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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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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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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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

market segmentation. consumer differentiation. d. respond similarly to a marketing action. will pay attention to marketing messages. b. go shopping on a regular basis. e. go shopping on a regular basis. be responsive to marketing research. e. c. Answer: b Page: 226 LO: 1 LL: 1 AACSB: 3 Rationale: Key term definition—market segmentation 120 . d. 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. pay attention to marketing messages. d. e. psychographics. aggregation marketing. c.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. use the same payment methods. use the same payment methods. market delineation. b. 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. c. have common needs. b. be responsive to marketing research.

d. have potential for future growth and have potential for increased profit or ROI. market segments. c. have different needs and have potential for future growth. 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. its members must a. Market differentiation c. market segment b. organizational buyers. demographic clusters. d. demographic cluster c. Market diversification b. a.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. 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. Market augmentation e. qualified prospect Answer: a Page: 226 LO: 1 LL: 1 Rationale: Key term definition—market segments AACSB: 3 121 . Market segmentation d. ultimate consumer e. 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. e. ultimate consumers. a. have common needs and respond similarly to market actions. organizational buyer d. e. c. have different needs and respond similarly to market actions. b. b. qualified prospects. represent a large share of the entire market and have critical buying power.

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

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

a. market needs e. government regulations c. controllable environmental factors Answer: d Page: 227. Fig. splitting people randomly between markets e. grouping people according to similar needs d. Second. a. grouping people randomly in a market b. government regulations. Answer: e Page: 227. 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. c. top-level management. product based market development Answer: c Page: 226 . 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. such needs and benefits must be related to specific marketing actions the organization can take.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. 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. the organization's marketing program. e. Fig. 124 .9-18 MARKET SEGMENTATION COMPREHENSION Market segmentation stresses __________ and relating needs and benefits to specific marketing actions. market sectioning c. b. self-regulatory industry standards. 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. self-regulatory industry standards b. top-level management d. controllable environmental factors. d.

the organization's marketing program c. government regulations d. product. 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 (the organization's marketing program) to demand (the customer needs). are legal. product. market segmentation relates supply (the organization's marketing program) to demand (__________). a. In economist's terms. a. promotion. self-regulatory industry standards b. Market segmentation relates the market needs or demand to the marketing program executed by the company. and place. strategic objectives e. it relates supply (__________) to demand (the customer needs). strategic objectives d. are socially responsible. tactical goals b. d. which includes price.9-21 MARKET SEGMENTATION APPLICATION Market segmentation is only a means to an end. customer needs e. create innovation. and place. 125 . 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. it relates supply (the organization's marketing program) to demand (the customer needs). promotion. increase sales and profitability. 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. c. b. 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. government regulations c. 9-22 MARKET SEGMENTATION APPLICATION Market segmentation is only a means to an end. Market segmentation is only a means to an end: in economist's terms. e. 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. sustainable. which includes price.

just-in-time manufacturing. Answer: a Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Market segmentation links market needs to an organization’s marketing program —specific marketing mix actions to satisfy those needs. 9-26 MARKET SEGMENTATION APPLICATION Reebok makes shoes with DMX Shear and Foam cushioning. d. d. This strategy is an example of a. b. c. 126 . e. sales forecasting. do all of the above. synergy. c. e. b. Answer: d Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Market segmentation links market needs to an organization’s marketing program —specific marketing mix actions to satisfy those needs. mass customization. This strategy is an example of a. link market needs to an organization’s product or price. Market segmentation is only a means to an end: to lead to tangible marketing actions that can increase sales and profitability. c. market segmentation. The Premier Control shoe is made for runners whose feet tend to turn out. increase overall sales and profitability. b. COMPREHENSION Answer: e Page: 227 LO: 1 LL: 2 AACSB: 3 Other Location: web Rationale: The process of segmenting a market and selecting specific segments as targets is the link between the various buyers’ needs and the organization’s marketing program (Figure 9-1). d. link market needs to an organization's marketing program. synergy. Reebok targets the specific needs of particular types of runners with its different types of shoes. 9-25 MARKET SEGMENTATION APPLICATION Small athletic shoe manufacturers such as Vans have targeted niche markets and made shoes designed to satisfy the needs of different specific groups of customers. just-in-time marketing.9-24 MARKET SEGMENTATION Marketers use market segmentation to a. link market needs to an organization’s advertising. market segmentation. The Premier Road is made with extra cushioning for pavement runners. sales forecasting. e. mass customization.

e. and return on investment. and ROI. and return on investment. d. 9-29 MARKET SEGMENTATION COMPREHENSION A business firm segments its markets when this strategy increases its sales revenue. When expenses are greater than the potentially increased sales from segmentation. profit. having a well-educated customer base. profit and return on investment. its pricing strategy. d. 9-28 MARKET SEGMENTATION COMPREHENSION A business firm goes to the trouble and expense of segmenting its markets when a. 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. the firm should a. profit. b. b. supplier geography. competitors enter the marketplace. b. not attempt to segment its market. c. profit. a firm should not attempt to segment its market. designing shoes for every type of occasion.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. c. e. act as its own distributor. which will lower quality. it changes its advertising campaign. 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. d. reduce production costs. the environment becomes uncertain. Answer: d Page: 227 . 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. offering the absolute best selection of shoes and the absolute best service. 127 . recession sets in.9-27 ZAPPOS SEGMENTATION STRATEGY COMPREHENSION The Zappos segmentation strategy is based on a. c. When expenses are greater than the potentially increased sales from segmentation. it expects that this will increase its sales. e.

