# CHAPTER 9

SEGMENTING, POSITIONING, AND FORECASTING MARKETS
Test Item Table by Major Section of the Chapter and Level of Learning
Level of Learning Major Section of the Chapter Zappos.com (pp.225-226) Why Segment Markets? (pp.226-230) Steps in Segmenting and Targeting Markets (pp.230-243) 6,7,8,9,10,11,12,13,55,56, 57,59,61 77,81,90,94,101,106,108, 109,124,125,126,127 Level 1: Knowledge (Knows Basic Terms & Facts) Level 2: Comprehension (Understands Concepts & Principles) 1,2,3,4,5 18,19,20,23,24,27,28,29,30,31, 33,35,38,39,42,43,60,207,208,209 , 210,211 62,63,64,65,66,67,68,69,70,71,72, 73,76,78,82,83,91,95,96,102,103, 107,111,112,113,114,115,119,120, 128,129,130,131,132,136,137,138 , 139,140,141,212,213,215,217,218 , 219,220,221 142,143,144,145,146,150,152,153 , 159,162,163,164,173,174,175,176 , 222,223 184,185,186,187,189,201,203, 224,225 Level 3: Application (Applies Principles)

14,15,16,17,21,22,25,26,32,34, 36,37,40,41,44,45,46,47,48,49, 50,51,52,53,54,58 74,75,79,80,84,85,86,87,88,89, 92,93,97,98,99,100,104,105,110, 116,117,118,121,122,123,133, 134,135,147,148,149,151,214, 216

Positioning the Product (pp.243-245) Sales Forecasting Techniques (pp.245-247)

154,155,156,160,161,167, 168,170,171,172

157,158,165,166,169,177,178

179,180,181,182,183,188, 191,192,196,197,198,200, 202

190,193,194,195,199,226

Video Case: Nokia (pp.249-251)

205

204,206

Note: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.

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CHAPTER 9
SEGMENTING, POSITIONING, AND FORECASTING MARKETS
Test Item Table by Learning Objective and Level of Learning
Level of Learning Learning Objective Level 1: Knowledge (Knows Basic Terms and Facts) 6,7,8,9,10,11,12,13,55, 56,57,59,61 Level 2: Comprehension (Understands Concepts & Principles) 1,2,3,4,5,18,19,20,23,24,27, 28,29,30,31,32,33,35,38,39, 42,43,60,207,208,209,210,21 1 62,63,64,65,212 Level 3: Application (Applies Principles) 14,15,16,17,21,22,25,26,34, 36,37,40,41,44,45,46,47,48, 49,50,51,52,53,54,58,206

Explain what market segmentation is and when to use it. Identify the five steps involved in segmenting and targeting markets. Recognize the factors used to segment consumer and organizational markets. Develop a market-product grid to identify a target market and recommend resulting actions. Explain how marketing managers position products in the marketplace. Describe three approaches to developing a sales forecast for an organization.

77,81,90,94,101,106,108, 109

66,67,68,69,70,71,72,73,76, 78,82,83,91,95,96,102,103, 107,111,112,113,114,115, 119,120,205,213,215,217,218 130,131,132,136,137,138,139 , 140,141,142,143,144,145,146 , 150,152,153,219,220,221 159,162,163,164,173,174, 175,176,222,223

74,75,79,80,84,85,86,87,88, 89,92,93,97,98,99,100,104, 105,110,116,117,118,121, 122,123,204,214,216 134,135,147,148,149,151

124,125,126,127

154,155,156,160,161,167 , 168,170,171,172 179,180,181,182,183, 188,191,192,196,197, 198,200,202

157,158,165,166,169,177, 178

184,185,186,187,189,201,203 , 224,225

190,193,194,195,199,204, 226

Note: Bold numbers indicate short essay questions. Underlined numbers indicate visually enhanced questions.

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CHAPTER 9
SEGMENTING, POSITIONING, AND FORECASTING MARKETS
MULTIPLE CHOICE QUESTIONS 9-1 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

The Zappos specific market segmentation strategy is to a. sell a huge selection of shoes to people who will buy them online. b. sell a wide selection of leather shoes and boots to retailers. c. sell all types of shoes, accessories, and clothing to department stores. d. use organizational segmentation to sell accessories to consumers. e. sell children’s shoes to online retailers. Answer: a Page: 225 LO: 1 LL: 2 AACSB: 3 Rationale: Hsieh, Lin, and founder Nick Swinmurn have given Zappos a clear, specific market segmentation strategy: Sell a huge selection of shoes to people who will buy them online. 9-2 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

Which of the following statements about Zappos.com is true? a. Zappos.com only sells a small selection of designer, high-end shoes. b. Using only the Zappos.com website it is impossible to discover how to contact the company. c. Zappos.com uses the latest in whiz-bang technology. d. Zappos.com uses ads on the site to finance it. e. The Zappos.com home page is fast as lightning. Answer: e Page: 225 LO: 1 LL: 2 AACSB: 3 Rationale: The Zappos.com home page is “fast as lightning.” In fact, in late 2006 it was fastest of the top 50 Internet retailers to load on your computer: 0.879 seconds. 9-3 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

Which of the following statements about Zappos is true? a. Zappos sells primarily sneakers. b. Zappos staff tries to spend most of its time on stuff that will improve customer-service levels. c. Baby boomers are the largest market Zappos products. d. The Zappos website is somewhat difficult to use when searching for a specific shoe size. e. The Zappos call center is closed only on Sundays from 7 a.m.-noon. Answer: b Page: 226 LO: 1 LL: 2 AACSB: 3 Rationale: Asked about the details of the Zappos website, Tony Hsieh almost yawns and says, “We try to spend most of our time on stuff that will improve customer-service levels.”

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9-4

CHAPTER OPENING EXAMPLE: ZAPPOS.COM

COMPREHENSION

Which of the following statements about Zappos is true? a. Customer service and loyalty is so critical both the Zappos call center and headquarters are in the same place—Las Vegas. b. Customer service employees don’t use scripts and don’t try to keep calls short. c. Every new employee in Las Vegas spends four weeks on the phone as a customer service representative and a week in its Kentucky warehouse. d. Operating the warehouse 24/7 lets customers order shoes as late as 11 p.m. and still get their shoes the next day. e. All of the above are true. Answer: e Page: 226 LO: 1 LL: 2 AACSB: 3 Rationale: This focus on customer service for the Zappos niche of online customers is something the company lives, breathes, and implements. Examples include all of the choices offered in the question. 9-5 CHAPTER OPENING EXAMPLE: ZAPPOS.COM COMPREHENSION

Which of the following statements about Zappos is true? a. Customer service and loyalty is so critical both the Zappos call center and headquarters are in the same place—New York. b. Customer service employees use scripts and try to keep calls short. c. Every new employee in New York spends four weeks on the phone as a customer service representative and a week in its Kentucky warehouse. d. Operating the warehouse 24/7 lets customers order shoes as late as 11 p.m. and still get their shoes the next day. e. All of the above are true. Answer: d Page: 226 LO: 1 LL: 2 AACSB: 3 Rationale: This focus on customer service for the Zappos niche of online customers is something the company lives, breathes, and implements. Some examples include: (1) Customer service and loyalty is so critical both the Zappos call center and headquarters are in the same place—Las Vegas. (2) Customer service employees don’t use scripts and don’t try to keep calls short. (3) Every new employee in Las Vegas spends four weeks on the phone as a customer service representative and a week in its Kentucky warehouse. (4) Operating the warehouse 24/7 lets customers order shoes as late as 11 p.m. and still get their shoes the next day.

119

pay attention to marketing messages. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-8 MARKET SEGMENTATION Other Location: web KNOWLEDGE Market segmentation involves aggregating prospective buyers into groups that will respond similarly to a marketing action and a. go shopping on a regular basis. e. go shopping on a regular basis. psychographics. c. e. b. Answer: c Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-7 MARKET SEGMENTATION KNOWLEDGE Market segmentation involves aggregating prospective buyers into groups that have common needs and will a. d. d. b. use the same payment methods. respond similarly to a marketing action.9-6 MARKET SEGMENTATION KNOWLEDGE Aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action is called a. c. market delineation. b. consumer differentiation. have common needs. market segmentation. e. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 120 . aggregation marketing. c. be responsive to marketing research. will pay attention to marketing messages. be responsive to marketing research. d. use the same payment methods.

Answer: a Page: 226 LO: 1 LL: 1 Rationale: Key term definition—market segments 9-12 MARKET SEGMENTS AACSB: 3 KNOWLEDGE Each __________ consists of people who are relatively similar to each other in terms of their consumption behavior.9-9 MARKET SEGMENTATION KNOWLEDGE __________ involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marking action. c. qualified prospect Answer: a Page: 226 LO: 1 LL: 1 Rationale: Key term definition—market segments AACSB: 3 121 . a. e. organizational buyer d. b. b. ultimate consumer e. ultimate consumers. Market differentiation c. have different needs and have potential for future growth. e. qualified prospects. Market diversification b. have potential for future growth and have potential for increased profit or ROI. demographic clusters. c. d. its members must a. represent a large share of the entire market and have critical buying power. organizational buyers. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-11 MARKET SEGMENTS KNOWLEDGE The phrase “relatively homogeneous collections of prospective buyers” is most descriptive of a. Market augmentation e. have different needs and respond similarly to market actions. a. market segments. Repositioning Answer: c Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 9-10 MARKET SEGMENTATION Other Location: SG KNOWLEDGE To be identified as a market segment. market segment b. Market segmentation d. have common needs and respond similarly to market actions. demographic cluster c. d.

a. full coverage marketing Answer: c Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—product differentiation 9-14 PRODUCT DIFFERENTIATION Other Location: web APPLICATION When Procter & Gamble introduced Crest toothpaste. market differentiation c. minty flavor to appeal to adults. it was intended for use by children and was therefore given a child-appealing bubblegum flavor. product differentiation d. usage segmentation e. to help consumers perceive the product as being different and better than competing products.9-13 PRODUCT DIFFERENTIATION KNOWLEDGE Which strategy involves a firm’s using different marketing mix activities. usage segmentation e. product differentiation d. 122 . product differentiation d. product extrapolation c. product sampling b. to help consumers perceive the product as being different and better than competing products. E-bay uses a __________ strategy to reach several different market segments. Sometime later the same basic formula was given a fresh. the change of flavor (a product feature) helped consumers to perceive the product as different as and better than competing products. such as product features and advertising. market penetration e. the first fluoride toothpaste. In the case of e-Bay the groups (a product feature) encourage buyers and sellers of particular items to interact. product sampling b. behavioral segmentation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. such as product features and advertising. 9-15 PRODUCT DIFFERENTIATION APPLICATION E-Bay has many different groups on its website. In the case of Crest. Groups range from Collectors Clubs to the eBay Community Cookbook group. to help consumers perceive the product as being different and better than competing products? a. What is this marketing strategy called? a. dual distribution b. psychographic segmentation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. such as product features and advertising. product extrapolation c.

is selling four versions with different product features to appeal to different market segments. The maker of Alka-Seltzer is using a.9-16 PRODUCT DIFFERENTIATION APPLICATION Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the stomach. market segmentation. market sectioning. d. Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. In Holland the mashed potatoes are replaced with a potato-and-onion croquette. product segmentation. Bayer. Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm’s using different marketing mix activities. and Alka-Seltzer Heartburn Relief. e. to help consumers perceive the product as being different and better than competing products. 123 . 9-17 PRODUCT DIFFERENTIATION APPLICATION KFC has modified its product to satisfy different market segments. AlkaSeltzer Morning Relief (for morning headaches and fatigue). the maker of Alka-Seltzer. such as product features and advertising. KFC changes the product features internationally to help consumers perceive the product as being different and better than competing products. market sectioning. b. e. Extra Strength Alka-Seltzer. and in Thailand. Each Alka-Seltzer product is targeted to a slightly different market segment. These examples best illustrate a. product base development. such as product features and advertising. c. to help consumers perceive the product as being different and better than competing products. product differentiation. b. Today you can buy Original Alka-Seltzer. product positioning. product base development. a customer gets fresh rice with soy or sweet chili sauce with his or her chicken. c. product differentiation. d. product segmentation.

