CH09 | Zappos | Market Segmentation

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.

116

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

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

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

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

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

124,125,126,127

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

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

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

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

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

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

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

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

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

118

9-4

CHAPTER OPENING EXAMPLE: ZAPPOS.COM

COMPREHENSION

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

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

119

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

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

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

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

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

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

126 . do all of the above. c. b. Answer: d Page: 227 LO: 1 LL: 3 AACSB: 3 Rationale: Market segmentation links market needs to an organization’s marketing program —specific marketing mix actions to satisfy those needs. e. market segmentation. Reebok targets the specific needs of particular types of runners with its different types of shoes. 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. e. mass customization. b. The Premier Control shoe is made for runners whose feet tend to turn out. link market needs to an organization’s product or price. b. This strategy is an example of a. mass customization. d. 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. c. synergy. e. sales forecasting. The Premier Road is made with extra cushioning for pavement runners. increase overall sales and profitability. d. market segmentation. just-in-time marketing. d. synergy. link market needs to an organization's marketing program. link market needs to an organization’s advertising. This strategy is an example of a. 9-26 MARKET SEGMENTATION APPLICATION Reebok makes shoes with DMX Shear and Foam cushioning. c. just-in-time manufacturing.9-24 MARKET SEGMENTATION Marketers use market segmentation to 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). sales forecasting. Market segmentation is only a means to an end: to lead to tangible marketing actions that can increase sales and profitability.

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

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

issue stock used for additional research and development for improved products. b. a. 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. which often results extremely high research. engineering. In this case. strategic planning e. purchase another firm that has additional products that would appeal to multiple markets. 9-33 ONE PRODUCT. c. the extra cost of developing and producing additional versions of the product b. it avoids __________. indirect distribution and logistics problems d. creating a service gap c. and manufacturing expenses. it avoids the extra costs of developing. d. engineering.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. 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. develop a separate promotional campaign. manufacture products that appeal to different markets. e. which often entail extremely high research. the incremental costs of taking the product into new market segments are typically those of a separate promotional campaign or a new channel of distribution. 129 . develop and produce another version of the product. and manufacturing expenses. and producing additional versions of the product. 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 the extra cost of developing and producing additional versions of the product. which often entails higher research. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for women. and manufacturing expenses. medium. MULTIPLE MARKET SEGMENTS COMPREHENSION When compared to a multiple-products-multiple-market segments strategy. and Weeboks. marketing costs generally increase. walking shoes. e. 130 . is a much more effective means of meeting consumers' individual needs. 9-36 ONE PRODUCT. b. is much more profitable. e. engineering. 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). Reach Toothbrush makes several versions of its toothbrush. as is the case with Johnson's Baby Oil. Reebok makes tennis shoes. MULTIPLE MARKET SEGMENTS APPLICATION Which of the following is an example of a single product with multiple market segments? a. b. creates greater cost savings in manufacturing costs. 9-35 ONE PRODUCT. d. increased number of choices c. 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. 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. Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages. is a more effective way of meeting organizational objectives. 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. has significantly higher distribution costs. d. c. running shoes. lower retail prices because of lower production costs d. increased satisfaction of consumer wants and needs b. c. not marketing economies of scale (alternative E) When using one product and multiple market segments.9-34 ONE PRODUCT. and hard bristle and a short or normal length head. improved service e. Kellogg's and Post both make bran cereals with raisins. which are available in a soft. a one-product-andmultiple-market-segment strategy a.

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

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

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

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

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

This is an example of a.9-47 MASS CUSTOMIZATION APPLICATION Custom Foot runs six retail locations. c. b. you select materials. multiple products in multiple segments. d.000 tins or 360. 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. This is an example of a. one product and multiple market segments. 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. how the 80/20 rule is implemented. mixing and matching design components such as style. The largest order has been for 15. colors. About 100 display boots provide style guidelines. market augmentation. Customers can make their shirts using any downloaded photo inserted into 600 templates or even design a shirt from scratch. CA sells organic cookies to corporate customers in tins with the customer’s corporate logo printed on it. repositioning. c. and customers go home empty-handed—at least initially. 9-48 MASS CUSTOMIZATION APPLICATION Chip-N-Dough Cookie Co. b. c. Custom Foot guarantees your boots will be ready within three weeks. e. mass customization. There's no inventory for sale. synergy. Once you choose a boot style. e. 136 . in Santa Ana. e. repositioning. and leather type. Customers browse the store. 9-49 MASS CUSTOMIZATION APPLICATION ChoiceShirts is an online company that makes custom T-shirts. At first glance none look any different from your basic old-fashioned shoe store. Answer: a Page: 229 LO: 1 LL: 3 AACSB: 3 Rationale: Mass customization is tailoring goods or services to the tastes of individual customers on a high volume scale. but the only boots on hand are display models. mass customization. market melding. This is an example of a. color. d. and textures.000 cookies. market melding. d. mass customization. price discrimination. b. synergy. how the 80/20 rule is implemented.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