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

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. d. which often results extremely high research. 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. 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. engineering. 9-33 ONE PRODUCT. e. develop and produce another version of the product.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. indirect distribution and logistics problems d. it avoids __________. purchase another firm that has additional products that would appeal to multiple markets. In this case. manufacture products that appeal to different markets. and manufacturing expenses. 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 manufacturing expenses. the extra cost of developing and producing additional versions of the product b. c. issue stock used for additional research and development for improved products. 129 . b. engineering. which often entail extremely high research. it avoids the extra costs of developing. a. strategic planning e. and producing additional versions of the product. creating a service gap c.

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

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

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

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

Betty Crocker carries one line of cake mixes for people with conventional ovens. 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. c. 9-44 MULTIPLE PRODUCTS. d. price discrimination. 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. one product and multiple market segments. Arm and Hammer Baking Soda can be used for baking and to remove odors from refrigerators and litter boxes. mass customization. e. One set of previews showed the action scenes in order to attract one audience. b. 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. and the other set showed romantic scenes to attract another audience. This is an example of a. c. a “Tiffany/Wal-Mart” strategy.9-43 MULTIPLE PRODUCTS. A new movie used several different advertisements. 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. b. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. Many firms are now offering different products or services to high-end or low-end segments. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a multiple products and multiple markets strategy? a. 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. synergy. e. 134 . d.S.

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

At first glance none look any different from your basic old-fashioned shoe store. 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. 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.000 cookies. e. color. and customers go home empty-handed—at least initially. CA sells organic cookies to corporate customers in tins with the customer’s corporate logo printed on it. c. how the 80/20 rule is implemented. market melding. 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 on a high volume scale. d. Customers browse the store.000 tins or 360. but the only boots on hand are display models. you select materials. mixing and matching design components such as style. The largest order has been for 15. repositioning. colors. mass customization. c.9-47 MASS CUSTOMIZATION APPLICATION Custom Foot runs six retail locations. 136 . e. repositioning. Custom Foot guarantees your boots will be ready within three weeks. This is an example of a. and textures. mass customization. and leather type. market augmentation. market melding. c. in Santa Ana. b. This is an example of a. Customers can make their shirts using any downloaded photo inserted into 600 templates or even design a shirt from scratch. 9-48 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Co. d. synergy. multiple products in multiple segments. b. e. price discrimination. how the 80/20 rule is implemented. This is an example of a. one product and multiple market segments. There's no inventory for sale. Once you choose a boot style. synergy. 9-49 MASS CUSTOMIZATION APPLICATION ChoiceShirts is an online company that makes custom T-shirts. mass customization. d. About 100 display boots provide style guidelines.

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

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

a one-product-one-market-segment strategy. c. Target marketing d. d. synergy. 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. Customer relationship management b. "Think of Model E as the Dell of the auto industry. launch. 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. and direct delivery. 139 . It is very similar to mass customization. Synergy c. b. built-to-order (BTO). Model E manufactures a car only when there is an order from a customer. Model E relies on a. repositioning. synergy. a. president and CEO of Model E. mass aggregation. customer relationship management (CRM). e." said William Santana Li.9-56 MASS CUSTOMIZATION KNOWLEDGE __________ is tailoring goods or services to the tastes of individual customers on a highvolume scale. a customer does not have the ability to specify an unlimited number of features. built-to-order (BTO). Mass production e. d. designing products based on what consumers truly want and leveraging best-in-class components and micro-factory approaches for rapid design. c. 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. mass aggregation. a one-product-one-market-segment strategy. e. b. but because of production issues.

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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.

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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

Answer: c Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: One of the five criteria to use in forming segments is the similarity of needs of potential buyers within a segment. Potential buyers within a segment should be similar in terms of a marketing action, such as product features sought or advertising media used. 9-69 CRITERIA FOR FORMING SEGMENTS Which of the following is NOT a criterion used in forming segments? a. potential for increased profit b. similarity of needs of potential buyers within a segment c. competitive position d. potential of marketing action to reach a segment e. simplicity and cost of assigning potential buyers to segments Answer: c Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Competitive position is a reason for selecting a market, not for segmenting it. The five criteria to be used in forming segments include (1) potential for increased profit; (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. 9-70 CRITERIA FOR FORMING SEGMENTS Which of the following is NOT a criterion used in forming segments? a. competitive position b. similarity of needs of potential buyers within a segment c. difference of needs of buyers among segments d. potential of marketing action to reach a segment e. simplicity and cost of assigning potential buyers to segments Answer: a Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Competitive position is a reason for selecting a market, not for segmenting it. The five criteria to be used in forming segments include (1) potential for increased profit; (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. COMPREHENSION COMPREHENSION