grouping people randomly in a market b. self-regulatory industry standards. market needs e. such needs and benefits must be related to specific marketing actions the organization can take. Answer: e Page: 227. 124 . self-regulatory industry standards b. Fig. e. controllable environmental factors. splitting people randomly between markets e. 9-1 LO: 1 LL: 2 AACSB: 3 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to an organization’s marketing program. 9-19 MARKET SEGMENTATION COMPREHENSION The process of segmenting a market and selecting specific segments as targets is the link between __________ and the organization's marketing program. a. c. Second. d. top-level management d. government regulations c. grouping people according to similar needs d. market sectioning c. government regulations. 9-1 LO: 1 LL: 2 AACSB: 3 Rationale: Figure 9-1 illustrates how the process of segmenting and targeting markets links market needs to an organization’s marketing program. Fig. product based market development Answer: c Page: 226 . 9-20 MARKET SEGMENTATION COMPREHENSION The process of segmenting a market and selecting specific segments as targets is the link between the various buyers’ needs and a.227 LO: 1 LL: 2 AACSB: 3 Rationale: Market segmentation first stresses the importance of grouping people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase. controllable environmental factors Answer: d Page: 227. a. the organization's marketing program.9-18 MARKET SEGMENTATION COMPREHENSION Market segmentation stresses __________ and relating needs and benefits to specific marketing actions. b. top-level management.

market segmentation relates supply (the organization's marketing program) to demand (__________). are legal. 125 . tactical goals Answer: b Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Economists relate supply and demand through price and quantity. it relates supply (__________) to demand (the customer needs). a. In economist's terms. product. it relates supply (the organization's marketing program) to demand (the customer needs). product. tactical goals b. create innovation. Market segmentation relates the market needs or demand to the marketing program executed by the company. increase sales and profitability. are socially responsible. 9-22 MARKET SEGMENTATION APPLICATION Market segmentation is only a means to an end. d. b. government regulations c. product positions Answer: d Page: 227 LO: 1 LL: 3 AACSB: 3 Other Location: SG Rationale: Economists relate supply and demand through price and quantity. In economist's terms. 9-23 MARKET SEGMENTATION COMPREHENSION A basic test of the usefulness of the market segmentation process is whether it leads to tangible marketing actions that can a. e. self-regulatory industry standards b. and place. a. which includes price. and place. promotion. Market segmentation is only a means to an end: in economist's terms.9-21 MARKET SEGMENTATION APPLICATION Market segmentation is only a means to an end. strategic objectives e. it relates supply (the organization's marketing program) to demand (the customer needs). Answer: a Page: 227 LO: 1 LL: 2 AACSB: 3 Rationale: A basic test of the usefulness of the segmentation process is whether it leads to tangible marketing actions that can increase sales and profitability. which includes price. sustainable. the organization's marketing program c. promotion. Market segmentation is only a means to an end: in economist's terms. Market segmentation relates the market needs or demand to the marketing program executed by the company. customer needs e. strategic objectives d. government regulations d. c.

act as its own distributor. d. reduce production costs. designing shoes for every type of occasion. c.228 LO: 1 LL: 2 AACSB: 3 Rationale: A business firm goes to the trouble and expense of segmenting its markets when it expects that this will increase its sales. b. 9-29 MARKET SEGMENTATION COMPREHENSION A business firm segments its markets when this strategy increases its sales revenue. e. 127 . and return on investment. the environment becomes uncertain. its pricing strategy. Answer: a Page: 227 LO: 1 LL: 2 AACSB: 3 Rationale: The Zappos segmentation strategy is based on selling service elements that lead to a positive customer experience and repeat purchases—the absolute best selection of shoes and the absolute best service. it expects that this will increase its sales. d. which will lower quality. Answer: d Page: 227 LO: 1 LL: 2 AACSB: 3 Rationale: A business firm goes to the trouble and expense of segmenting its markets when it expects that this will increase its sales.9-27 ZAPPOS SEGMENTATION STRATEGY COMPREHENSION The Zappos segmentation strategy is based on a. c. c. and return on investment. terminate as many employees as possible to save money. discontinue manufacturing any products that are not in the mature stage of their product life cycle. having a well-educated customer base. d. e. not attempt to segment its market. profit and return on investment. offering the absolute best selection of shoes and the absolute best service. supplier geography. it changes its advertising campaign. the firm should a. a firm should not attempt to segment its market. e. 9-28 MARKET SEGMENTATION COMPREHENSION A business firm goes to the trouble and expense of segmenting its markets when a. Answer: d Page: 227 . When expenses are greater than the potentially increased sales from segmentation. When expenses are greater than the potentially increased sales from segmentation. b. competitors enter the marketplace. recession sets in. profit. and ROI. profit. b. profit.

the definition of a “one-product and multiple-market segments” situation.STREET & SMITH COVERS 9-30 MARKET SEGMENTATION STRATEGY COMPREHENSION Street & Smith publishes the same baseball magazine with exactly the same stories but with 14 different covers to appeal to baseball fans in 14 different regions of the U. d.S. one product and multiple market segments. b. geographic segmentation Answer: e Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: The magazine has 14 different covers to appeal to sports fans in 14 different geographic regions.” Yet the 14 different covers enable the magazine with exactly the same stories to reach 14 different regional segments. 9-31 MARKET SEGMENTATION STRATEGY COMPREHENSION Street & Smith publishes the same baseball magazine with exactly the same stories but with 14 different covers to appeal to baseball fans in 14 different regions of the U. so the answer is “a.S. segmenting organizational markets. In terms of market segmentation strategies. or mass customization. outlet-type segmentation c. 128 . behavioral segmentation e. c. income segmentation. Four samples are shown in Figure 9-B. psychographic segmentation b. clearly using the geographic variable as the basis for market segmentation. Four samples are shown in Figure 9-B. e. multiple products and multiple market segments. What is the market segmentation strategy? a. this is an example of a. Answer: a Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: There is only a single product. the magazine stories inside the cover. segments of one. demographic segmentation d.

manufacture products that appeal to different markets. the incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution. c. develop and produce another version of the product. develop a separate promotional campaign. amortization costs Answer: a Page: 228 LO: 1 LL: 2 AACSB: 3 Other Location: web Rationale: The incremental costs of taking a product into new product segments are rarely as large as those for developing an entirely new product. 9-33 ONE PRODUCT. engineering. In this case. the extra cost of developing and producing additional versions of the product b. creating a service gap c. MULTIPLE MARKET SEGMENTS COMPREHENSION When a firm produces only a single product or service and attempts to sell it to two or more market segments. engineering. indirect distribution and logistics problems d. Answer: c Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: When an organization produces only a single product or service and attempts to sell it to two or more market segments. and producing additional versions of the product. and manufacturing expenses.9-32 MARKET SEGMENTATION STRATEGY APPLICATION One marketing action that can be taken to sell a single product or service to multiple market segments is a. strategic planning e. it avoids __________. and manufacturing expenses. b. which often entail extremely high research. 129 . issue stock used for additional research and development for improved products. a. d. e. it avoids the extra costs of developing. purchase another firm that has additional products that would appeal to multiple markets. which often results extremely high research.

MULTIPLE MARKET SEGMENTS APPLICATION What is the most likely way for consumers to benefit because a firm uses a strategy of one product for multiple market segments? a. walking shoes. engineering. which often entails higher research. Answer: c Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: When a firm produces only a single product or service and attempts to sell it to two or more market segments. a one-product-andmultiple-market-segment strategy a. is a much more effective means of meeting consumers' individual needs. is much more profitable. creates greater cost savings in manufacturing costs. 9-36 ONE PRODUCT. MULTIPLE MARKET SEGMENTS COMPREHENSION When compared to a multiple-products-multiple-market segments strategy. d. Reach Toothbrush makes several versions of its toothbrush. as is the case with Johnson's Baby Oil. Answer: c Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: A one product and multiple market segment strategy simply involves producing a single product and selling it to two or more market segments. increased number of choices c. and manufacturing expenses. it avoids the extra cost of developing and producing additional versions of the product. has significantly higher distribution costs. Kellogg's and Post both make bran cereals with raisins. improved service e. not marketing economies of scale (alternative E) When using one product and multiple market segments. d. lower retail prices because of lower production costs d.9-34 ONE PRODUCT. and hard bristle and a short or normal length head. b. 9-35 ONE PRODUCT. lower retail prices because of lower marketing costs Answer: c Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Producing a single product and selling it to multiple market segments gives important production economies of scale and reduced costs that may be passed on to consumers as lower prices (alternative C). medium. c. Reebok makes tennis shoes. is a more effective way of meeting organizational objectives. b. e. Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages. and Weeboks. marketing costs generally increase. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. increased satisfaction of consumer wants and needs b. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a single product with multiple market segments? a. which are available in a soft. e. 130 . c. running shoes.

mass customization e. one product with multiple market segments b. the publisher of the Harry Potter books is using which of the following segmentation strategies? a. teen. the Harry Potter series of books were often at the top of The New York Times fiction best-seller list. teen. one product with multiple market segments b. synergy d. Scholastic. mass customization e. synergy d. MULTIPLE MARKET SEGMENTS COMPREHENSION In the United States. Time is using which of the following segmentation strategies? a. CRM Answer: a Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Time is selling one magazine (product) to multiple geographic segments. multiple products with multiple market segments c. and adult readers around the world. multiple products with multiple market segments c. The only difference in each magazine is that the advertisements in the magazine are different and are targeted to the appropriate geographic segment.S. 131 . These books have been marketed to preteen. MULTIPLE MARKET SEGMENTS APPLICATION Time magazine publishes 200 different U. 9-38 ONE PRODUCT. editions each targeted at unique geographic and demographic segments using a special mix of advertisements.9-37ONE PRODUCT. and adult readers. CRM Answer: a Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: Scholastic is selling one book series (product) to multiple market segments— preteen.

e. Alternative C is an example of two types of vehicles for two different groups of consumers—those who wish to carry people and those who wish to carry products. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. reduces the number of employees required. stabilizes the sales revenues and profits. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. each targeted at a different type of user. Answer: c Page: 228 LO: 1 LL: 2 AACSB: 3 Rationale: A multiple products and multiple markets strategy has a number of distinct products each targeted to a different type of user. Ford manufactures SUVs for those who wish to carry lots of people and pickup trucks for those who wish to carry lots of products. One set of previews showed the action scenes in order to attract one audience. b. and adds to the manufacturer’s sales revenues and profits. b. 9-40 MULTIPLE PRODUCTS. and the other set showed romantic scenes to attract another audience. d. 132 . doesn’t reduce quality or increase price. Answer: e Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Manufacturing multiple products for multiple market segments is worthwhile if it serves customers’ needs better.9-39 MULTIPLE PRODUCTS. conforms to all union regulations. d. serves customers' needs better. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. MULTIPLE MARKET SEGMENTS COMPREHENSION Which of the following is an example of a multiple products and multiple markets strategy? a. doesn't reduce quality or increase price. c.S. Manufacturing these different cereals is clearly more expensive than producing one but seems worthwhile if it adds to the manufacturer’s sales revenues and profits. c. e. are an example of multiple products aimed at multiple markets. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. A new movie used several different advertisements. and a. decreases the cost of the physical plant.

c. A new movie used several different advertisements. reduces the number of employees required. whereas its Old Navy stores sell a slightly different version for \$22. One set of previews showed the action scenes in order to attract one audience. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. conforms to all union regulations. Gap’s Banana Republic chain sells blue jeans for \$58. e. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. stabilizes the sales revenues and profits. b. Answer: d Page: 229 LO: 1 LL: 2 AACSB: 3 Rationale: A “Tiffany/Wal-Mart” strategy is a two-tier marketing strategy.S. each targeted at a different type of user. e. and the other set showed romantic scenes to attract another audience. 133 . doesn't reduce quality or increase price. Many firms are now offering different variations of the same basic product or service to high-end and low-end segments. Manufacturing these different cereals is clearly more expensive than producing one but seems worthwhile if it adds to the manufacturer’s sales revenues and profits. d. 9-42 MULTIPLE PRODUCTS. and adds to the manufacturer’s sales revenues and profits. MULTIPLE MARKET SEGMENTS COMPREHENSION Which of the following is an example of a “Tiffany/Wal-Mart” strategy? a. are an example of multiple products aimed at multiple markets. serves customers’ needs better. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. decreases the cost of the physical plant. Answer: e Page: 228 LO: 1 LL: 3 AACSB: 3 Rationale: Manufacturing multiple products for multiple market segments is worthwhile if it serves customers’ needs better. b. and a.9-41 MULTIPLE PRODUCTS. doesn’t reduce quality or increase price. MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. d. c.

