Chap 009

Chapter 9
IDENTIFYING MARKET SEGMENTS AND TARGETS

Test Item Table
Major Section of the Level of Learning

Chapter
Level 1: Definition Level 2: Conceptual Level 3: Application
(Knows Basic (Understands Concepts (Applies Principles)
Terms & Facts) & Principles)
Sneakers Marketing 1, 2
Wars: Heelys, Air
Pumps, and Three
Billion Trillion
Choices
(pp. 185-186)
Why Segment 3, 4, 6, 7, 23, 24, 35, 5, 8, 9, 16, 17, 18, 19, 10, 11, 12, 13, 14, 15, 28, 31, 33, 34,
Markets? 39, 41, 43 20, 21, 22, 25, 26, 27, 36, 37, 38, 40
(pp. 186-191) 29, 30, 32, 42, 44, 45,
148, 149, 150, 151, 152
Steps in Segmenting 46, 47, 55, 63, 64, 71, 49, 50, 51, 52, 53, 54, 48, 57, 58, 59, 60, 61, 62, 65, 66, 67,
and Targeting 74, 75, 76, 84, 90, 92, 56, 106, 112, 113, 114, 68, 69, 70, 72, 73, 77, 78, 79, 80, 81,
Markets 94, 95, 96, 97, 99, 115, 118, 119, 120, 132, 82, 83, 85, 86, 87, 88, 89, 91, 93, 98,
(pp. 191-201) 100, 108, 129, 131 153, 155, 156, 158, 159,
101, 102, 103, 104, 105, 107, 109,
160, 161, 162
110, 111, 116, 117, 121, 122, 123,
124, 125, 126, 127, 128, 130, 154, 157
Positioning the 133, 134, 137, 139, 138, 142, 163, 164 135, 136, 143
Product 140, 141
(pp. 201-202)
Video Case: Nokia 144, 145, 146, 147

(pp. 203-205)
Note: Bold numbers indicate short essay questions.

CHAPTER 9
MULTIPLE CHOICE QUESTIONS
9-1 CHAPTER OPENING EXAMPLE: SNEAKERS CONCEPTUAL
Heely Sports Ltd. used __________ in its search for a market for the latest sneaker craze.
a. market segmentation
b. financial analysis
c. geographic segmentation
d. organizational marketing
e. sales forecasting
Answer: a Page: 186

Rationale: All sneaker manufacturers search for new market segments of consumers and ways
to differentiate their products from the competition.
9-2 CHAPTER OPENING EXAMPLE: SNEAKERS CONCEPTUAL
Which of the following statements about U.S. trends for sneakers is true?
a. Teenagers are 31 percent of total sales and are willing to spend more for sneakers than older
consumers.
b. The average price paid for a pair of sneakers is over $100 and expected to increase.
c. Baby boomers are the largest market for sneakers.
d. Most sneakers bought for use in some sport are bought for tennis.
e. In the sneakers market, the growth potential for women is lower, but women will pay a
higher average price for a pair.
Answer: a Page: 186

Rationale: Over 60 percent of sneakers purchased in 2000 cost less than $50 per pair.
Teenagers are the largest market for sneakers and are willing to pay more for them. Most
sneakers that are bought for use in some sport are bought for running. Women are buying more
and more sneakers, but men on average buy more and are willing to pay more than women.
9-3 MARKET SEGMENTATION DEFINITION
Aggregating prospective buyers into groups that have common needs and will respond similarly
to a marketing action is called:
a. consumer differentiation.
b. psychographics.
c. market segmentation.
d. market delineation.
e. aggregation marketing.
Answer: c Page: 187

Rationale: Key term definition—market segmentation
Market segmentation involves aggregating prospective buyers into groups that have common
needs and will:
a. pay attention to marketing messages.

b. respond similarly to a marketing action.
c. be responsive to marketing research.
d. use the same payment methods.
e. go shopping on a regular basis.
Answer: b Page: 187 Other Location: web

Rationale: Key term definition—market segmentation
9-5 MARKET SEGMENTATION CONCEPTUAL
To be identified as a market segment, its members must:
a. represent a large share of the entire market and have critical buying power.
b. have common needs and respond similarly to market actions.
c. have different needs and have potential for future growth.
d. have different needs and respond similarly to market actions.
e. have potential for future growth and have potential for increased profit or ROI.
Answer: b Page: 187

Rationale: An organization develops its segments by aggregating prospective buyers on the
basis of common needs and similar response to a marketing action.
__________ involves aggregating prospective buyers into groups that (1) have common needs
and (2) will respond similarly to a marking action.
a. Diversification
b. Divestment
c. Market segmentation
d. Market augmentation
e. Repositioning
Answer: c Page: 187