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company’s historical profitability COMPREHENSION Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The five criteria to be used in forming segments include (1) potential for increased profit. (2) similarity of needs of potential buyers within a segment. (5) simplicity and cost of assigning potential buyers to segments. (2) similarity of needs of potential buyers within a segment. assign them to a segment e. (4) potential of a marketing action to reach a segment. (5) simplicity and cost of assigning potential buyers to segments. 9-72 CRITERIA FOR FORMING SEGMENTS Which of the following is a criterion used in forming market segments? a. ignore any and all similarities Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The five criteria to be used in forming segments include (1) potential for increased profit. difference of needs of retailers between segments e. simplicity and cost of assigning potential buyers to segments Answer: e Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: The five criteria to be used in forming segments include (1) potential for increased profit. a. difference of needs of retailers between segments d. 144 . (4) potential of a marketing action to reach a segment. optimize their different needs d. (3) difference of needs of buyers among segments. competitive position b. company’s historical profitability b. This means being able to recognize the characteristics of potential buyers and __________ without encountering excessive costs. similarity of potential sellers within a segment d.9-71 CRITERIA FOR FORMING SEGMENTS Which of the following is a criterion used in forming market segments? a. (2) similarity of needs of potential buyers within a segment. (3) difference of needs of buyers among segments. diversify their interests c. maximize internal considerations b. competitive position c. (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. potential of marketing action to reach a segment e. similarity of potential sellers within a segment c. 9-73CRITERIA FOR FORMING SEGMENTS COMPREHENSION COMPREHENSION A marketing manager must be able to put a market segmentation plan into effect.

“Would segmentation be worth doing and is it possible?” c. 9-76 CONSUMER SEGMENTATION VARIABLES COMPREHENSION Four general categories used to segment consumer markets are geographic segmentation. This multiple product and multiple market segment strategy would have the greatest difficulty meeting which of the following criteria used to form market segments? a. the limited benefit to consumers in the segment. different needs of buyers among different segments c. Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question. similarity of needs of potential buyers within a segment d. (2) demographic segmentation. psychographic segmentation e. consumer markets. and (4) behavioral segmentation. demographic segmentation. potential for increased profit and ROI Answer: e Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: The segment would probably not provide increased profit and ROI—given the size of the market. to preservatives used in salad bars. usually mild. simplicity and cost of assigning potential buyers to segments e. 145 .9-74 CRITERIA FOR FORMING SEGMENTS APPLICATION Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question a. instrumentality of sufficient marketing objectives to ignore that segment b. “Is there too much competition for this product?” e. demand segmentation c. and the high cost of running a duplicate salad bar. a. NAICS code segmentation Answer: d Page: 231 LO: 3 LL: 2 AACSB: 3 Rationale: Figure 9-3 shows four general bases of segmentation and the typical variables that can be used to segment U. “Is it possible to reposition this product?” d. and behavioral segmentation. So these restaurants will need to have their regular salad bar plus a special salad bar for the allergies segment. regional segmentation d.S. __________. (3) psychographic segmentation. These four segmentation bases are: (1) geographic segmentation. supplier segmentation b. Restaurants might consider people with these "allergies" as a separate segment. “Is this product useful on a global scale?” b. “Is the market loyal to the product?” Answer: b Page: 231 LO: 3 LL: 3 AACSB: 3 Rationale: It’s not always a good idea to segment a market. and is it possible?” 9-75 CRITERIA FOR FORMING SEGMENTS APPLICATION Between two and three percent of the population have some degree of allergic reaction. “Would segmentation be worth doing.

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. geographic e. This is geographic segmentation. GE built a downsized microwave oven to hang under kitchen cabinets. e. zip code segmentation. age b. b. NAICS code segmentation. e. behavioral c. socioeconomic d. b. was too hot for Americans in the East and not hot enough for those in the West and Southwest. which could be heated and poured directly onto nacho chips. Campbell’s plants in Texas and California produce a hotter nacho cheese sauce than that produced in the other plants. a. In China KFC sells a much spicier chicken the farther away its restaurants are from the coastal areas. c. regional segmentation. 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. d. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. c. geographic segmentation. Today. d. Campbell’s is using __________ segmentation. 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. 9-79 GEOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on region? a.9-77 GEOGRAPHIC SEGMENTATION Segmentation based on where prospective customers live or work is called a. 146 . Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. 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. MSA segmentation.

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

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

b. psychographic Answer: c Page: 232 LO: 3 LL: 3 Rationale: Life stage is a demographic variable. 149 . socioeconomic d. Because smaller households need to cook less food. the first question the telemarketer asks is whether the person answering the phone has a family. demographic d. a. it appears the State of Alabama Board of Tourism has segmented the market using __________ variables. life stage. behavior c. Since the apparent target of these ads is traditional families. 9-87 DEMOGRAPHIC SEGMENTATION AACSB: 3 APPLICATION The State of Alabama Board of Tourism ran a series of ads showing traditional families enjoying various attractions in the state. and household size are demographic variables. 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. regional b. and restyled it to hang under cabinets. d. GE downsized its microwave oven. c. geographic e. e. 9-88 DEMOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on household size? a. Whether the prospect has a family indicates the use of which type of consumer segmentation variable by the telemarketer? a. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Household size is a demographic customer characteristic. buying situation e.9-86 DEMOGRAPHIC SEGMENTATION APPLICATION When a telemarketer calls to sell a consumer life insurance. Campbell's makes spicier nacho cheese sauce for its distributors in Texas than it does in Maine. psychographic Answer: b Page: 232 LO: 3 LL: 3 AACSB: 3 Rationale: Marital status. demographic c. usage b. GE built a downsized microwave oven to hang under kitchen cabinets.