d. one product and multiple market segments. Many firms are now offering different products or services to high-end or low-end segments. mass customization. b. Alternative C is an example of two types of cake mixes for two different groups of consumers—those with conventional ovens and those with microwave ovens. synergy. d. Answer: c Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: A multiple products and multiple markets strategy has a number of distinct products each targeted to a different type of user. b. 9-44 MULTIPLE PRODUCTS. 134 . and another line of cake mixes for people with microwave ovens. College Football magazine selects different covers for essentially the same magazine in order to appeal to different geographic markets in the U. MULTIPLE MARKET SEGMENTS COMPREHENSION The Walt Disney Company carefully markets two distinct Winnie-the-Poohs—such as the original line-drawn figures on fine china sold at Nordstrom and a cartoon-like Pooh on polyester bed sheets sold at Wal-Mart. Betty Crocker carries one line of cake mixes for people with conventional ovens. One set of previews showed the action scenes in order to attract one audience.S. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. e. c. and the other set showed romantic scenes to attract another audience. A new movie used several different advertisements. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. c. price discrimination.9-43 MULTIPLE PRODUCTS. Answer: e Page: 229 LO: 1 LL: 2 AACSB: 3 Rationale: This is an example of the two-tiered strategy referred to as a “Tiffany/Wal-Mart” strategy. This is an example of a. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a multiple products and multiple markets strategy? a. a “Tiffany/Wal-Mart” strategy. e.

MULTIPLE MARKET SEGMENTS APPLICATION Kellogg's different types of cereals. are an example of multiple products aimed at multiple markets. synergy. doesn't reduce quality or increase price. adds to the manufacturer's sales revenues and profits. a “Tiffany/Wal-Mart” strategy. b. one product and multiple market segments. c. Answer: e Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Manufacturing multiple products for multiple market segments is worthwhile if it serves customers’ needs better. b. decreases the cost of the physical plant. doesn’t reduce quality or increase price. d. c.50. mass customization. e. Many firms are now offering different products or services to high-end or low-end segments. and a. MULTIPLE MARKET SEGMENTS APPLICATION You can go to your nearest Hallmark card store and buy a birthday greeting card for a friend and pay \$4. d. 9-46 MULTIPLE PRODUCTS. Answer: e Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: This is an example of the two-tiered strategy referred to as a “Tiffany/Wal-Mart” strategy. 135 . Manufacturing these different cereals is clearly more expensive than producing one type of cereal but seems worthwhile if it serves customers' needs better. conforms to all union regulations.9-45 MULTIPLE PRODUCTS. each targeted at a different type of user. or you can buy a card that's not quite as nice but just as sentimental from the store's new \$. and adds to the manufacturer’s sales revenues and profits.99 line of greeting cards. This is an example of a. price discrimination. e. reduces the number of employees required. stabilizes the sales revenues and profits.

nikeid. 137 . c. how the 80/20 rule is implemented. repositioning. So. b. mass customization. mass customization. if you send in the money and a photo of your young niece.9-50 MASS CUSTOMIZATION APPLICATION MyTwinn makes dolls that look like young girls. a. product sampling b. psychographic segmentation Answer: c Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Today’s Internet ordering and flexible manufacturing and marketing processes have made mass customization possible. usage segmentation e. synergy. e. d. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. 9-51 MASS CUSTOMIZATION APPLICATION Lands’ End will custom fit the Marinac jacket and make it with additional features such as thumb loops.com allows customers to visit its website and design a sneaker to their own personal specifications. tailoring goods or services to the tastes of individuals on a high-volume scale. c. e. synergy. target marketing. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost.com. repositioning. and a key clip when you order from LandsEnd. This is an example of a. d. mass customization d. For \$119 they will make a doll that looks just like a photograph. product extrapolation c. she could have a doll that is her twin! This is an example of a. target marketing. b. how the 80/20 rule is implemented. 9-52 MASS CUSTOMIZATION APPLICATION To create a __________ strategy. underarm ventilation slits.

target marketing. c. e. target marketing d. synergy c. a. mass customization. d. repositioning. synergy. synergy. This is an example of a.95 per 12-foot roll. how the 80/20 rule is implemented. mass production e. and desires special tender loving care. how the 80/20 rule is implemented.9-53 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Company will let you select cookies and put a photo of yourself on the tin. 9-55 CUSTOMER RELATIONSHIP MANAGEMENT KNOWLEDGE The essence of __________ is that each customer has unique needs and wants.95 to \$32. 9-54 MASS CUSTOMIZATION APPLICATION Name Maker is an online company that sells high-end gift wrap printed with custom slogans. c. A customer can have gift wrap printed with the name of the person celebrating a birthday or the folks who are getting married. b. repositioning. e. customer relationship management b. target marketing. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. b. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers at high volumes for a relatively low cost. d. This made-to-order gift wrap is priced from \$24. This is an example of a. mass customization Answer: a Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—customer relationship management 138 . mass customization.

" said William Santana Li. a customer does not have the ability to specify an unlimited number of features. b. a one-product-one-market-segment strategy. mass aggregation. built-to-order (BTO). and direct delivery. e. d. Synergy c. customer relationship management (CRM). d. 139 . Target marketing d. built-to-order (BTO). mass aggregation. Mass customization Answer: e Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—mass customization 9-57 BUILD-TO-ORDER KNOWLEDGE Manufacturing a product only when there is an order from a customer is called: a. Answer: e Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: The comparison of the Model E to Dell is the phrase that should remove any doubt from students' minds about what kind of business this is. Customer relationship management b.9-56 MASS CUSTOMIZATION KNOWLEDGE __________ is tailoring goods or services to the tastes of individual customers on a highvolume scale. e. launch. "Think of Model E as the Dell of the auto industry. but because of production issues. designing products based on what consumers truly want and leveraging best-in-class components and micro-factory approaches for rapid design. a. Model E manufactures a car only when there is an order from a customer. Answer: e Page: 229 LO: 1 LL: 1 AACSB: 3 Rationale: Text term definition—mass customization 9-58 BUILD-TO-ORDER APPLICATION Model E is a new type of car manufacturer that relies on the Internet to build new car designs from prototypes to marketable vehicles much faster than ever before possible. synergy. president and CEO of Model E. Mass production e. a one-product-one-market-segment strategy. It is very similar to mass customization. c. synergy. repositioning. c. Model E relies on a. b.

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SYNERGY

KNOWLEDGE

The key to successful product differentiation and market segmentation strategies is finding the ideal balance between satisfying a customer’s individual wants and achieving organizational __________, the increased customer value achieved through performing organizational functions like marketing or manufacturing more efficiently. a. segregation b. synergy c. segmentation d. selection e. value add Answer: b Page: 229 LO: 1 Rationale: Key term definition—synergy 9-60 SYNERGY LL: 1 AACSB: 3 COMPREHENSION

The ultimate criterion for an organization’s marketing success in customer relationship management is that __________ as a result of increased synergies. a. investors should make more money b. executives should get larger salaries c. products should be made more cheaply d. customers should be better off e. the government should collect more taxes Answer: d Page: 229 LO: 1 LL: 3 AACSB: 3 Other Location: web Rationale: The synergy called increased customer value can take the form of more products, improved quality on existing products, lower prices, easier access to product through improved distribution, and so on. So the ultimate criterion for an organization’s marketing success in customer relationship management is that customers should be better off as a result of the increased synergies. 9-61 SYNERGY Synergy is the increased customer value achieved through a. performing organizational functions more efficiently. b. larger rebates at the point of sale. c. higher trade-in values for older model cars. d. the ability to be exposed to more informative advertising messages. e. more tax revenues for government. Answer: a Page: 229 LO: 1 Rationale: Key term definition—synergy LL: 1 AACSB: 3 Other Location: SG KNOWLEDGE

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STEPS IN SEGMENTING AND TARGETING MARKETS

COMPREHENSION

The five key steps in segmenting and targeting markets a. help identify market needs. b. provide guidance to reposition products. c. help create ideas for new products. d. link market needs of customers to the organization’s marketing program. e. are required by law. Answer: d Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: Figure 9-2 shows the five key steps in segmenting and targeting markets link market needs of customers to the organization’s marketing program. 9-63 STEPS IN SEGMENTING AND TARGETING MARKETS The first step in segmenting and targeting markets is to a. recognize a need. b. group potential buyers into segments. c. create product groupings. d. estimate size of the overall market. e. develop a market-product grid. Answer: b Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: The steps in segmenting and targeting markets include: (1)group potential buyers into segments; (2)group products to be sold into categories; (3)develop a market-product grid and estimate size of markets; (4) select target markets; (5) take marketing actions to reach target markets. 9-64 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION COMPREHENSION

There are five steps involved in segmenting and targeting a market. What should a marketer do once he or she has selected a target market? a. create product groupings b. develop a market-product grid c. estimate size of market d. take marketing actions to reach that target market e. form prospective buyers into market segments Answer: d Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: The steps in segmenting and targeting markets include: (1)group potential buyers into segments; (2)group products to be sold into categories; (3)develop a market-product grid and estimate size of markets; (4) select target markets; (5) take marketing actions to reach target markets.

141

9-65STEPS IN SEGMENTING AND TARGETING MARKETS

COMPREHENSION

There are five steps involved in segmenting and targeting a market. What should a marketer do once he or she has selected a target market and grouped products to be sold into categories? a. create product groupings b. develop a market-product grid and estimate size of market c. identify market needs d. take marketing actions to reach that target market e. form prospective buyers into market segments Answer: b Page: 230; Fig. 9-2 LO: 2 LL: 2 AACSB: 3 Rationale: The steps in segmenting and targeting markets include: (1)group potential buyers into segments; (2)group products to be sold into categories; (3)develop a market-product grid and estimate size of markets; (4) select target markets; (5) take marketing actions to reach target markets. 9-66 CRITERIA FOR FORMING SEGMENTS COMPREHENSION

The best segmentation approach is the one that a. makes it easiest to reach the segment. b. recognizes different needs of buyers among different segments. c. recognizes similarities of needs of potential buyers within a segment. d. is simplest and least costly in assigning potential buyers to segments. e. maximizes the opportunity for future profit and ROI. Answer: e Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The best segmentation approach is the one that maximizes the opportunity for future profit and ROI. If this potential is maximized without segmentation, don’t segment. 9-67 CRITERIA FOR FORMING SEGMENTS COMPREHENSION

A different market segment usually requires a different marketing action that in turn means greater costs. If increased revenues don't offset extra costs, a marketer should __________ to reduce the number of marketing actions. a. increase the advertising budget b. try direct mail instead of broadcast advertising c. cancel current activities d. combine segments e. discontinue offering the good or service Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Other Location: SG Rationale: If the needs of the various segments aren’t very different, combine them into fewer segments. A different segment usually requires a different marketing action that, in turn, means greater costs. If increased sales don’t offset extra costs, combine segments and reduce the number of marketing actions.

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CRITERIA FOR FORMING SEGMENTS Potential buyers within a segment should be a. difficult to reach to prevent competitors from reaching them first. b. similar to buyers among different segments. c. similar in terms of a marketing action. d. high cost to assign to segments. e. interested in direct mail services.

