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

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

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

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

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

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

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

This strategy is an example of a. synergy. just-in-time marketing. sales forecasting. link market needs to an organization's marketing program. d. The Premier Road is made with extra cushioning for pavement runners. Reebok targets the specific needs of particular types of runners with its different types of shoes. synergy. 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. sales forecasting. mass customization. increase overall sales and profitability. e. 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. 9-26 MARKET SEGMENTATION APPLICATION Reebok makes shoes with DMX Shear and Foam cushioning. b. This strategy is an example of a. 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). c. do all of the above. d. b. e.9-24 MARKET SEGMENTATION Marketers use market segmentation to a. link market needs to an organization’s advertising. Market segmentation is only a means to an end: to lead to tangible marketing actions that can increase sales and profitability. 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. e. market segmentation. d. b. mass customization. link market needs to an organization’s product or price. 126 . The Premier Control shoe is made for runners whose feet tend to turn out. market segmentation. c. c.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

S. and (4) behavioral segmentation. “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. usually mild. 145 . (3) psychographic segmentation. and behavioral segmentation. and the high cost of running a duplicate salad bar. So these restaurants will need to have their regular salad bar plus a special salad bar for the allergies segment. 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. similarity of needs of potential buyers within a segment d. 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. These four segmentation bases are: (1) geographic segmentation. consumer markets. to preservatives used in salad bars. (2) demographic segmentation. demand segmentation c. “Would segmentation be worth doing. “Is it possible to reposition this product?” d. 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. psychographic segmentation e. supplier segmentation b. a. the limited benefit to consumers in the segment.9-74 CRITERIA FOR FORMING SEGMENTS APPLICATION Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question a. simplicity and cost of assigning potential buyers to segments e. different needs of buyers among different segments c. demographic segmentation. instrumentality of sufficient marketing objectives to ignore that segment b. __________. regional segmentation d. “Would segmentation be worth doing and is it possible?” c. Restaurants might consider people with these "allergies" as a separate segment. 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. “Is there too much competition for this product?” e. “Is this product useful on a global scale?” b. 9-76 CONSUMER SEGMENTATION VARIABLES COMPREHENSION Four general categories used to segment consumer markets are geographic segmentation. Grouping potential buyers into meaningful segments involves meeting some specific criteria that answer the question.

d. a. 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. 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. b. 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. This is geographic segmentation. zip code segmentation. Today. c. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on weekdays. MSA segmentation. c. In China KFC sells a much spicier chicken the farther away its restaurants are from the coastal areas. which could be heated and poured directly onto nacho chips. 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. d. 9-79 GEOGRAPHIC SEGMENTATION APPLICATION Which of the following statements demonstrates the formation of a segment based on region? a. geographic e. geographic segmentation. regional segmentation. socioeconomic d. was too hot for Americans in the East and not hot enough for those in the West and Southwest. 146 . e. NAICS code segmentation. Campbell’s plants in Texas and California produce a hotter nacho cheese sauce than that produced in the other plants. age b. Campbell’s is using __________ segmentation. behavioral c. b. GE built a downsized microwave oven to hang under kitchen cabinets.9-77 GEOGRAPHIC SEGMENTATION Segmentation based on where prospective customers live or work is called a. e.

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

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

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

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

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

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

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

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

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

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

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

158 .FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4.67. This is the reason for the emphasis in almost all marketing strategies on effective ways to reach these heavy users. Answer: c Page: 233 LO: 3 LL: 2 AACSB: 3 Rationale: The Usage Index per Person column in Figure 9-4 emphasizes the importance of the heavy-user group even more. heavy users are most important to a fast-food restaurant because a. the heavy users have an index of 467. d. there are fewer of them than any other user segment. c. Giving the light users an index of 100. b. the segment is at the top of the chart.00 spent by a light user in one of these restaurants in a month. For every $1. the usage index is highest for that segment. each heavy user spends $4. their consumption percentage is higher than the percentage that they represent of the total users and non-users. e. there are less of them than any other segment.