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

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

9-97 BEHAVIORAL SEGMENTATION APPLICATION Magnavox sells its target markets many different types of TVs from flat screens to a 20” combination TV/DVD. demographic segmentation b. or a distribution system. demographic segmentation. such as a new product. geographic segmentation d. an ad campaign. b. psychographic segmentation c.9-95 BEHAVIORAL SEGMENTATION COMPREHENSION Segmentation based on what features are important to different customers is known as a. 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. c. psychographic segmentation. or a distribution system. 152 . 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. geographic segmentation. Magnavox uses behavioral segmentation to guide the types of TVs it sells since different consumers have different benefits they seek in a TV set. such as a new product. such as a new product. socioeconomic segmentation. an ad campaign. However. MicroFridge is using which type of segmentation basis? a. demographic segmentation b. behavioral segmentation e. The small set is much less expensive and allows the viewer to watch a DVD without extra equipment. psychographic segmentation c. an ad campaign. d. Magnavox is using which type of segmentation variable in this example? a. or a distribution system. behavioral segmentation e. and freezer targeted to these students. geographic segmentation d. behavioral segmentation. their dorm rooms are often woefully short of space. The larger sets can be outfitted with surround sound at a higher price than the small set. 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. 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. MicroFridge understands this and markets a combination microwave. e. refrigerator.

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

d. b. service inventory. turnover. sometimes called frequency marketing. d. c. This technique.9-101 BEHAVIORAL SEGMENTATION BY USAGE KNOWLEDGE The quantity consumed or patronage—store visits—during a specific period is called a. turnover. service inventory. 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. e. e. demographic segmentation. c. consumption rate. 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. is a strategy that focuses on usage rate. sometimes called frequency marketing. geographic segmentation. trial. consumption rate. b. 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. behavioral segmentation. c. This technique uses a. b. a type of behavioral segmentation. buying condition segmentation. usage rate. 154 . e. d. 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. trial. usage rate. psychographic segmentation. This technique.

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

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

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

This is the reason for the emphasis in almost all marketing strategies on effective ways to reach these heavy users. the heavy users have an index of 467. each heavy user spends $4. heavy users are most important to a fast-food restaurant because a. the segment is at the top of the chart.00 spent by a light user in one of these restaurants in a month. 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. there are fewer of them than any other user segment. the usage index is highest for that segment.FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4. their consumption percentage is higher than the percentage that they represent of the total users and non-users. Giving the light users an index of 100. c.67. e. there are less of them than any other segment. For every $1. b. d. 158 .

FIGURE 9-5 9-113 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. that you need to devise a marketing program to win customers from McDonald’s and Burger King. b. c. primary (19.2 percent) user segments are somewhat behind Burger King and far behind McDonald’s. your restaurant is a market leader. e.6 percent). so a natural strategy is to look at these two competitors and devise a marketing program to win customers from them. Burger King is closing in on your market share. the information in Figure 9-5 suggests a. McDonald’s is not a serious competitor to you. d. most of the respondents think of Wendy’s as their primary fast food restaurant. and secondary (12.8 percent). 159 . Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The Wendy’s bar in Figure 9-5 shows that your sole (0.

dry air where the operation is located serves as a cheap and effective airplane preservative. But the 56. Answer: b Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The nonusers part of the Wendy’s bar in Figure 9-5 also provides ideas. get around gatekeepers and reach buyers. NAICS sector b. The warm. Answer: c Page: 235 LO: 3 LL: 2 AACSB: 3 Rationale: Variables for segmenting organizational markets are shown in Figure 9-6 and include geographic. number of employees Answer: a Page: 235 LO: 3 LL: 3 AACSB: 3 Rationale: The NAICS sectors would reveal other companies that fly commercial planes and might be interested in Evergreen's services. c. b. 9-115 ORGANIZATIONAL MARKET SEGMENTATION COMPREHENSION Variables such as location. number of locations c. 160 . nonprospects may be the best segment to go after to increase Wendy’s sales. e. new menu items or promotional strategies may succeed in converting the prospects into users that patronize Wendy’s. d. These adults use the product category (fast food) but do not go to Wendy’s.000 a month for its storage service. d. segment a consumer market. promote buyer loyalty. McDonald’s is not a serious competitor to you. your restaurant is a market leader. demographic. b. the North American Industry Classification System (NAICS) code. c.4 percent of the Wendy’s bar shown as prospects may be worth detailed thought. forecast sales to a consumer market. It shows that 11 percent of adult Americans don’t go to fast-food restaurants in a typical month and are really nonprospects—unlikely to ever patronize your restaurant. statistical area e.9-114 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant. New menu items or promotional strategies may succeed in converting these prospects into users that patronize Wendy’s. is the world's biggest parking lot for unwanted commercial aircraft. segment an organizational market. 9-116 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION Evergreen Air Center in Marana. Airlines pay from $750 to $5. area density d. and number of employees are all examples of ways to a. Which organizational segmentation variable might Evergreen use to segment the market? a. the information in Figure 9-5 suggests a. and behavioral bases. Burger King is closing in on your market share. e. Arizona.