COMPREHENSION

143

geographic segmentation. zip code segmentation.9-77 GEOGRAPHIC SEGMENTATION Segmentation based on where prospective customers live or work is called a. Today. MSA segmentation. e. GE built a downsized microwave oven to hang under kitchen cabinets. d. NAICS code segmentation. e. b. age b. Campbell’s plants in Texas and California produce a hotter nacho cheese sauce than that produced in the other plants. regional segmentation. Answer: a Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: KFC has discovered that to be successful in globalization it must be willing to adapt to the taste preferences of different regions. In China KFC sells a much spicier chicken the farther away its restaurants are from the coastal areas. behavioral c. d. c. Answer: b Page: 231 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—geographic segmentation KNOWLEDGE 9-78 GEOGRAPHIC SEGMENTATION COMPREHENSION Campbell’s found that its canned nacho cheese sauce. 146 . was too hot for Americans in the East and not hot enough for those in the West and Southwest. 9-79 GEOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on region? a. This is geographic segmentation. b. perceptual Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Campbell’s is marketing a different sauce to different markets depending on where they are located. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. A gourmet grocer advertises its services on a small-audience classical music station even though there is a much larger-audience rock station in the area. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. geographic e. a. c. socioeconomic d. which could be heated and poured directly onto nacho chips. Campbell’s is using __________ segmentation.

age. 9-81 DEMOGRAPHIC SEGMENTATION KNOWLEDGE Segmentation which is based on some objective physical. so Universal is using geographic characteristics in deciding where to hold a successful country music concert. Figure 9-3 lists the most common segmentation variables classified as demographic. COMPREHENSION 147 . personality b. gender c. d. income e. Answer: b Page: 231 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—demographic segmentation 9-82 DEMOGRAPHIC SEGMENTATION Which of the following is a consumer demographic variable? a. socioeconomic characteristics d. usage rate d. e. This requires Universal Concerts to best segment its Canadian market according to __________ if it hopes to have a sold-out concert. usage segmentation. geographic characteristics b. Western Canadians much prefer country music. MSA Answer: b Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Demographics are objective. measurable. and so on. or other classification attribute among people. age Answer: a Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: Western Canadians prefer country music much more than do Eastern Canadians. In general. needs e.9-80 GEOGRAPHIC SEGMENTATION APPLICATION Universal Concerts is planning on bringing a series of concerts to Canada next year. education level. demographic segmentation. or other classification attribute of prospective customers is called a. personality segmentation. such as gender. demographic characteristics c. c. income. yet in Eastern Canada a country music event is very likely to have lots of empty seats. b. a. behavioral segmentation. needs segmentation. measurable.

9-84 DEMOGRAPHIC SEGMENTATION APPLICATION More than half of all U. a. age. demographic characteristics e. education. personality e. 9-85 DEMOGRAPHIC SEGMENTATION APPLICATION Proctor & Gamble Co. 9-3 LO: 3 LL: 2 AACSB: 3 Rationale: Consumer demographic variables include gender. so Campbell’s packages meals with only one or two servings—from Great Starts breakfasts to L’Orient dinners. education b.9-83 DEMOGRAPHIC SEGMENTATION Which of the following is a consumer demographic variable? a. household size. birth era. marital status. psychographic characteristics Answer: d Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: The number of people in a household is a demographic characteristic that Campbell’s uses to segment the market. (P & G) decided to skip a generation of consumers when it began to market Old Spice deodorant. households are made up of only one or two persons. NAICS code d. MSA c. income. lifestyle d. demographic c. user status COMPREHENSION Answer: a Page: 232.S. and occupation. usage patterns c. buyer situations d. life stage. geographic e. who don’t remember the Old Spice brand sold to their grandfathers many years ago. regional b. P & G is using which type of segmentation variable? a. Fig. AACSB: 3 148 . Campbell’s is using __________ to segment its market. usage rates b. psychographic Answer: b Page: 232 LO: 3 LL: 3 Rationale: Age is a demographic variable. The target market is men aged 18 to 34. race/ethnicity.

or needs of prospective customers. socioeconomic segmentation. a type of psychographic segmentation. or needs of prospective customers is called a. This is an example of __________ segmentation. geographic e. 150 . Maxine. b.9-89 DEMOGRAPHIC SEGMENTATION APPLICATION At a Hallmark store you can find several different product lines of greeting cards. situational segmentation. psychographic Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Ethnicity is a demographic segmentation variable. psychographic segmentation. socioeconomic segmentation. likely including Fresh Ink. lifestyle d. e. Answer: a Page: 232 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—psychographic segmentation 9-91 PSYCHOGRAPHIC SEGMENTATION COMPREHENSION Claritas’ lifestyle segmentation is based on the belief that “birds of a feather flock together. e. and Tree of Life cards—all made by Hallmark for sale in its stores and intended to appeal to different target markets. aspirations (lifestyle). Answer: a Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Psychographic segmentation is based on some subjective mental or emotional attributes (personality). aspirations. d. b. a. Claritas uses lifestyle segmentation. The Mahogany line is designed to appeal to African-Americans.” This type of consumer segmentation is called a. geographic segmentation. 9-90 PSYCHOGRAPHIC SEGMENTATION KNOWLEDGE Segmentation based on some subjective mental or emotional attributes. d. situational segmentation. c. Shoebox. regional b. behavioral segmentation. demographic c. Nature's Sketchbook. psychographic segmentation. c. geographic segmentation. behavioral segmentation. Mahogany.

Field & Stream. a retail outdoor outfitter. outdoor life. psychographic b. and why they buy is called a. buying situation d. what benefits they seek. e. Answer: d Page: 232 LO: 3 LL: 1 AACSB: 3 Rationale: Text term definition—behavioral segmentation 151 . Golf Digest. 9-93 PSYCHOGRAPHIC SEGMENTATION APPLICATION Magazines like Fitness. socioeconomic segmentation. and Health all use a __________ segmentation strategy. geographic d. geographic segmentation. 9-94 BEHAVIORAL SEGMENTATION KNOWLEDGE Segmentation based on some observable actions or attitudes by prospective customers—such as where they buy. demographic segmentation. how frequently they buy. This suggests that REI would segment the market based on which type of customer variable? a. psychographic segmentation. demographic b. outdoor lives are part of the target market for REI. a. age c. These magazines are designed to appeal to people who enjoy certain lifestyles. psychographic Answer: e Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Lifestyle is a psychographic variable. c. d. behavior c. sociocultural e. behavioral segmentation. geographic Answer: a Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Psychographic segmentation includes lifestyle—including living an active. socioeconomic e. b.9-92 PSYCHOGRAPHIC SEGMENTATION APPLICATION People who live active.

9-95 BEHAVIORAL SEGMENTATION COMPREHENSION Segmentation based on what features are important to different customers is known as a. refrigerator. psychographic segmentation c. an ad campaign. demographic segmentation. psychographic segmentation c. such as a new product. geographic segmentation d. 152 . behavioral segmentation e. d. c. geographic segmentation d. demographic segmentation b. and freezer targeted to these students. However. an ad campaign. such as a new product. MicroFridge understands this and markets a combination microwave. The small set is much less expensive and allows the viewer to watch a DVD without extra equipment. socioeconomic segmentation Answer: d Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Understanding what features are important to different customers (behavioral segmentation) is a useful way to segment markets because it can lead directly to specific marketing actions. or a distribution system. such as a new product. socioeconomic segmentation Answer: d Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Understanding what features are important to different customers (behavioral segmentation) is a useful way to segment markets because it can lead directly to specific marketing actions. Magnavox is using which type of segmentation variable in this example? a. The larger sets can be outfitted with surround sound at a higher price than the small set. MicroFridge is using which type of segmentation basis? a. psychographic segmentation. socioeconomic segmentation. demographic segmentation b. 9-96 BEHAVIORAL SEGMENTATION COMPREHENSION College dorm residents frequently want to keep and prepare their own food and snacks to save money or have a late night snack. Magnavox uses behavioral segmentation to guide the types of TVs it sells since different consumers have different benefits they seek in a TV set. their dorm rooms are often woefully short of space. behavioral segmentation e. an ad campaign. behavioral segmentation. or a distribution system. e. b. 9-97 BEHAVIORAL SEGMENTATION APPLICATION Magnavox sells its target markets many different types of TVs from flat screens to a 20” combination TV/DVD. Answer: d Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Understanding what features are important to different customers (behavioral segmentation) is a useful way to segment markets because it can lead directly to specific marketing actions. or a distribution system. geographic segmentation.

Participants bring casseroles. British Airways (BA) has grown market share for its transatlantic business class by offering greater comfort. attractive and inexpensive disposable dishes for transporting food. Answer: d Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: BA is using behavioral segmentation (benefits the prospective customers seek) to sell airline tickets to frequent fliers who wish to sleep on a transatlantic flight. and an SUV. Promotions to frequent fliers stress that passengers can sleep in fully reclining seats and arrive refreshed to carry out a full day's schedule. psychographic segmentation. socioeconomic c. a small sedan. family size e. psychographic b. behavioral segmentation. e. the Prius. geographic b. vegetables. 9-100 BEHAVIORAL SEGMENTATION APPLICATION Many companies have cut travel budgets. life stage segmentation. Reynolds has recognized how to use _________ variables to segment its market. psychographic e. demographic Answer: c Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Toyota is using behavioral segmentation (benefits the prospective customers seek) to sell two types of vehicles that provide exceptional gasoline mileage. Toyota is using which type of segmentation variable to market these cars? a. BA's strategy is an example of a. industry sector segmentation. Both provide high mileage for the automobile class. b. d. and desserts and all share the food. Despite the shrinking pool of business-class travelers. so that very few business people are authorized to fly first class. geographic Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Reynolds is using behavioral segmentation (benefits the prospective customers seek) to sell cookware that is disposable and can be left behind. breads. c. behavioral d. 153 . Reynolds responded to this problem by creating Pot Lux cookware. lifestyle segmentation.9-98 BEHAVIORAL SEGMENTATION APPLICATION Toyota makes two types of hybrid automobiles. a. 9-99 BEHAVIORAL SEGMENTATION APPLICATION Many families today hold potluck meals during holidays or special events. It is easy to forget to take the bowl that you brought to the dinner home with you. demographic d. behavioral c. the Highlander.

buying condition segmentation. is a strategy that focuses on usage rate. This technique. usage rate. service inventory. c. Answer: b Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly to create loyal customers. turnover. sometimes called frequency marketing. geographic segmentation. d. c. psychographic segmentation. trial.9-101 BEHAVIORAL SEGMENTATION BY USAGE KNOWLEDGE The quantity consumed or patronage—store visits—during a specific period is called a. b. This technique. demographic segmentation. c. b. service inventory. consumption rate. Answer: c Page: 232 LO: 3 LL: 1 Rationale: Key term definition—usage rate 9-102 BEHAVIORAL SEGMENTATION BY USAGE Frequency marketing is a strategy that focuses on a. Answer: c Page: 232 LO: 3 LL: 2 AACSB: 3 Rationale: Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly to create loyal customers. trial. d. behavioral segmentation. consumption rate. This technique uses a. e. is a strategy that focuses on usage rate. 9-103 BEHAVIORAL SEGMENTATION BY USAGE COMPREHENSION AACSB: 3 COMPREHENSION Airlines have developed frequent-flier programs to encourage passengers to use the same airline repeatedly. d. usage rate. e. a type of behavioral segmentation. turnover. e. 154 . sometimes called frequency marketing. b.

their salad. geography. c. benefits offered. 9-105 BEHAVIORAL SEGMENTATION BY USAGE APPLICATION A national car rental firm targets 50 percent of its advertising to salespeople who rent a car over 40 weeks per year. nonprospects. leads. 9-106 NONPROSPECTS KNOWLEDGE People who do NOT use a firm's product or service. or their bowl of soup as a delicious addition. undefined prospects. and most likely never will. c. Post was trying to convince people who had never tried the cereal to try it. Post is using which segmentation variable? a. e. e. needs Answer: c Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Usage rate is a behavioral segmentation variable that refers to the quantity consumed. Its market share has been steadily declining as consumers began associating it with something their grandfather ate. Answer: a Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Rate of use and user status are both behavioral segmentation variables. which Post is trying to increase by suggesting other product uses.9-104 BEHAVIORAL SEGMENTATION BY USAGE APPLICATION Post Grape-Nuts cereal has been marketed since early in the 20 th century. In this example. b. nonqualified prospects. lifestyle e. Answer: d Page: 233 LO: 3 LL: 1 AACSB: 3 Rationale: Among nonusers of a product. and people who were familiar with the product to use it in a variety of different ways. are called a. usage. psychographics. people who might become users are prospects and people who are never likely to become users are nonprospects. Its market is likely segmented by a. d. demographics. Post recently launched a campaign to increase consumption of the cereal by inviting consumers to try the crunchy cereal on top of their yogurt. behavioral d. "over 40 weeks per year" is a measure of usage rate. 155 . disenfranchised prospects. b. In this case. demographic c. d. psychographic b.