most of the respondents think of Wendy’s as their primary fast food restaurant. so a natural strategy is to look at these two competitors and devise a marketing program to win customers from them. the information in Figure 9-5 suggests a. c. Answer: e Page: 234 LO: 3 LL: 2 AACSB: 3 Rationale: The Wendy’s bar in Figure 9-5 shows that your sole (0. and secondary (12. b. your restaurant is a market leader.6 percent). Burger King is closing in on your market share.2 percent) user segments are somewhat behind Burger King and far behind McDonald’s. d.FIGURE 9-5 9-113 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION As an owner of a Wendy’s fast food restaurant.8 percent). that you need to devise a marketing program to win customers from McDonald’s and Burger King. e. primary (19. McDonald’s is not a serious competitor to you. 159 .

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

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

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

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

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

It is helpful in determining which target market segments to select and which product groupings to offer.9-128 MARKET-PRODUCT GRID COMPREHENSION One advantage of a market-product grid is that it can be used to a. e. which products to reposition. e. b. which products to be sold into groups. 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. how to implement a harvesting strategy. select representative samples of consumers for marketing research studies. c. d. screen many new product ideas in order to select the one with best long-run market potential. c. 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. make optimal decisions under conditions of uncertainty. d. b. 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. 165 . how to implement the 80-20 rule. relate the product life cycle to consumer demand. determine which target market segments to select and which product groupings to offer. which product groupings to offer.

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

between-meal snack customers. 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. c. dinner customers. e. lunch. The largest potential market segment is for a. c. The other choices run vertically down the columns and correspond to operations/production synergies and efficiencies. lunch customers.9-131 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. e. d. Similarly. assume the medium market (shown by a “2”) is twice the size of the small market. b. 167 . For example. between-meal snack. dinner. students that live in a dormitory. 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. e. assume the medium market (shown by a “2”) is twice the size of the small market. dormitory customers. 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. b. breakfast. students that are day commuters. The strategy to increase revenues that would be most likely to exploit marketing synergies and efficiencies is trying to reach a. d. students that live in an apartment. c. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). 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. after-dinner snack customers. b. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). after-dinner snack. Similarly. d. The meal occasion (product grouping) that comprises the largest market is a. 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. students that are night commuters. 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. faculty or staff members.

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. and compatibility with the organization’s objectives and resources. faculty customers. competitive position. which is a horizontal row in Figure 9-8.9-134 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. apartment customers. d. who might be reached by this coupon that is intended to increase sales during the 2:00 PM to 4:30 PM time period. cost of reaching the segment d. All of the above are criteria used for selecting a target market. 168 . d. b. night commuter customers. size of the market b.” This is a market segment. 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. e. 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. c. compatibility with the organization’s objectives and resources e. c. Answer: c Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: The target here is potential between-meal snack customers. dinner customers. dormitory customers. day commuter customers. 9-136 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is a criterion used for selecting a target segment? a. between-meal snack customers. expected growth c. e. 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. answer “c. after-dinner snack customers. which is a vertical column in Figure 9-8. night commuter customers. Assume students who live in dormitories or apartments on or near the campus cannot use student parking lots. cost of reaching the segment. staff customers. This is a “product” or “meal” in the market-product grid. 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. b.

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

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

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

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

e. 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. 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.com.com. Lewis decided to join Goodness Grows in North Carolina. Inc.9-149 SELECT TARGET SEGMENTS APPLICATION In developing a marketing strategy for the recently released Nike Air Jordan XVII with a price tag of $200. c. forming products to be sold into groups. a specialty food association that advertises local products and distributes them to local supermarkets and gourmet shops. e. forming prospective buyers into segments. taking marketing actions to reach target markets. b.com. a company that makes Tongue Tinglin' B.Q. “How much is my home really worth?” 9-151 TAKING MARKETING ACTIONS APPLICATION Doris Lewis owns Lewis Edibles. d. c. b. c. In developing a marketing strategy to sell the sauce. d. d. b. developed a market-product grid and estimating size of markets. Zillow is an online real estate service that answers the most important question. Sauce. This is an example of a. the website of the local newspaper. formed products to be sold into groups. wsj. LexisNexis.B.. selected target market segments to reach. zillow. taken marketing actions to reach target markets. 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. 173 . the neighborhood and look around there. Nike decided to concentrate on affluent teens rather than members of high school basketball teams. 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. Lewis has just a. developing a market-product grid and estimating size of markets. She wants to target local people who like the special blend of flavors found only in North Carolina barbecue sauce. formed prospective buyers into segments. selecting target market segments to reach. e.