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

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

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

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

which product groupings to offer. c. which products to be sold into groups. d. how to implement the 80-20 rule. screen many new product ideas in order to select the one with best long-run market potential. 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. 165 . select representative samples of consumers for marketing research studies. e. c. b. determine which target market segments to select and which product groupings to offer. b. make optimal decisions under conditions of uncertainty. 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. 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. which products to reposition. how to implement a harvesting strategy. It is helpful in determining which target market segments to select and which product groupings to offer. 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. e.

b. 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 is a faculty or staff member.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. d. e. whether the student has the discretionary income to eat at Wendy’s. The best way to describe how the student market is segmented is by a. c. combining the factors of where the student lives and when (s)he is on campus. whether the student lives near the campus or far away. the meals eaten at the restaurant. 166 .

assume the medium market (shown by a “2”) is twice the size of the small market. c. 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. 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. lunch. b. For example. 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. after-dinner snack customers. between-meal snack customers. 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. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). 167 . breakfast. students that live in a dormitory. The strategy to increase revenues that would be most likely to exploit marketing synergies and efficiencies is trying to reach a. e. students that are day commuters. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). d. dinner customers. between-meal snack. 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. d. The meal occasion (product grouping) that comprises the largest market is a. after-dinner snack. lunch customers. dinner. b. b. The largest potential market segment is for a. Similarly. c. 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. d. students that live in an apartment. e. students that are night commuters.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. Similarly. assume the medium market (shown by a “2”) is twice the size of the small market. The other choices run vertically down the columns and correspond to operations/production synergies and efficiencies. e. faculty or staff members. dormitory customers. c.

dinner customers.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. 9-136 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. This is a “product” or “meal” in the market-product grid. competitive position. 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. night commuter customers. e. cost of reaching the segment 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.” This is a market segment. 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. cost of reaching the segment. who might be reached by this coupon that is intended to increase sales during the 2:00 PM to 4:30 PM time period. 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. Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. night commuter customers. Assume students who live in dormitories or apartments on or near the campus cannot use student parking lots. after-dinner snack customers. b. 168 . c. size of the market b. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The target here is potential between-meal snack customers. d. e. expected growth. which is a vertical column in Figure 9-8. answer “c. dormitory customers. c. All of the above are criteria used for selecting a target market. day commuter customers. faculty customers. compatibility with the organization’s objectives and resources e. and compatibility with the organization’s objectives and resources. between-meal snack customers. apartment customers. d. b. which is a horizontal row in Figure 9-8. expected growth c.

9-139 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. similarity of needs of potential buyers within a segment. competitive position d. There are also five criteria to use in forming the segments. cost of reaching the segment. 169 . To form segments the criteria include potential for increased profit. competitive position. difference of needs of buyers among segments. which are often confused with those used to select segments. potential of a marketing action to reach a segment e. difference of needs of buyers among segments d. cost of reaching the segment and compatibility with the organization’s objectives and resources. Similarities of needs of buyers within a segment is a criterion for segmenting a market. simplicity and cost of assigning potential buyers to segments. potential of a marketing action to reach a segment. similarity of needs of potential buyers within a segment c. cost of reaching the segment and compatibility with the organization’s objectives and resources. There are also five criteria to use in forming the segments. 9-138 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. potential for increased profit b. similarities of needs of potential buyers c. To form segments the criteria include potential for increased profit. difference of needs of buyers among segments d. market size Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. and compatibility with the organization’s objectives and resources. potential of a marketing action to reach a segment. potential for increased profit b. compatibility with the organization’s objectives and resources Answer: b Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. expected growth. competitive position. expected growth. similarity of needs of potential buyers within a segment c. size of the market b. which are often confused with those used to select segments. cost of reaching the segment e. difference of needs of buyers among segments. expected growth Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. similarity of needs of potential buyers within a segment. potential of a marketing action to reach a segment e. not for selecting one. simplicity and cost of assigning potential buyers to segments.9-137 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion used for selecting a market segment? a. expected growth. competitive position.

9-142 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. expected growth. expected growth of the market. What is the fifth criterion? a. potential of a marketing action to reach a segment. competitive position of the firm with respect to the market. which are often confused with those used to select segments. amount of publicity likely to result Answer: a Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. potential of a marketing action to reach a segment. similarity of needs of potential buyers within a segment c. difference of needs of buyers among segments d. expected growth. To form segments the criteria include potential for increased profit. cost of reaching the segment Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. simplicity and cost of assigning potential buyers to segments. similarity of needs of potential buyers within a segment c. compatibility with the organization’s objectives b. They include the size of the market. simplicity and cost of assigning potential buyers to segments. potential for increased profit b. how long target market members have been customers e. and cost of reaching the segment. difference of needs of buyers among segments. similarity of needs of potential buyers within a segment. competitive position. competitive position. difference of needs of buyers among segments d. cost of reaching the segment and compatibility with the organization’s objectives and resources. To form segments the criteria include potential for increased profit. potential of a marketing action to reach a segment e. cost of reaching the segment and compatibility with the organization’s objectives and resources.9-140 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. similarity of needs of potential buyers within a segment. expected growth. which are often confused with those used to select segments. 170 . time required to create awareness c. There are also five criteria to use in forming the segments. There are also five criteria to use in forming the segments. potential for increased profit b. cost of reaching the segment and compatibility with the organization’s objectives and resources. difference of needs of buyers among segments. competitive position. potential of a marketing action to reach a segment e. 9-141 SELECT TARGET MARKETS COMPREHENSION Five general criteria are often used to pick target segments. competitive position Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. need to conform to government regulations d.