d. and twenty percent should be reserved for emergency demand. nonqualified prospects. remote chances. eighty percent of a firm's products will ultimately be sold at the original markup price. eighty percent of a firm's first time users will become brand loyal and twenty percent of the firm's first time users will use the product only once. e. b. people who might become users are prospects and people who are never likely to become users are nonprospects. eighty percent of a firm's sales are obtained from twenty percent of its customers. c. non-prospects.9-107 NONPROSPECTS COMPREHENSION The nearly 14 percent of adult Americans who don't go to fast-food restaurants in a typical month. people who might become users are prospects and people who are never likely to become users are nonprospects. c. and twenty percent will not. 9-108 PROSPECTS KNOWLEDGE People who might become users of the type of good or service your firm sells are called a. 9-109 80/20 RULE KNOWLEDGE The 80/20 rule is a concept that suggests a. ultimate consumers. d. e. prospects. c. and are never likely to become users. undefined prospects. nonprospects. b. d. are called a. leads. b. eighty percent of a firm's inventory should be readily available. undefined prospects. Answer: c Page: 233 LO: 3 LL: 1 AACSB: 3 Rationale: Among nonusers of a product. Answer: c Page: 234 LO: 3 LL: 1 Rationale: Key term definition—80/20 rule AACSB: 3 Other Location: SG 156 . cold leads. eighty percent of a firm's expenditures are tax deductible and twenty percent are not. e. Answer: d Page: 233 LO: 3 LL: 2 AACSB: 3 Rationale: Among nonusers of a product.

geographic e. usage Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Other Location: web Rationale: According to the 80/20 rule. 157 . the primogeniture rule Answer: b Page: 234 LO: 3 LL: 3 AACSB: 3 Rationale: The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained from 20 percent of its customers.9-110 80/20 RULE APPLICATION Todd Harris and Associates. discovered from analysis of its files that one-fifth of its clients accounted for more than three-quarters of its fees and commissions. a New York sales promotion agency. the law of eminent domain e. geographic b. 9-111 80/20 RULE COMPREHENSION The 80/20 rule is most closely related to which consumer segmentation variable? a. the 80/20 rule c. benefits sought d. the law of inverse proportions b. eighty percent of a firm's sales are obtained from twenty percent of its customers. This suggests that heavy users contribute disproportionately to a firm’s sales. This is an example of what classic concept? a. psychographic c. the survival of the fittest d.

their consumption percentage is higher than the percentage that they represent of the total users and non-users. c. 158 .67. there are less of them than any other segment. each heavy user spends \$4.00 spent by a light user in one of these restaurants in a month. there are fewer of them than any other user segment. the heavy users have an index of 467. the usage index is highest for that segment. Giving the light users an index of 100. e.FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4. For every \$1. heavy users are most important to a fast-food restaurant because a. d. b. This is the reason for the emphasis in almost all marketing strategies on effective ways to reach these heavy users. Answer: c Page: 233 LO: 3 LL: 2 AACSB: 3 Rationale: The Usage Index per Person column in Figure 9-4 emphasizes the importance of the heavy-user group even more. the segment is at the top of the chart.

6 percent). and secondary (12. c.FIGURE 9-5 9-113 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. b. e. d. most of the respondents think of Wendy’s as their primary fast food restaurant. your restaurant is a market leader. primary (19. McDonald’s is not a serious competitor to you.2 percent) user segments are somewhat behind Burger King and far behind McDonald’s. the information in Figure 9-5 suggests a. so a natural strategy is to look at these two competitors and devise a marketing program to win customers from them. Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The Wendy’s bar in Figure 9-5 shows that your sole (0.8 percent). 159 . that you need to devise a marketing program to win customers from McDonald’s and Burger King. Burger King is closing in on your market share.

S. Imagine that the agency decided the singer would not perform at venues located in small town communities that have less than 100. and behavioral. c. 9-119 ORGANIZATIONAL MARKET SEGMENTATION COMPREHENSION Which of the following is a basis used to segment U. a fertilizer manufacturer. needs e. 9-118 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION Australia-based Renewable Energy Ltd. One of these devices is capable of generating energy equal to \$2 million of natural gas per year. This basis of venue segmentation is a. usage. The company believes its target market is businesses that use a lot of energy like its first customer. nature of good. psychographic.9-117 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION William Morris Agency represents country singer Trace Adkins in negotiations with various venues in which he could perform. e. small town or rural and is a geographic variable.S. It most likely will use which of the following strategies to segment its market? behavioral and geographic number of employees and behavioral purchase location and purchase type NAICS code and geographic behavioral and NAICS code Answer: d Page: 235 LO: 3 LL: 3 AACSB: 3 Rationale: Renewable Energy would most likely use the NAICS code to locate other fertilizer manufacturers and geographic segmentation to find prospects in rural areas where there is a ready supply of manure. demographic. suburban. education Answer: a Page: 235 LO: 3 LL: 2 AACSB: 3 Rationale: Figure 9-6 shows the segmentation bases for U. buying condition. sells a \$10 million device that converts manure into energy. d. b. geographic b.000 people. income d. organizational markets include geographic. Answer: c Page: 235 LO: 3 LL: 3 AACSB: 3 Rationale: Population density includes whether the area is urban. and that are located in rural areas. psychographic c. 161 . geographic. organizational markets? a.

Examples would be the pet food aisle or the paper product aisle. grouping by usage e. so the product grouping that makes the most marketing sense is by meal or time of day. Why would Safeway display product groupings in this manner? a. or a meal occasion that satisfies a need at a particular time of day. If the firm has only one product or service. The groupings increase the number of market-product combinations on the marketproduct grid into a more manageable framework for subsequent analysis.9-120 PRODUCT GROUPING COMPREHENSION If Wendy’s customers are buying an eating experience. grouping by meal d. 9-121 PRODUCT GROUPING APPLICATION Safeway displays the thousands of items it sells in aisles containing related items or product groupings. which of the following product groupings would likely make the most sense? a. grouping by product type such as types of drinks b. this isn’t a problem. Product groupings can be generated quantitatively to show which adhere to the 80/20 rule. The products are grouped so people can relate to these product groupings in a more meaningful way. Wendy’s customers really buy an eating experience. Answer: c Page: 236 LO: 3 LL: 2 AACSB: 3 Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. but when it has dozens or hundreds. grouping by price c. If the firm has only one product or service. but when it has dozens or hundreds. Answer: c Page: 236 LO: 3 LL: 3 AACSB: 3 Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. Consumers buy more in illogically organized environments. 162 . e. this isn’t a problem. d. All of the above are reasons why Safeway would use product groups. b. c. these must be grouped in some way so buyers can relate to them. these must be grouped in some way so buyers can relate to them. Product groupings should not be used in Wendy’s.

9-122 PRODUCT GROUPING APPLICATION In developing a marketing strategy for your Hallmark store. If the firm has only one product or service. 9-123 PRODUCT GROUPINGS APPLICATION Hallmark placed its scrapbook supplies. c. market-product grid d. its competitors engage in no product groupings. scrapbooks. Memory-keeping is the meaningful category in this case. target market selection. competitors better relate to these groupings for benchmarking purposes. but when it has dozens or hundreds. this isn’t a problem. payoff table c. these must be grouped in some way so buyers can relate to them. photo albums and related supplies into one product group because a. a. c. product differentiation table e. product grouping. but when it has dozens or hundreds. d. taking marketing actions to reach target markets. market segmentation of prospects. Memory-keeping is the category to which customers can best relate in this case. If the firm has only one product or service. growth-share matrix b. it is more profitable to define product groupings in terms of large market segment because it reduces manufacturing and marketing costs. You decide to display all of these products together to inspire your customers to create and keep memories. Answer: b Page: 236 LO: 3 LL: 3 AACSB: 3 Other Location: web Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. market-product grid development. e. these must be grouped in some way so buyers can relate to them. and related supplies. b. customers better relate to these groupings. 9-124 MARKET-PRODUCT GRID KNOWLEDGE A __________ is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization. b. This strategy is an example of a. it is easier to estimate the industry sales for fewer market-product combinations. d. not photo albums. cross-tabulation Answer: c Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 163 . this isn’t a problem. Answer: b Page: 236 LO: 3 LL: 3 AACSB: 3 Rationale: Finding a means of grouping the products a firm sells into meaningful categories is as important as grouping customers into segments. e. you decide that what you are really selling is memory keeping.

market share compared to closest competitor. the market segments of potential buyers to products offered or potential marketing actions by an organization. the market segments of potential buyers to relative market share compared to closest competitor. a. Answer: d Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 9-126 MARKET-PRODUCT GRID Other Location: web KNOWLEDGE A market-product grid is a framework to relate the __________ to products offered or potential marketing actions by an organization. market segments of potential buyers Answer: e Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 9-127 MARKET-PRODUCT GRID KNOWLEDGE A market-product grid is a framework to relate the market segments of potential buyers to a. market share compared to closest competitor e. products offered or potential marketing actions by an organization. b. d. total anticipated revenue. e. total anticipated profit. e. total anticipated revenue c. estimated expenses for products sold b. estimated expenses for products sold to various market segments. c.9-125 MARKET-PRODUCT GRID KNOWLEDGE A market-product grid is a framework to relate a. d. total anticipated profit for each product to segments. Answer: e Page: 237 LO: 4 LL: 1 AACSB: 3 Rationale: Key term definition—market-product grid 164 . total anticipated profit d. estimated expenses for products sold. c. b. total anticipated revenue for each product to market segments.

e. Answer: d Page: 237 LO: 4 LL: 2 AACSB: 3 Rationale: Even “guesstimates” of the size of specific markets using a market-product grid are helpful in determining which target market segments to select and which product groupings to offer. select representative samples of consumers for marketing research studies. b. d. which product groupings to offer. how to implement the 80-20 rule. 165 . which products to reposition. 9-129 MARKET-PRODUCT GRID COMPREHENSION Determining the size of specific markets using a market-product grid is helpful in determining which target market segments to select and a. d. how to implement a harvesting strategy. It is helpful in determining which target market segments to select and which product groupings to offer. which products to be sold into groups. make optimal decisions under conditions of uncertainty. relate the product life cycle to consumer demand.9-128 MARKET-PRODUCT GRID COMPREHENSION One advantage of a market-product grid is that it can be used to a. b. c. determine which target market segments to select and which product groupings to offer. c. screen many new product ideas in order to select the one with best long-run market potential. e. Answer: c Page: 237 LO: 4 LL: 2 AACSB: 3 Other Location: SG Rationale: A market-product grid is a framework to relate the segments of a market to the products offered.

c. whether the student has the discretionary income to eat at Wendy’s. combining the factors of where the student lives and when (s)he is on campus. Answer: d Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: The method of segmenting the student market combines where they live if they are not a commuter (dormitory or apartment) and when they are on campus if they are a commuter (day or night). whether the student lives near the campus or far away. The best way to describe how the student market is segmented is by a.FIGURE 9-8 9-130 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. whether the student is a faculty or staff member. the meals eaten at the restaurant. e. b. d. 166 .

d. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). Similarly. Answer: b Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: Totaling the meal columns vertically shows the “lunch” meal occasion to have the most “units” of sales (14) of any meal column. lunch customers. dormitory customers. 167 . after-dinner snack. students that live in an apartment. d. The strategy to increase revenues that would be most likely to exploit marketing synergies and efficiencies is trying to reach a. For example. dinner. The largest potential market segment is for a. d. between-meal snack customers. e. c. lunch. students that are day commuters. The other choices run vertically down the columns and correspond to operations/production synergies and efficiencies. e. dinner customers. a flyer placed on a bulletin board in a dormitory or under the door of dormitory residents could promote the entire restaurant and several of its meals to dormitory customers. e. c. assume the medium market (shown by a “2”) is twice the size of the small market. after-dinner snack customers.9-131 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. faculty or staff members. Answer: b Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: Totaling the market segment rows horizontally shows that students that live in an apartment is the largest segment with 9 “units” of sales. between-meal snack. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). students that live in a dormitory. assume the medium market (shown by a “2”) is twice the size of the small market. Answer: e Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: Marketing synergies and efficiencies run horizontally across the rows because a single kind of marketing action can reach customers that buy different “products”—in this case meals. b. b. 9-133 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. breakfast. Similarly. c. 9-132 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. students that are night commuters. The meal occasion (product grouping) that comprises the largest market is a. b.