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

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

The advertising message was that using applesauce in baking cuts calories and also makes the resulting baked good healthier. c. In this case. competitive and differentiation. repositioning e. Differentiation d. 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. Head-to-head c. b. Consumer Answer: c Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—differentiation positioning 176 . perceptual mapping b. Motts was using a __________ strategy. 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. Competitive e. product differentiation d. competitive and distinctive. product positioning c. a. 9-159 PRODUCT POSITIONING Two major types of product positioning are a. head-to-head and parallel market. a.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. d. 9-160 DIFFERENTIATION POSITIONING KNOWLEDGE COMPREHENSION __________ positioning involves seeking a less competitive. Segment b. e. Motts Applesauce was attempting to expand the use of the product from a dinnertime side dish to a baking ingredient. differentiation and parallel market. head-to-head and differentiation.

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

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

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

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

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

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

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

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

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

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

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

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

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 . she knew the person who was talking was planning to use a __________. All those things are positive. 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.9-194 LOST-HORSE FORECAST APPLICATION When a marketing student overheard the following comments. So on balance. technological forecast c. The Ohio River Boatworks uses the __________ method of forecasting. lost-horse forecast b. adding some sales representatives. trend extrapolation c. 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. But on the negative side. 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. a. lost-horse forecast b. and adding 3 new product models.” a. Delphi forecast e. trend extrapolation d. technological b. trend extrapolation d. “We're increasing TV advertising. technological forecast c. a. Delphi e. lost-horse d. and makes the final forecast. Delphi forecast e. I think sales will increase next year by 5 percent. 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. assesses whether they have a positive or negative impact. we're going to increase prices across the board by 20 percent. lists factors that could affect the forecast.

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

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

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

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. product extrapolation c. such as product features and advertising. product differentiation d. Rollerblade is implementing a __________ strategy with its innovative skate technology. e. product sampling b. adjustable aluminum frame Rollerblade developed that when shorter allows for tighter turns and when longer permits more speed. usage segmentation. to help consumers perceive the product as being different and better than competing products. market differentiation Answer: c Page: 226 LO: 1 LL: 3 AACSB: 3 Rationale: Product differentiation involves a firm using different marketing mix activities. 193 . a.

product differentiation relates to market segmentation. as the text points out in connection with Zappos. to help consumers perceive the product as being different and better than competing products. 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. In a narrower sense. Such needs and benefits must be related to specific. In its broadest sense it involves a firm's using different marketing mix activities. where perhaps the same or similar target markets are more likely to buy the product differentiated as having greater reliability or lower price. product differentiation involves a firm's selling two or more products with different features targeted to different market segments. Differences may involve nonphysical features as well. 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. POSITIONING. tangible marketing actions the firm can take to satisfy those needs. such as product features and advertising. AND FORECASTING MARKETS SHORT ESSAY QUESTIONS 9-207 MARKET SEGMENTATION COMPREHENSION Define market segmentation. Page: 226 LO: 1 LL: 2 AACSB: 3 194 . As long as a new product does not take a significant amount of sales away from an existing product. Segmentation links needs to actions. because clearly defined and different target markets have different needs that can be satisfied with different products of the same general type. 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.CHAPTER 9 SEGMENTING. it can contribute to increased revenues for the firm. Thus. such as image or price.

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

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

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

demographic or behavioral segments. In a complete marketproduct grid analysis. and awareness/intentions are similar to the consumer market variables used for segmentation and may also be used to segment organizational markets. Page: 237 LO: 4 LL: 2 AACSB: 3 198 . 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.S. each cell in the grid can show the estimated market size of a given product sold to a specific market segment. usage rate. organizational markets? COMPREHENSION Answer: Organizational markets can be segmented by geographic.9-217 ORGANIZATIONAL MARKET SEGMENTATION What are the segmentation bases for U. 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.

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

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

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

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