which are often confused with those used to select segments. potential for increased profit b. the more attractive the segment is. perhaps it is growing significantly or is expected to grow in the future. The less the competition.9-143 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. Although the size of market in the segment may be small now. simplicity and cost of assigning potential buyers to segments Answer: d Page: 238 LO: 4 LL: 2 AACSB: 3 Other Location: SG Rationale: Competitive position is a criterion for selecting a target market. feasibility of a marketing action to reach a segment d. simplicity and cost of assigning potential buyers to segments. difference of needs of buyers between segments c. COMPREHENSION COMPREHENSION 171 . compatibility with the organization’s objectives and resources Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Rationale: There are five criteria used for selecting a target segment—market size. competitive position. feasibility of a marketing action to reach a segment d. similarity of needs of potential buyers within a segment b. potential of a marketing action to reach a segment e. difference of needs of buyers among segments. difference of needs of buyers among segments d. To form segments the criteria include potential for increased profit. potential of a marketing action to reach a segment. competitive position. There are also five criteria to use in forming the segments. similarity of needs of potential buyers within a segment c. 9-145 SELECT TARGET SEGMENTS Which of the following is a criterion for selecting a target market? a. difference of needs of sellers between segments c. 9-144 SELECT TARGET SEGMENTS Which of the following is a criterion for selecting a target market? a. cost of reaching the segment and compatibility with the organization’s objectives and resources. simplicity and cost of assigning potential buyers to segments e. expected growth. or amount of competition in the segment e. expected growth of segment Answer: e Page: 238 LO: 4 LL: 2 AACSB: 3 Other Location: SG Rationale: Expected growth is a criterion for selecting a target market. similarity of needs of potential buyers within a segment. similarity of needs of potential buyers within a segment b.

Best Food's competitive position in the segment b. be accurately described by all of the above. expected growth of the market segment d. 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.9-146 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion for selecting a market segment? a. 9-147 SELECT TARGET SEGMENTS APPLICATION Best Foods Company is considering expanding beyond the regional market segments now served by its Hellmann's mayonnaise. be readily accessible to the firm's marketing programs. 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. have no expected growth. 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. similarity of needs of potential buyers b. Because it would be so small. 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. 172 . not for selecting one. This is an example of which criterion used to select target market segments? a. be very small. competitive position d. d. b. Best Food's created product groupings c. size of the market segment e. 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. In terms of the criteria used for selecting a target segment. cost of reaching the segment e. c. e. not be compatible with the company's current resources. it would not be readily accessible by marketing programs. expected growth c. This market would use the rehabilitation services that the company now provides. this market would a.

developed a market-product grid and estimating size of markets. Nike decided to concentrate on affluent teens rather than members of high school basketball teams. c. c. taken marketing actions to reach target markets. zillow. taking marketing actions to reach target markets. formed products to be sold into groups. Inc.B. a specialty food association that advertises local products and distributes them to local supermarkets and gourmet shops. developing a market-product grid and estimating size of markets. formed prospective buyers into segments. 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. 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. b.. e. d. 173 . a company that makes Tongue Tinglin' B.com. b. b. d. c. selected target market segments to reach.Q. e. selecting target market segments to reach. Lewis decided to join Goodness Grows in North Carolina.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. 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. wsj. In developing a marketing strategy to sell the sauce. the neighborhood and look around there. This is an example of a.com. forming prospective buyers into segments. Lewis has just a. She wants to target local people who like the special blend of flavors found only in North Carolina barbecue sauce. LexisNexis. 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. forming products to be sold into groups. Zillow is an online real estate service that answers the most important question. Sauce.com. “How much is my home really worth?” 9-151 TAKING MARKETING ACTIONS APPLICATION Doris Lewis owns Lewis Edibles. e. d. the website of the local newspaper.

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. c. marketing research. marketing b. marketing d. 9-153 MARKETING MATTERS COMPREHENSION In the early 1980s Apple Computer Company was often called "Camp Runamok" because the innovative company had no a. 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. b. distributors. The company saves money on __________ but spends more on __________. e. Answer: d Page: 243 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product positioning 174 . d. investment capital. product positioning. competitors. selective perception. coherent product lines targeted to identifiable market segments. each of which will have to be designed and manufactured. competitive positioning. competition. b. profits. e. each of which will have to be designed and manufactured. a. 9-154 PRODUCT POSITIONING KNOWLEDGE The place an offering occupies in consumers' minds on important attributes relative to competitive products is called a. c. marketing. production e. marketing. The company saves money on marketing but spends more in production. product perception. production.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. relative positioning. marketing c. d.

b. struggling to increase milk sales. the place a product offering occupies in consumers' minds on important attributes e. grocery. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Key term definition—product repositioning 9-157 REPOSITIONING APPLICATION Recently. represent Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Changing the place an offering occupies in consumers’ minds is called repositioning. perceptual mapping. geographic segmentation. psychographics.9-155 PRODUCT POSITIONING KNOWLEDGE What does the term product positioning refer to? a. a. a careful analysis of cross tabulations b. tried to change the way adults thought about milk. product differentiation. repositioning. reposition d. shelf locations in major chain. 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. U. c. The dairies wanted to __________ milk in the minds of the consumer. segment b. differentiate c. d. e. often within major metropolitan areas d. The dairy industry tried to reposition milk in the minds of adult consumers. product positioning. dairies. 175 .S. explain e. and department stores c.