9-134 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. night commuter customers. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The target here is potential between-meal snack customers. day commuter customers. cost of reaching the segment d.” This is a market segment. which is a horizontal row in Figure 9-8. faculty customers. which is a vertical column in Figure 9-8. Assume students who live in dormitories or apartments on or near the campus cannot use student parking lots. d. Sending out coupons for “10 percent off all purchases between 2:00 PM and 4:30 PM” during fall term would be especially targeted at potential a. and compatibility with the organization’s objectives and resources. e. who might be reached by this coupon that is intended to increase sales during the 2:00 PM to 4:30 PM time period. All of the above are criteria used for selecting a target market. compatibility with the organization’s objectives and resources e. dormitory customers. c. 9-135 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. dinner customers. competitive position. apartment customers. d. b. night commuter customers. b. This is a “product” or “meal” in the market-product grid. expected growth. between-meal snack customers. size of the market b. Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. after-dinner snack customers. cost of reaching the segment. expected growth c. e. c. 168 . answer “c. 9-136 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. Placing flyers under windshield wipers of cars parked in student parking lots on weekdays between 7:00 AM and 4:00 PM that offer a \$2 off coupon on any meal during spring term would be especially targeted at potential a. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: Cars parked in student parking lots between 7:00 AM and 4:00 PM generally belong to day commuters. staff customers.

172 . not for selecting one. In terms of the criteria used for selecting a target segment. have no expected growth. expected growth of the market segment d. b.9-146 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion for selecting a market segment? a. One criterion management wants to use to evaluate potential new geographic market segments is whether new equipment must be bought to serve each new segment. expected growth c. This is an example of which criterion used to select target market segments? a. compatibility with Best Food's objectives and resources Answer: e Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: New equipment to reach a new market segment relates to the organization's resources. it would not be readily accessible by marketing programs. competitive position d. be readily accessible to the firm's marketing programs. size of the market segment e. Best Food's created product groupings c. Because it would be so small. This market would use the rehabilitation services that the company now provides. 9-147 SELECT TARGET SEGMENTS APPLICATION Best Foods Company is considering expanding beyond the regional market segments now served by its Hellmann's mayonnaise. this market would a. be accurately described by all of the above. cost of reaching the segment e. 9-148 SELECT TARGET SEGMENTS APPLICATION A rehabilitation center wants to target women in their 20s who have received some permanent disability as the result of a skiing accident. compatibility with the company's objectives Answer: a Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: Similarity of needs is a criterion for segmenting a market. e. be very small. c. d. similarity of needs of potential buyers b. Best Food's competitive position in the segment b. not be compatible with the company's current resources. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The market would grow as people continue skiing—although it may be slow growth.

. d.Q. forming products to be sold into groups. Answer: a Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: A decision to concentrate on affluent teenagers is the selection of a target market segment. formed products to be sold into groups. In developing a marketing strategy to sell the sauce. 9-150 GOING ONLINE COMPREHENSION If you want to reach families in a particular income segment and believe the value of their home is a good indicator you would most likely go to a. the website of the local newspaper. wsj. This is an example of a. e. the neighborhood and look around there. zillow.com. taking marketing actions to reach target markets. d. Lewis has just a. a specialty food association that advertises local products and distributes them to local supermarkets and gourmet shops. Inc.9-149 SELECT TARGET SEGMENTS APPLICATION In developing a marketing strategy for the recently released Nike Air Jordan XVII with a price tag of \$200.B. d. Zillow is an online real estate service that answers the most important question. Sauce. forming prospective buyers into segments. developing a market-product grid and estimating size of markets. Answer: d Page: 239 LO: 4 LL: 2 AACSB: 3 Rationale: Zillow provides “zillions” of data for the place(s) where your “pillow” is located. c. selecting target market segments to reach. Nike decided to concentrate on affluent teens rather than members of high school basketball teams. selected target market segments to reach. taken marketing actions to reach target markets. c. She wants to target local people who like the special blend of flavors found only in North Carolina barbecue sauce. Answer: d Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: Alternative d is the final result in the process of segmenting and targeting markets. b. “How much is my home really worth?” 9-151 TAKING MARKETING ACTIONS APPLICATION Doris Lewis owns Lewis Edibles. developed a market-product grid and estimating size of markets. a company that makes Tongue Tinglin' B. LexisNexis. e.com. b. c. 173 .com. b. formed prospective buyers into segments. e. Lewis decided to join Goodness Grows in North Carolina.

marketing c. each of which will have to be designed and manufactured. Answer: b Page: 243 LO: 4 LL: 2 AACSB: 3 Rationale: Apple’s lack of a segmentation strategy in the early 1980s and its current segmentation strategy are described in the Marketing Matters. product perception. each of which will have to be designed and manufactured. 9-153 MARKETING MATTERS COMPREHENSION In the early 1980s Apple Computer Company was often called "Camp Runamok" because the innovative company had no a. investment capital. relative positioning. coherent product lines targeted to identifiable market segments. d. marketing. selective perception. c. production. distributors. profits. marketing b. e. b. marketing research. competition. a. d. e. competition Answer: d Page: 242 LO: 4 LL: 2 AACSB: 3 Rationale: A choice to take advantage of marketing synergies can often come at the expense of production ones because a single customer segment will likely require a variety of products. production e. The company saves money on __________ but spends more on __________. competitors. The company saves money on marketing but spends more in production. competitive positioning. c.9-152 MARKET-PRODUCT SYNERGIES COMPREHENSION A choice to take advantage of marketing synergies can often come at the expense of production ones because a single customer segment will likely require a variety of products. b. Answer: d Page: 243 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product positioning 174 . marketing d. product positioning. 9-154 PRODUCT POSITIONING KNOWLEDGE The place an offering occupies in consumers' minds on important attributes relative to competitive products is called a. marketing.

geographic segmentation. repositioning. The dairies wanted to __________ milk in the minds of the consumer. a careful analysis of cross tabulations b. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product repositioning 9-157 REPOSITIONING APPLICATION Recently.S.9-155 PRODUCT POSITIONING KNOWLEDGE What does the term product positioning refer to? a. product positioning. The dairy industry tried to reposition milk in the minds of adult consumers. often within major metropolitan areas d. U. perceptual mapping. b. explain e. dairies. reposition d. psychographics. and department stores c. tried to change the way adults thought about milk. e. an old and outdated concept no longer worthy of consideration in marketing planning Answer: d Page: 243 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product positioning 9-156 REPOSITIONING Other Location: SG KNOWLEDGE Changing the place an offering occupies in consumers' minds relative to competitive products is called a. represent Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Changing the place an offering occupies in consumers’ minds is called repositioning. differentiate c. d. c. the place a product offering occupies in consumers' minds on important attributes e. struggling to increase milk sales. a. product differentiation. grocery. shelf locations in major chain. segment b. 175 .

consumer positioning e. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: Companies use a differentiation positioning strategy among brands within their own product line to minimize cannibalization of a brand's sales or market share. 177 . seek a less competitive. smaller market niche. compete with competitors on similar product attributes in the same market. Differentiation positioning involves seeking a less competitive. compete against other products of the same company. 9-163 DIFFERENTIATION POSITIONING COMPREHENSION COMPREHENSION When McDonald’s introduced its low-fat McLean Deluxe hamburger it used __________ positioning to avoid direct competition with Wendy’s and Burger King. cognitive positioning. e. differentiation positioning. head-to-head positioning b. lateral positioning. smaller market niche in which to locate a brand. d. compete with competitors on similar product attributes but in a different market. b. lateral positioning c. firms often use a. compete directly with competitors but emphasize unique product attributes. b. a.9-161 DIFFERENTIATION POSITIONING KNOWLEDGE Differentiation positioning requires a product to a. cognitive positioning Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. head-to-head positioning. differentiation d. c. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—differentiation positioning 9-162 DIFFERENTIATION POSITIONING To avoid cannibalization within company product lines. d. c. e. repositioning.

some Rolex wristwatches carry a price tag of several thousand dollars. The image of the Timex is very different from that of Rolex. and department stores in all sizes of communities. build customer loyalty through direct competition. relatively accurate. 178 . competition is extreme. and are often available only in fine jewelry stores or specialty shops. the marketers of Timex and Rolex watches have attempted to a. in order to compete in the wristwatch market. compete for the same segment. Timex watches can be purchased in drug stores. parallel market positioning b. differentiation positioning e. head-to-head positioning Answer: d Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: Companies follow a differentiation strategy among brands within their own product line to minimize cannibalization of a brand's sales or market share. many comparable alternatives are available to the consumer. e. both the Timex and the Rolex wristwatches will satisfy the consumer's need to know the time of day. repositioning d. However. b. develop similar products. For most products. By using distinctly different pricing and distribution strategies. and inexpensive.9-164 DIFFERENTIATION POSITIONING COMPREHENSION Which type of product positioning would most likely be used to avoid cannibalization? a. d. create cognitive dissonance in consumers who are considering the purchase of a wristwatch. distinction positioning c. each marketer has attempted to create a distinct product image in the mind of the consumer. 9-165 DIFFERENTIATION POSITIONING APPLICATION Some Timex wristwatches can be purchased for less than \$30. Rolex watches are distributed more selectively. In general. use a product differentiation strategy. c. discount stores. In this example. Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: In today's market place. The Rolex brand tends to be perceived as an expensive status symbol. consumers view Timex watches as being dependable.

b. distinction c. Differentiation positioning involves seeking a smaller market niche that is less competitive in which to locate a brand. consumer d. 9-170 PERCEPTUAL MAP KNOWLEDGE Marketers use perceptual maps as a means to display or graph in two dimensions the location of products or brands a. d.9-169 HEAD-TO-HEAD POSITIONING APPLICATION In the sneaker market. Nike and Reebok practice head-to-head positioning. normally in major metropolitan areas. within selected retail outlets. indicating accessibility by consumers. c. Answer: d Page: 244 LO: 5 LL: 1 Rationale: Key term definition—perceptual map 9-171 PERCEPTUAL MAP A perceptual map is most like a a. in the minds of consumers. head-to-head Answer: e Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: In the sneaker market. within distribution channels. which involves competing directly with competitors on similar product attributes in the same target market. differentiation e. a. e. with respect to the geographic areas in which they are manufactured. consumer map of likes and dislikes. pyramid design. three-dimensional cube. as they are clustered by type of outlet. b. Answer: c Page: 244 LO: 5 LL: 1 Rationale: Key term definition—perceptual map AACSB: 3 Other Location: web AACSB: 3 KNOWLEDGE 180 . parallel market b. e. two-dimensional graph. d. database. Reebok and Nike practice __________ positioning since both manufacturers compete in the same target market with similar product attributes. c.