each heavy user spends $4. Giving the light users an index of 100. the segment is at the top of the chart. This is the reason for the emphasis in almost all marketing strategies on effective ways to reach these heavy users. there are fewer of them than any other user segment.FIGURE 9-4 9-112 SIMMONS FAST-FOOD MARKET RESEARCH COMPREHENSION According to the data displayed in Figure 9-4. there are less of them than any other segment. their consumption percentage is higher than the percentage that they represent of the total users and non-users. e. the heavy users have an index of 467. 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. c. d. the usage index is highest for that segment. heavy users are most important to a fast-food restaurant because a. For every $1. 158 .67.00 spent by a light user in one of these restaurants in a month. b.

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

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

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

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

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

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

make optimal decisions under conditions of uncertainty. 9-129 MARKET-PRODUCT GRID COMPREHENSION Determining the size of specific markets using a market-product grid is helpful in determining which target market segments to select and a. relate the product life cycle to consumer demand. b. which products to be sold into groups.9-128 MARKET-PRODUCT GRID COMPREHENSION One advantage of a market-product grid is that it can be used to a. determine which target market segments to select and which product groupings to offer. b. 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. 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. e. which product groupings to offer. It is helpful in determining which target market segments to select and which product groupings to offer. 165 . c. d. which products to reposition. screen many new product ideas in order to select the one with best long-run market potential. c. how to implement the 80-20 rule. select representative samples of consumers for marketing research studies. d. e.

combining the factors of where the student lives and when (s)he is on campus.FIGURE 9-8 9-130 WENDY’S MARKET-PRODUCT GRID COMPREHENSION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. whether the student lives near the campus or far away. whether the student is a faculty or staff member. d. 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. 166 . 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). c. the meals eaten at the restaurant. b.

Similarly. 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. d. e. students that are day commuters. For example. c. d. 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. e. The largest potential market segment is for a. c. The meal occasion (product grouping) that comprises the largest market is a. after-dinner snack customers. students that are night commuters. assume the medium market (shown by a “2”) is twice the size of the small market. students that live in a dormitory. dinner customers. Similarly. 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. 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. faculty or staff members. b. 9-133 WENDY’S MARKET-PRODUCT GRID APPLICATION Figure 9-8 shows the market-product grid for a Wendy’s restaurant next to a large urban university campus. The other choices run vertically down the columns and correspond to operations/production synergies and efficiencies. after-dinner snack. lunch. breakfast. dormitory 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. d. between-meal snack customers. The strategy to increase revenues that would be most likely to exploit marketing synergies and efficiencies is trying to reach a. assume the medium market (shown by a “2”) is twice the size of the small market. 167 . e. b. 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. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). b. lunch customers. Assume the large market (shown by a “3”) is 3 times the size of the small market (shown by a “1”). students that live in an apartment. between-meal snack.

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

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

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

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

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. In terms of the criteria used for selecting a target segment. 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. d. have no expected growth. similarity of needs of potential buyers b. This market would use the rehabilitation services that the company now provides. This is an example of which criterion used to select target market segments? a. Because it would be so small. 172 . it would not be readily accessible by marketing programs. 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. competitive position d. this market would a. compatibility with Best Food's objectives and resources Answer: e Page: 238 LO: 4 LL: 3 AACSB: 3 Rationale: New equipment to reach a new market segment relates to the organization's resources. e. Best Food's created product groupings c. c. not for selecting one. Best Food's competitive position in the segment b. 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. size of the market segment e. be very small.9-146 SELECT TARGET SEGMENTS COMPREHENSION Which of the following is NOT a criterion for selecting a market segment? a. 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 c. be readily accessible to the firm's marketing programs. not be compatible with the company's current resources. cost of reaching the segment e. be accurately described by all of the above.