a. product positioning c. Motts Applesauce was attempting to expand the use of the product from a dinnertime side dish to a baking ingredient. 9-159 PRODUCT POSITIONING Two major types of product positioning are a. head-to-head and differentiation. b. Consumer Answer: c Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—differentiation positioning 176 . product differentiation d. Differentiation d. repositioning e. competitive and distinctive. d. In this case. The advertising message was that using applesauce in baking cuts calories and also makes the resulting baked good healthier. 9-160 DIFFERENTIATION POSITIONING KNOWLEDGE COMPREHENSION __________ positioning involves seeking a less competitive. Segment b. c. smaller market niche in which to locate a brand. psychographics Answer: c Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Repositioning is changing a product's image in consumers' minds. Head-to-head c. Motts was using a __________ strategy. perceptual mapping b. head-to-head and parallel market. a. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Two main approaches to positioning a new product in the market are head-tohead and differentiation. differentiation and parallel market. Competitive e. competitive and differentiation. e.9-158 REPOSITIONING APPLICATION Motts Applesauce used an advertising campaign to change the way consumers thought about applesauce from a dinnertime side dish to a replacement for cooking oil in baking.

repositioning. differentiation positioning. d. compete against other products of the same company. 177 . 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. a.9-161 DIFFERENTIATION POSITIONING KNOWLEDGE Differentiation positioning requires a product to a. d. 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. cognitive positioning. lateral positioning. b. 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. c. e. Differentiation positioning involves seeking a less competitive. compete directly with competitors but emphasize unique product attributes. c. 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. smaller market niche. firms often use a. b. compete with competitors on similar product attributes in the same market. lateral positioning c. head-to-head positioning b. consumer positioning e. seek a less competitive. smaller market niche in which to locate a brand. differentiation d. e. compete with competitors on similar product attributes but in a different market. head-to-head positioning.

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

psychological c. repositioning e. which involves seeking a smaller market niche that is less competitive in which to locate a brand. In the sneaker business. seek out its own market niche. parallel market c. Heelys practices differentiation positioning. compete against other products of the same company. c. compete with competitors on similar product attributes in the same market. differentiation e. distinction d. e. d. compete with competitors on similar product attributes but in a different market. b. segmentation d. and thereby reduce or avoid cannibalization. detachable wheel in the shoe’s heel. which involves competing directly with competitors on similar product attributes in the same target market.9-166 DIFFERENTIATION POSITIONING APPLICATION Heelys sneakers come with an imbedded. Heelys is practicing __________ positioning. 9-167 HEAD-TO-HEAD POSITIONING KNOWLEDGE An approach to positioning a new product in the market is __________ positioning. differentiation Answer: e Page: 244 LO: 5 LL: 3 AACSB: 3 Rationale: Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. a. head-to-head b. head-to-head Answer: e Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—head-to-head positioning 9-168 HEAD-TO-HEAD POSITIONING Other Location: SG KNOWLEDGE Head-to-head positioning requires a product to a. perceptual b. Answer: b Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—head-to-head positioning 179 . compete with competitors using unique attributes. a.

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

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

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

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

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

market potential e. 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. sales forecast b. e. and local taxes e. a. c. the minimum anticipated sales in related industries not including federal. industry potential. market potential. state. total industrial products sold worldwide b. environmental forecast. Delphi forecast c.9-181 MARKET POTENTIAL KNOWLEDGE The term market potential or industry potential refers to what important marketing factor? a. market share. industry potential d. company forecast. the total of all products sold nationally c. market share Answer: a Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—sales or company forecast 185 . b. the sum of products in a particular industry sold domestically under normal economic conditions d. 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. d.

technological methods e. surveys of competitors c. 9-185 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. judgments of the decision maker b. statistical method. 186 COMPREHENSION COMPREHENSION COMPREHENSION . surveys of knowledgeable groups b. judgments of trade associations d. and (3) statistical methods. judgments of trade associations d. e. 9-187 JUDGMENTS OF THE DECISION MAKER The most commonly used forecasting technique is the a. (2) surveys of knowledgeable groups. b. technological methods e. (2) surveys of knowledgeable groups. 9-186 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. statistical methods b. 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. (2) surveys of knowledgeable groups. surveys of competitors c. 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. and (3) statistical methods. judgment of the decision maker. and (3) statistical methods.9-184 SALES FORECAST Which of the following is one of the main sales forecasting techniques? a. 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. c. technological method. survey of knowledgeable groups. 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. d. surveys of competitors c. judgments of trade associations d. technological methods e.

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. b. Alternatives B. c. APPLICATION AACSB: 3 COMPREHENSION 187 . and E are surveys of knowledgeable groups that are more time-consuming and costly than judgment forecasts. C. 9-190 DIRECT FORECAST The least complex sales forecasting technique is likely the a. d. 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 e. direct forecast. 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. lost-horse forecast d. direct forecast c. sales force survey forecast. statistical forecast e. 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 d. a. Delphi forecast c. buildup forecast b. trend extrapolation. e. technological forecast b.9-188 DIRECT FORECAST KNOWLEDGE A __________ is an estimate of the value to be forecast without any intervening steps. Delphi forecast. survey of buyers intentions forecast.

a. survey of buyers' intentions forecast. Delphi d. assessing whether they have a positive or negative impact.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. lost-horse forecast b. experimental estimation. statistical inference. c. e. linear trend extrapolation. technological forecast c. This is an example of a a. listing the facts that could affect the forecast. 188 . technological c. d. jury of executive opinion b. b. Delphi forecast e. lost-horse forecast. 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. 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. a. statistical method e. 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. trend extrapolation d.