perceptual map. a listing of all prospective brands and products b. rank order of the ratings of a existing brand's preference relative to its competitors e. and the firm itself. Answer: d Page: 244 LO: 5 LL: 1 Rationale: Key term definition—perceptual map 9-173 PERCEPTUAL MAP AACSB: 3 Other Location: SG COMPREHENSION A perceptual map can be used to identify a firm's product in terms of how closely it fits the "ideal" and where it fits in relationship to competitors. e. three types of data are needed: identification of important attributes for a product class. judgments of existing products or brands with respect to these attributes. competitors. intermediaries. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. managerial judgments about how consumers perceive products c. and ratings of an “ideal” product’s or brand’s attributes. consumer preference matrix. market-product grid. All of the above types of data are collected from consumers.9-172 PERCEPTUAL MAP KNOWLEDGE A graph displaying consumers' perceptions of product attributes across two dimensions is a a. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: A key to positioning a product or brand effectively is the perceptions of customers. b. c. 181 . d. b. competitors. e. consumers. 9-174 PERCEPTUAL MAP COMPREHENSION Which of the following data are collected from consumers to develop a perceptual map for a particular product? a. The map is based on perceptions of a. payoff table. independent rating organizations such as Consumer Reports. consumers. growth matrix. d. c. identification of the important attributes for a product class d.

a listing of all prospective brands and products b. managerial judgments about how consumers perceive products c. rank order of the ratings of a existing brand's preference relative to its competitors e. three types of data are needed: identification of important attributes for a product class. judgments of existing products or brands with respect to important attributes d. ratings of an “ideal” product’s or brand’s attributes d. a listing of all prospective brands and products b. judgments of existing products or brands with respect to these attributes. managerial judgments about how consumers perceive products c. and ratings of an “ideal” product’s or brand’s attributes. and ratings of an “ideal” product’s or brand’s attributes. three types of data are needed: identification of important attributes for a product class. 9-176 PERCEPTUAL MAP COMPREHENSION Which of the following data are collected from consumers to develop a perceptual map for a particular product? a. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map. All of the above data are collected from consumers. judgments of existing products or brands with respect to these attributes. 182 . All of the above data are collected from consumers. rank order of the ratings of a existing brand's preference relative to its competitors e.9-175 PERCEPTUAL MAP COMPREHENSION Which of the following data are collected from consumers to develop a perceptual map for a particular product? a. Answer: c Page: 244 LO: 5 LL: 2 AACSB: 3 Rationale: To develop a perceptual map.

fruit-flavored drinks. Its advertising agency recommends that it run ads showing that coffee is healthier than one or more competitive drinks shown in the figure. Answer: b Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: For the planned ads. both sugared soft drinks and skinny lattes. Such drinks are seen as less nutritious. In the ads.FIGURE 9-10 9-177 PRODUCT POSITIONING APPLICATION The perceptual map in Figure 9-10 shows how various drinks are seen in the minds of adult consumers. sugared soft drinks. skinny lattes. e. coffee should be compared with a. fruit-flavored drinks and sugared soft drinks. Suppose a coffee producer wants to increase sales. c. d. b. 183 . The only such drink in the figure is sugared soft drinks. the coffee producer should position its coffee against drinks in the figure that are lower than coffee on the vertical nutrition axis.

company growth potential. more adult than a skinny latte. So fruitflavored drinks (choice e) is the correct answer. market share. 9-179 MARKET POTENTIAL KNOWLEDGE The maximum total sales of a product by all firms to a segment under specified environmental conditions and marketing efforts of the firms are called a. Additionally. c. Answer: b Page: 245 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—market or industry potential 9-180 MARKET POTENTIAL Another commonly used term for market potential is a. Suppose this map describes accurately how I see the drinks shown. more nutritious than a milk shake. this is not true for either diet drinks or skinny latte (choices a or c). growth potential. mineral water must be to the right of the drink compared. b. industry potential. e. d. Answer: a Page: 245 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—market or industry potential KNOWLEDGE 184 . I am a heavy consumer of mineral water. A likely reason I drink mineral water according to this perceptual map is that I see it as a. sales forecast. more nutritious than a fruit-flavored drink. b. market potential. mineral water must be above the drink compared. Delphi forecast. d. Answer: e Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: On the vertical nutrition scale. top-down forecast. b. I am very concerned about nutrition and don’t want to look like a kid. d.. more adult than nutritionally-designed diet drinks. As an adult. e. Also. this is true for fruit-flavored drinks (choice e) but not tea or milk shakes (choices b or d). market forecast.9-178 PRODUCT POSITIONING APPLICATION The perceptual map in Figure 9-10 shows how various drinks are seen in the minds of adult consumers. c. e. on the horizontal scale. more nutritious than tea. sales forecast. c.

market potential e. environmental forecast. c. market share. company forecast.9-181 MARKET POTENTIAL KNOWLEDGE The term market potential or industry potential refers to what important marketing factor? a. and local taxes e. the maximum total sales of a product by all firms to a segment under specified environmental conditions and marketing efforts of the firms Answer: e Page: 245 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—market or industry potential 9-182 SALES (COMPANY) FORECAST Another commonly used term for sales forecast is a. Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—sales or company forecast 9-183 SALES (COMPANY) FORECAST KNOWLEDGE KNOWLEDGE The term __________ is defined as the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts. the sum of products in a particular industry sold domestically under normal economic conditions d. industry potential d. e. industry potential. market potential. sales forecast b. state. a. the total of all products sold nationally c. b. Delphi forecast c. total industrial products sold worldwide b. d. market share Answer: a Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—sales or company forecast 185 . the minimum anticipated sales in related industries not including federal.

9-185 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. 9-187 JUDGMENTS OF THE DECISION MAKER The most commonly used forecasting technique is the a. statistical method. d. technological methods e. government document survey analysis Answer: a Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Three main sales forecasting techniques are often used: (1) judgments of the decision maker.9-184 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. (2) surveys of knowledgeable groups. government document survey analysis Answer: a Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Three main sales forecasting techniques are often used: (1) judgments of the decision maker. e. and (3) statistical methods. (2) surveys of knowledgeable groups. technological methods e. judgment of the decision maker. 186 COMPREHENSION COMPREHENSION COMPREHENSION . (2) surveys of knowledgeable groups. and (3) statistical methods. judgments of trade associations d. surveys of competitors c. judgments of the decision maker b. surveys of knowledgeable groups b. 9-186 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. technological method. judgments of trade associations d. statistical methods b. and (3) statistical methods. Answer: c Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: 99% of all sales forecasts are judgments of the person who must act on the results of the forecast—the individual decision maker. linear trend extrapolation method. c. judgments of trade associations d. technological methods e. b. government document survey analysis COMPREHENSION Answer: a Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Three main sales forecasting techniques are often used: (1) judgments of the decision maker. surveys of competitors c. surveys of competitors c. survey of knowledgeable groups.

9-190 DIRECT FORECAST The least complex sales forecasting technique is likely the a. survey of knowledgeable groups forecast Answer: c Page: 246 LO: 6 LL: 1 Rationale: Key term definition—direct forecast 9-189 DIRECT FORECAST “How many quarts of milk should I buy?” is an example of a a. direct forecast. a. Alternative D is a statistical method that involves the greatest cost in terms of time and money due to the data collection and analysis involved. sales force survey forecast. Alternatives B. direct forecast c. statistical forecast e. d. buildup forecast b. direct forecast d. lost-horse forecast d. b. and E are surveys of knowledgeable groups that are more time-consuming and costly than judgment forecasts. survey of buyers intentions forecast. technological forecast b. C. Answer: a Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: Alternative A is correct because a direct forecast is developed using the heuristic judgment of the decision maker. Delphi forecast.9-188 DIRECT FORECAST KNOWLEDGE A __________ is an estimate of the value to be forecast without any intervening steps. Delphi forecast c. trend extrapolation. c. e. Delphi forecast e. APPLICATION AACSB: 3 COMPREHENSION 187 . field sales forecast Answer: b Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: The decision-maker makes the forecast without having any data to work with.

statistical inference. a. d. lost-horse Answer: e Page: 246 LO: 6 LL: 1 Rationale: Key term definition—lost-horse forecast 9-192 LOST-HORSE FORECAST AACSB: 3 KNOWLEDGE A __________ forecast involves starting with the last known value of the item being forecasted. Delphi forecast e. lost-horse forecast b. technological c. linear trend extrapolation. statistical method e. a. listing the facts that could affect the forecast. assessing whether they have a positive or negative impact. Answer: d Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: A lost-horse forecast involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future. experimental estimation. and making the final forecast. survey of buyers' intentions forecast Answer: a Page: 246 LO: 6 LL: 1 Rationale: Key term definition—lost-horse forecast 9-193 LOST-HORSE FORECAST AACSB: 3 APPLICATION Deluxe Cleaners uses last year's sales as a starting point to estimate next year's sales and then looks at positive and negative influences that may affect sales. 188 . b.9-191 LOST-HORSE FORECAST KNOWLEDGE A __________ involves making a forecast using the last known value and modifying it according to positive or negative factors expected in the future. e. technological forecast c. jury of executive opinion b. c. survey of buyers' intentions forecast. lost-horse forecast. Delphi d. This is an example of a a. trend extrapolation d.

190 . salesforce survey d.000 for the quarter. statistical method e. judgments of individuals b. survey of buyers' intentions d. a. lost-horse Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—survey of buyers' intentions forecast 9-198 SALESFORCE SURVEY FORECAST KNOWLEDGE A __________ forecast involves asking the firm’s sales people to estimate sales during a coming period.750. Based on this information. jury of executive opinion b. technological c. survey of experts e.9-197 SURVEY OF BUYERS' INTENTIONS FORECAST KNOWLEDGE A __________ forecast asks prospective customers whether they are likely to buy a good or service during some future time period. survey of experts e. jury of executive opinion c. This is an example of a __________ forecast. statistical Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: A sales force survey forecast uses estimates by a firm's salespeople of sales for a coming period. statistical Answer: c Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: A sales force survey forecast uses estimates by a firm's salespeople of sales for a coming period. a. jury of executive opinion c. salesforce survey d. 9-199 SALESFORCE SURVEY FORECAST APPLICATION All the salespeople in the Southwest regional office are asked to provide estimates of anticipated sales revenues for the next quarter. the forecast is set at \$4. judgments of individuals b. a.

it is referred to as a.9-200 TREND EXTRAPOLATION KNOWLEDGE The best-known statistical method of forecasting is called __________. inductive extrapolation e. information extension d. deductive interpolation Answer: a Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—trend extrapolation 9-201 TREND EXTRAPOLATION The key strength of trend extrapolation is a. linear trend extrapolation. Answer: d Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: Trend extrapolation assumes that the underlying relationships in the past will continue into the future. lack of assumption. reliance on computers for computation. e. d. exponential extrapolation. which is the basis of the method’s key strength: simplicity. b. inductive extrapolation. c. trend extrapolation b. Answer: e Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—linear trend extrapolation 191 . simplicity. 9-202 LINEAR TREND EXTRAPOLATION KNOWLEDGE COMPREHENSION The best-known statistical method of forecasting involves extending a pattern observed in past data into the future. which involves extending a pattern observed in past data into the future. exponential interpolation c. reliance on facts. a. c. the Delphi method. b. its near-perfect accuracy of prediction. e. d. When the pattern of data is described with a straight line. information extension.

250 LO: 3 LL: 3 AACSB: 3 Rationale: Psychographic segmentation is based on some subjective mental or emotional attributes. which involves extending a pattern observed in past data into the future. Answer: d Page: 250 LO: 3 LL: 2 AACSB: 3 Rationale: Market segmentation helps Rollerblade best service different consumers’ needs. market segmentation. Delphi b. aggregation marketing. c. and the sales for 2008 were 1000 units higher than 2007. or needs of prospective customers. I'd say we’re safe in forecasting 2009 sales as 1000 units greater than 2008. “The sales for 2007 were 1000 units higher than 2006. market delineation. aspirations. behavioral segmentation variables. buildup Answer: d Page: 246 LO: 6 LL: 2 AACSB: 3 Rationale: The best-known statistical method of forecasting is trend extrapolation. Fitness/Recreation skaters. Rollerblade segments on consumer needs. jury of executive opinion c. When the pattern is described with a straight line. geographic. e. Rollerblade is using a. and Race skaters. b. d. 9-205 VIDEO CASE: ROLLERBLADE COMPREHENSION APPLICATION By dividing its market into categories. linear trend extrapolation e. 9-204 VIDEO CASE: ROLLERBLADE The segmentation strategy used by Rollerblade is a. Junior skaters.” The CEO was most likely using a __________ forecast. a. c. b. Potential buyers within a segment should be similar in terms of their needs and the resulting marketing action. it is linear trend extrapolation as is the case here. e. consumer differentiation.9-203 LINEAR TREND EXTRAPOLATION COMPREHENSION The CEO says to her marketing manager. demographic. Answer: c Page: 231. 192 . such as product features. which it labels Urban/Street skaters. resource based. socioeconomic. d. psychographic. direct d.