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

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

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

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

head-to-head positioning b. d. e. 177 . lateral positioning c. compete with competitors on similar product attributes in the same market. head-to-head positioning. b. differentiation positioning. cognitive positioning. 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. consumer positioning e. compete with competitors on similar product attributes but in a different market. smaller market niche in which to locate a brand. differentiation d. repositioning. Answer: d Page: 244 LO: 5 LL: 1 AACSB: 3 Rationale: Text term definition—differentiation positioning 9-162 DIFFERENTIATION POSITIONING To avoid cannibalization within company product lines. c. 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. e. a. compete against other products of the same company. 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. firms often use a. smaller market niche.9-161 DIFFERENTIATION POSITIONING KNOWLEDGE Differentiation positioning requires a product to a. b. seek a less competitive. lateral positioning. d. Differentiation positioning involves seeking a less competitive. c. compete directly with competitors but emphasize unique product attributes.

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

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

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

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

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

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

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

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

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

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. 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. technological forecast b. Alternatives B. survey of knowledgeable groups forecast Answer: c Page: 246 LO: 6 LL: 1 Rationale: Key term definition—direct forecast 9-189 DIRECT FORECAST “How many quarts of milk should I buy?” is an example of a a. direct forecast c. d. survey of buyers intentions forecast. trend extrapolation. C. sales force survey forecast. and E are surveys of knowledgeable groups that are more time-consuming and costly than judgment forecasts. e. Delphi forecast e. b. a. buildup forecast b. direct forecast. Delphi forecast c. statistical forecast e. Delphi forecast. APPLICATION AACSB: 3 COMPREHENSION 187 . c. lost-horse forecast d.9-188 DIRECT FORECAST KNOWLEDGE A __________ is an estimate of the value to be forecast without any intervening steps. direct forecast d. Answer: a Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: Alternative A is correct because a direct forecast is developed using the heuristic judgment of the decision maker.

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

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

statistical Answer: c Page: 246 LO: 6 LL: 3 AACSB: 3 Rationale: A sales force survey forecast uses estimates by a firm's salespeople of sales for a coming period. 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. technological c. a. jury of executive opinion c. jury of executive opinion c. This is an example of a __________ forecast. statistical method e.750. the forecast is set at $4. judgments of individuals b. 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. a. a. survey of experts e. 190 . salesforce survey d. salesforce survey d. survey of experts e. jury of executive opinion b.000 for the quarter. survey of buyers' intentions d.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 Answer: c Page: 246 LO: 6 LL: 1 AACSB: 3 Rationale: A sales force survey forecast uses estimates by a firm's salespeople of sales for a coming period. judgments of individuals b. Based on this information.

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

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

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

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

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

Compared to the food bank's previous policy. 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. 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.9-212 STEPS IN SEGMENTING AND TARGETING MARKETS COMPREHENSION There are five key steps in segmenting and targeting markets. Page: 231 LO: 3 LL: 3 AACSB: 3 196 . List these five key steps. This will be the market segment it targets. it is now much more likely to serve its clients more effectively with the new segmentation strategy. List these important factors in marketing planning. Fig. It now wants to give free food only to people who go hungry on a regular basis. The potential for increased profit and ROI is replaced by the potential for serving client users more effectively. Answer: The five key steps are: (1) group potential buyers into segments (2) group products to be sold into categories (3) develop a market-product grid and estimate size of markets (4) select target markets (5) take marketing actions to reach target markets Page: 230. 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. which link market needs of customers to the organization’s marketing program.

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

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

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

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. Page: 246 LO: 6 LL: 2 AACSB: 3 200 .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. this can be effective. Answer: Market potential is also known as industry potential. 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. 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. They are: (1) identification of the important attributes for a product class (2) judgments of existing products or brands with respect to these attributes (3) ratings of an "ideal" product’s or brand's attributes Page: 244 LO: 5 LL: 2 AACSB: 3 COMPREHENSION 9-224 MARKET POTENTIAL AND SALES FORECAST Differentiate between market potential and sales forecast. Sales forecast is also known as company forecast. For industrial products with few prospective buyers. Page: 245 . 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.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. Answer: Survey of buyers' intentions asks prospective customers whether they are likely to purchase a specific product during a specified future period of time.

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

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