trend extrapolation c. Delphi e.” a. technological forecast c. a. But on the negative side. she knew the person who was talking was planning to use a __________. a. survey of buyers' intentions forecast Answer: a 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. Delphi forecast e. we're going to increase prices across the board by 20 percent. technological b. All those things are positive. adding some sales representatives. and makes the final forecast. trend extrapolation d. lost-horse forecast b. assesses whether they have a positive or negative impact. technological forecast c. lost-horse forecast b. The Ohio River Boatworks uses the __________ method of forecasting. lost-horse d. 9-195 LOST-HORSE FORECAST APPLICATION The Ohio River Boatworks uses last year’s sales as a starting point to estimate next year’s sales of its boats. So on balance. 9-196 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. “We're increasing TV advertising. and adding 3 new product models.9-194 LOST-HORSE FORECAST APPLICATION When a marketing student overheard the following comments. trend extrapolation d. survey of buyers' intentions forecast Answer: e Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: Key term definition—survey of buyers’ intentions forecast 189 . survey of buyers' intentions Answer: c 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. Delphi forecast e. lists factors that could affect the forecast. I think sales will increase next year by 5 percent.

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. This is an example of a __________ forecast. jury of executive opinion c. salesforce survey d. technological c. statistical method e. a. a. judgments of individuals b. jury of executive opinion b. the forecast is set at $4. 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. survey of experts e. 190 . survey of buyers' intentions d. 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. jury of executive opinion c.750.000 for the quarter. a. 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. 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. judgments of individuals b. salesforce survey d. Based on this information.

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

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

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

tangible marketing actions the firm can take to satisfy those needs. Thus. Such needs and benefits must be related to specific. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. 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. to help consumers perceive the product as being different and better than competing products. AND FORECASTING MARKETS SHORT ESSAY QUESTIONS 9-207 MARKET SEGMENTATION COMPREHENSION Define market segmentation. POSITIONING. In its broadest sense it involves a firm's using different marketing mix activities. Differences may involve nonphysical features as well. 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. product differentiation relates to market segmentation. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price. such as product features and advertising. 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. In a narrower sense. such as image or price.CHAPTER 9 SEGMENTING. Page: 226 LO: 1 LL: 2 AACSB: 3 194 . Segmentation links needs to actions. 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.

Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-210 MULTIPLE PRODUCTS. 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. Page: 228 LO: 1 LL: 2 AACSB: 3 COMPREHENSION 9-211 MASS CUSTOMIZATION Explain the difference between mass customization and build-to-order. 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. and adds to the organization’s sales revenues and profits. doesn’t reduce quality or increase price. Although these expenses can be high. which often entails high research. engineering. In this case. and manufacturing expenses. 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. Answer: Mass customization involves the tailoring of goods or services to the tastes of individual customers on a high-volume scale. Page: 229 LO: 1 LL: 2 AACSB: 3 195 .9-209 SINGLE PRODUCT. they are rarely as large as those for developing an entirely new product. Build-to-order involves manufacturing a product only when there is an order from a customer.

9-212 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION There are five key steps in segmenting and targeting markets. 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. which link market needs of customers to the organization’s marketing program. 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. 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. 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. Compared to the food bank's previous policy. List these important factors in marketing planning. The potential for increased profit and ROI is replaced by the potential for serving client users more effectively. It now wants to give free food only to people who go hungry on a regular basis. Fig. This will be the market segment it targets. List these five key steps. Page: 231 LO: 3 LL: 3 AACSB: 3 196 .

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

usage rate.9-217 ORGANIZATIONAL MARKET SEGMENTATION What are the segmentation bases for U. 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. In a complete marketproduct grid analysis. each cell in the grid can show the estimated market size of a given product sold to a specific market segment. demographic or behavioral segments.S. Product features. 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. organizational markets? COMPREHENSION Answer: Organizational markets can be segmented by geographic.

Head-to-head positioning involves competing directly with competitors on similar product attributes in the same target market. Differentiation positioning involves seeking a smaller market niche that is less competitive in which to locate a brand. For example. Dollar Rental Cars is positioned head-to-head with Avis and Hertz. 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. Product synergies run vertically down the market-product grid and each column represents an opportunity for efficiency in research and development and production. Marketing efforts can be streamlined with a focus on fewer segments. To simplify product lines. 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. Answer: Marketing synergies run horizontally across a market-product grid and represent an opportunity for efficiency in terms of a market segment.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. 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 . Five criteria can be used to select the target segments. Answer: There are two major approaches to positioning a product.").239 LO: 4 LL: 2 AACSB: 3 COMPREHENSION 9-221 MARKETING SYNERGIES/PRODUCT SYNERGIES Explain the difference between marketing synergies and product synergies. reduce R & D and production expenses. For example. Page: 244 LO: 5 LL: 2 AACSB: 3 199 .

this can be effective. Sales forecast is also known as company forecast. 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. 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. 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: 245 . Page: 246 LO: 6 LL: 2 AACSB: 3 200 .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. 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. Answer: Market potential is also known as industry potential. For industrial products with few prospective buyers.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. 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. companies obtain three types of data from consumers. 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.

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

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