Rationale: Key term definition—market segmentation.
516
9-7 MARKET SEGMENTS DEFINITION
The phrase “relatively homogeneous groups of prospective buyers” is most descriptive of:
a. market segments.
b. demographic clusters.
c. organizational buyers.
d. ultimate consumers.
e. qualified prospects.
Answer: a Page: 187

Rationale: Key term definition—market segments
9-8 MARKET SEGMENTS CONCEPTUAL
Each __________ consists of people who are relatively similar to each other in terms of their
consumption behavior.
a. market segment
b. demographic cluster
c. organizational buyer
d. ultimate consumer
e. qualified prospect
Answer: a Page: 187

Rationale: A market segment is a relatively homogeneous group of prospective buyers,
consisting of people who are relatively similar to each other in terms of their consumption
behavior.
9-9 PRODUCT DIFFERENTIATION CONCEPTUAL
A firm strategy of using different marketing mix activities, such as product features or
advertising, to help consumers perceive a product as being different and better than competing
products is called:
a. dual distribution.
b. market differentiation.
c. product differentiation.
d. market penetration.
e. full coverage marketing.
Answer: c Page: 187 Other Location: web

Rationale: Key term definition—product differentiation
9-10 PRODUCT DIFFERENTIATION APPLICATION
When Procter & Gamble introduced Crest toothpaste, the first fluoride toothpaste, it was intended
for use by children and was therefore given a child-appealing bubblegum flavor. Some time later
the same basic formula was given a fresh, minty flavor to appeal to adults. What is this
marketing strategy called?
a. product sampling
b. product extrapolation
c. product differentiation
d. usage segmentation
e. psychographic segmentation
Answer: c Page: 187

Rationale: Product differentiation is a strategy of using different marketing mix activities, such
as product features (in this case the toothpaste flavor) or advertising, to help consumers perceive
a product as being different and better than competing products.
At a Hallmark store you can find several different brands of greeting cards, including Fresh Ink,
Nature's Sketchbook, Shoebox, Maxine, Mahogany, and Tree of Life cards—all made by
Hallmark for sale in its stores. Hallmark uses a __________ strategy to reach several different
market segments.
a. product sampling
e. behavioral segmentation
Answer: c Page: 187

as product features (in this case the brand of card) or advertising, to help consumers perceive a
product as being different and better than competing products.
518
Alka-Seltzer was made originally as a hangover remedy that cured the headache and settled the
stomach. Today you can buy Original Alka-Seltzer, Extra Strength Alka-Seltzer, Alka-Seltzer
Morning Relief (for morning headaches and fatigue, and Alka-Seltzer Heartburn Relief. Each
Alka-Seltzer product is targeted to a slightly different market segment. The maker of Alka-
Seltzer is using:
a. product segmentation.
b. market sectioning.
d. product segmentation.
e. product base development.
Answer: c Page: 187

as product features (in this case the various types of Alka-Seltzer) or advertising, to help
consumers perceive a product as being different and better than competing products.
KFC is a popular fast-food restaurant in the U.S. In opened its 500th restaurant in China in 2001
and is more popular than McDonald's in that country. One of the reasons is that when the
company entered the Chinese market, it recruited its managers from Taiwan and the Chinese
communities in the U.S. and Canada. This has been useful in coping with local Chinese
governments and developing a distinctly different Chinese strategy, which includes Chicky, a
friendly chicken character that has a strong appeal for children. To succeed in China, KFC used:
a. product positioning.
d. market segmentation.
Answer: c Page: 187

as product features or advertising (in this case, Chicky, a friendly chicken character) to help
KFC has modified its product to satisfy different market segments. In Holland the mashed
potatoes are replaced with a potato-and-onion croquette, and in Thailand, a customer gets fresh
rice with soy or sweet chili sauce with his or her chicken. KFC uses:
Answer: c Page: 187

as product features (in this case the type of starchy food offered) or advertising, to help
Some Timex wristwatches can be purchased for less than $30; some Rolex wristwatches carry a
price tag of several thousand dollars. In general, consumers view Timex watches as being
dependable, relatively accurate, and inexpensive. The Rolex brand tends to be perceived as an
expensive status symbol. Timex watches can be purchased in drug stores, discount stores, and
department stores in all sizes of communities. Rolex watches are distributed more selectively,
and are often available only in fine jewelry stores or specialty shops. By using distinctly different
pricing and distribution strategies, the marketers of Timex and Rolex watches have attempted to:
a. compete for the same segment.