9-206 VIDEO CASE: ROLLERBLADE APPLICATION The 4D™ refers to an innovative. product sampling b. e. to help consumers perceive the product as being different and better than competing products. usage segmentation. product extrapolation c. such as product features and advertising. Rollerblade is implementing a __________ strategy with its innovative skate technology. Having a variety of products available allows consumers in each segment to select skate best suited to their usage needs. a. adjustable aluminum frame Rollerblade developed that when shorter allows for tighter turns and when longer permits more speed. 193 . product differentiation d. market differentiation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm using different marketing mix activities.

such as image or price. Page: 226 LO: 1 LL: 2 AACSB: 3 194 . Thus. Differences may involve nonphysical features as well. In its broadest sense it involves a firm's using different marketing mix activities. In a narrower sense. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. POSITIONING.CHAPTER 9 SEGMENTING. Segmentation links needs to actions. tangible marketing actions the firm can take to satisfy those needs. it can contribute to increased revenues for the firm. As long as a new product does not take a significant amount of sales away from an existing product. as the text points out in connection with Zappos. AND FORECASTING MARKETS SHORT ESSAY QUESTIONS 9-207 MARKET SEGMENTATION COMPREHENSION Define market segmentation. Such needs and benefits must be related to specific. product differentiation relates to market segmentation. It stresses the importance of aggregating—or grouping—people or organizations in a market according to the similarity of their needs and the benefits they are looking for in making a purchase. Page: 226 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-208 PRODUCT DIFFERENTIATION What is product differentiation? How does it relate to market segmentation? How does it potentially improve a firm's revenues? Answer: Product differentiation is a strategy that has come to have two different but related meanings. How does it link needs with marketing actions? Answer: Market segmentation involves aggregating prospective buyers into groups that have common needs and will respond similarly to a marketing action. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. to help consumers perceive the product as being different and better than competing products. such as product features and advertising. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price.

Although these expenses can be high. Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-210 MULTIPLE PRODUCTS. and adds to the organization’s sales revenues and profits. Build-to-order involves manufacturing a product only when there is an order from a customer. Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-211 MASS CUSTOMIZATION Explain the difference between mass customization and build-to-order. Page: 229 LO: 1 LL: 2 AACSB: 3 195 . Producing these different products or services is clearly more expensive than producing only one product or service but is effective if it meets customers’ needs better. MULTIPLE MARKETS COMPREHENSION Why would an organization produce a single good or service and then attempt to sell it to two or more market segments? Answer: An organization would produce a single good or service and then attempt to sell it to two or more market segments to avoid the added cost of developing additional versions of the product. MULTIPLE MARKETS Why would an organization produce multiple products or services and then attempt to sell them to two or more market segments? Answer: Organizations may target different products or services to multiple market segments. In this case. doesn’t reduce quality or increase price. and manufacturing expenses. engineering. they are rarely as large as those for developing an entirely new product.9-209 SINGLE PRODUCT. which often entails high research. the incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution. Answer: Mass customization involves the tailoring of goods or services to the tastes of individual customers on a high-volume scale.

Fig. This will be the market segment it targets. How will the evaluation of its market segment strategy differ from that used for a retail store? Answer: There is one difference between for-profit and not-for-profit criteria. it is now much more likely to serve its clients more effectively with the new segmentation strategy. 9-2 LO: 2 LL: 2 AACSB: 3 COMPREHENSION 9-213 CRITERIA FOR FORMING SEGMENTS A marketing manager should develop segments for a market that meet five principal criteria. Page: 231 LO: 3 LL: 3 AACSB: 3 196 . List these important factors in marketing planning. which link market needs of customers to the organization’s marketing program. Compared to the food bank's previous policy. It now wants to give free food only to people who go hungry on a regular basis. List these five key steps.9-212 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION There are five key steps in segmenting and targeting markets. Answer: The five criteria are: (1) potential for increased profit and ROI (2) similarity of needs of potential buyers within a segment (3) difference of needs of buyers among segments (4) potential of a marketing action to reach a segment (5) simplicity and cost of assigning potential buyers to segments Page: 231 LO: 3 LL: 2 AACSB: 3 APPLICATION 9-214 CRITERIA FOR FORMING SEGMENTS A nonprofit food bank was gathering and handing out food to anyone who requested it. The potential for increased profit and ROI is replaced by the potential for serving client users more effectively. Answer: The five key steps are: (1) group potential buyers into segments (2) group products to be sold into categories (3) develop a market-product grid and estimate size of markets (4) select target markets (5) take marketing actions to reach target markets Page: 230.

measurable (age. income) or other classification attribute (birth era. Page: 232 LO: 3 LL: 3 AACSB: 3 197 . As for the usage dimension. They could be defined by ZIP Code. and economy relative to more expensive restaurants. and those fond of pleasures such as eating out. and (4) behavioral segmentation. using as many segmentation variables as you can. aspirations (lifestyle). perhaps related to occupations. Segmentation according to the benefits dimension could include convenience. perhaps. (2) demographic segmentation. what benefits they seek. young adults. and explaining why each variable is appropriate. city size). which is based on some observable actions or attitudes by prospective customers—such as where they buy. Describe how you would segment the market according to segmentation bases. and why they buy. Louis. how frequently they buy. race). The psychographic dimension would include variables such as extroverted. Page: 231 LO: 3 LL: 2 AACSB: 3 APPLICATION 9-216 SEGMENTATION VARIABLES Assume you are manager of The Outback Steak House. Answer: [Students might select any segmentation variables from Figure 9-3. which is based on some objective physical (gender. The Outback manager would seek those people who had not only the need. including homeowners. which is based on where prospective customers live or work (region.9-215 CONSUMER SEGMENTATION VARIABLES COMPREHENSION What are the four general bases by which consumer markets can be segmented? Answer: Four general bases of segmentation are: (1) geographic segmentation. and demographic correlations can be rather easily made with regard to those factors. probably with children. Also important would be household income. married. the most likely include these: The first dimension would be geographic with segmentation variables designed to describe those people within a reasonable draw area around the restaurant. census tract. those people who might dine at The Outback more than once a month. occupation) of prospective customers. or subdivision. since repeat business is the key to success in this sort of venture. gregarious. (3) psychographic segmentation. a franchised restaurant that has newly opened in St.] However. or needs of prospective customers. The next dimension should be demographics. but also the means to dine at the restaurant. which is based on some subjective mental or emotional attributes (personality). it would be well to seek medium and heavy users including.

demographic or behavioral segments. each cell in the grid can show the estimated market size of a given product sold to a specific market segment. In a complete marketproduct grid analysis. organizational markets? COMPREHENSION Answer: Organizational markets can be segmented by geographic.S.9-217 ORGANIZATIONAL MARKET SEGMENTATION What are the segmentation bases for U. usage rate. Page: 237 LO: 4 LL: 2 AACSB: 3 198 . Answer: A market-product grid is a framework to relate the market segments of potential buyers to products offered or potential marketing actions by an organization. Page: 235 LO: 3 LL: 2 AACSB: 3 COMPREHENSION 9-218 CRITERIA TO FORM SEGMENTS What are the five essential criteria that segments should have to ensure the success of segmentation? Answer: (1) Simplicity and cost-effectiveness of assigning potential buyers to segments (2) Potential for increased profit (3) similarity of needs of potential buyers within a segment (4) difference of needs of buyers among segments (5) potential of a marketing action to reach a segment Page: 231 LO: 3 LL: 2 AACSB: 3 COMPREHENSION 9-219 MARKET-PRODUCT GRID Explain what a market-product grid is and how it is used. and awareness/intentions are similar to the consumer market variables used for segmentation and may also be used to segment organizational markets. Product features.

For example. Differentiation positioning involves seeking a smaller market niche that is less competitive in which to locate a brand. reduce R & D and production expenses. Curtis Mathis positions its televisions as a high quality product ("The most expensive television sets money can buy. (1) market size (2) expected growth (3) competitive position (4) cost of reaching the segment (5) compatibility with the organization’s objectives and resources Page: 238 . For example. Answer: Marketing synergies run horizontally across a market-product grid and represent an opportunity for efficiency in terms of a market segment.239 LO: 4 LL: 2 AACSB: 3 COMPREHENSION 9-221 MARKETING SYNERGIES/PRODUCT SYNERGIES Explain the difference between marketing synergies and product synergies. Page: 242 LO: 4 LL: 2 AACSB: 3 COMPREHENSION 9-222 APPROACHES TO PRODUCT POSITIONING What are two approaches to product positioning? Give an example of each approach. Answer: There are two major approaches to positioning a product. To simplify product lines. Page: 244 LO: 5 LL: 2 AACSB: 3 199 . Product synergies run vertically down the market-product grid and each column represents an opportunity for efficiency in research and development and production."). Five criteria can be used to select the target segments. a company might only wish to manufacture one or a few products and could determine which to make based on the number of segments with an interest in that product.9-220 CRITERIA TO SELECT THE TARGET SEGMENTS What are the criteria used to select target markets? COMPREHENSION Answer: There are two different kinds of criteria in the market segmentation process: those used to (1) divide the market into segments and (2) actually pick the target segments. Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. Dollar Rental Cars is positioned head-to-head with Avis and Hertz. Marketing efforts can be streamlined with a focus on fewer segments.

Answer: Survey of buyers' intentions asks prospective customers whether they are likely to purchase a specific product during a specified future period of time. Page: 246 LO: 6 LL: 2 AACSB: 3 200 . companies obtain three types of data from consumers.9-223 DATA NEEDED FOR PERCEPTUAL MAP COMPREHENSION What are the three types of data needed from consumers to develop a perceptual map? Answer: In determining a brand's position and the preferences of consumers. Salespeople can be unreliable forecasters—painting too rosy a picture if they are enthusiastic about a new product and too grim a forecast if their sales quota and future compensation are based on it. Salesforce survey forecast asks the firm's salespeople to estimate product sales during a specified future period of time since they are in close contact with their current and prospective customers. this can be effective. Sales forecast is also known as company forecast. Answer: Market potential is also known as industry potential. For industrial products with few prospective buyers. They are: (1) identification of the important attributes for a product class (2) judgments of existing products or brands with respect to these attributes (3) ratings of an "ideal" product’s or brand's attributes Page: 244 LO: 5 LL: 2 AACSB: 3 COMPREHENSION 9-224 MARKET POTENTIAL AND SALES FORECAST Differentiate between market potential and sales forecast. Page: 245 .246 LO: 6 LL: 2 AACSB: 3 COMPREHENSION 9-225 SURVEYS OF KNOWLEDGEABLE GROUPS What are the two common groups surveyed to develop sales forecasts? Describe the information contained in the forecasts that result. Market potential refers to the maximum total sales of a product by all firms to a segment during a specified time period under specified environmental conditions and marketing efforts of the firms. Sales forecast refers to the total sales of a product that a firm expects to sell during a specified time period under specified environmental conditions and its own marketing efforts.

9-226 TREND EXTRAPOLATION APPLICATION Suppose you are a sales forecaster for 3M Company. the forecaster may choose to use linear trend extrapolation). and had actual sales revenue figures on adhesives for the past ten years. the quality is so good. the volume is so great. What statistical method of forecasting future sales might you use? Answer: The best-known statistical method of forecasting is trend extrapolation. In the case of 3M's adhesives. or extending a pattern observed in past data into the future. Page: 246 LO: 6 LL: 3 AACSB: 3 201 . and the history so excellent that a trend extrapolation would make great sense. (If the trend is thought to be a straight line. Trend extrapolation assumes the underlying relationships in the past will continue into the future.