b. develop similar products.
c. use a product differentiation strategy.
d. build customer loyalty through direct competition.
e. create cognitive dissonance in consumers who are considering the purchase of a wristwatch.
Answer: c Page: 187

Rationale: In today's market place, competition is extreme. For most products, many
comparable alternatives are available to the consumer. In this example, both the Timex and the
Rolex wristwatches will satisfy the consumer's need to know the time of day. However, in order
to compete in the wristwatch market, each marketer has attempted to create a distinct product
image in the mind of the consumer. The image of the Timex is very different from that of Rolex.
520
The process of segmenting a market and selecting specific segments as targets is the link between
__________ and the organization's marketing program.
a. self-regulatory industry standards

b. government regulations
c. top-level management
d. market needs
e. controllable environmental factors
Answer: d Page: 187; Figure 9-1

Rationale: Figure 9-1 illustrates how the process of segmenting and targeting
markets links market needs to the organization’s marketing program.
The process of segmenting a market and targeting specific segments is the link between various
buyers' needs and:
a. self-regulatory industry standards.

b. government regulations.
c. the organization's marketing program.
d. top-level management.
e. controllable environmental factors.
Answer: c Page: 187; Figure 9-1

Rationale: Figure 9-1 illustrates how the process of segmenting and targeting
markets links market needs to the organization’s marketing program.
Market segmentation is only a means to an end. In economist's terms, it relates supply

(__________) to demand (the customer needs).
a. self-regulatory industry standards

c. the organization's actions
d. strategic objectives
e. tactical goals

Rationale: Market segmentation involves aggregating prospective buyers into groups that (1)
have common needs and (2) will respond similarly to marketing action (in this case, the
organization’s marketing program).
Market segmentation is only a means to an end. In economist's terms, market segmentation

relates supply (the organization's actions) to demand (__________).
a. tactical goals
c. customer needs
d. strategic objectives
e. product positions.

have common needs and (2) will respond similarly to marketing action on the part of the
organization.
A basic test of the usefulness of the segmentation process is whether it leads to tangible
marketing actions that:
a. increase sales and profitability.

b. are legal.
c. are socially responsible.
d. differentiate shareholders.
e. create innovation.
Answer: a Page: 187

Rationale: A basic test of the usefulness of the segmentation process is whether it leads to
tangible marketing actions to increase sales and profitability.
Marketers use market segmentation to:
a. link market needs to an organization's marketing program.

b. relate supply to demand in economic terms.
c. develop specific marketing actions related to the 4 Ps.
d. increase overall sales, profits and/or other organizational goals.
e. do all of the above.
Answer: e Page: 187 Other Location: web

Rationale: Market segmentation is used to link market needs to marketing programs, to relate
supply to demand, to develop marketing actions related to the 4Ps, and to increase sales and
profitability.
522
9-22 MARKETING NEWSNET CONCEPTUAL
Small athletic shoe manufacturers such as Vans and Customatix have targeted niche markets and
made shoes designed to satisfy needs of different customers. This strategy is an example of:
a. mass customization.
b. MSA and NAICS.
c. market segmentation.
d. synergy.
e. sales forecasting.
Answer: c Page: 188

Rationale: Vans targets the rising wave of skateboard, snowboard, biking, and outdoor
enthusiasts. Customatix targets those who wish to design their own shoes.
9-23 MARKET-PRODUCT GRID DEFINITION
A __________ is a framework to relate the segments of a market to products offered or potential

marketing actions by the firm.
a. growth-share matrix
b. payoff table
c. market-product grid
d. product differentiation table
e. cross tabulation
Answer: c Page: 188

Rationale: Key term definition—market-product grid
9-24 MARKET-PRODUCT GRID DEFINITION
A market-product grid is a framework to relate:
a. estimated expenses for products sold to various market segments.

b. total anticipated revenue for each product to market segments.
c. total anticipated profit for each product to segments.
d. the segments of a market to products offered or potential marketing actions by the firm.
e. the segments of a market to relative market share compared to closest competitor.
Answer: d Page: 188 Other Location: web

Rationale: Key term definition—market-product grid
9-25 MARKET-PRODUCT GRID CONCEPTUAL
One advantage of a market-product grid is that it can be used to:
a. make optimal decisions under conditions of uncertainty.

b. screen many new product ideas in order to select the one with best long-run market potential.
c. relate likely sales of products to prospective market segments.
d. select representative samples of consumers for marketing research studies.
e. relate the product life cycle to consumer demand.
Answer: c Page: 188

Rationale: A market-product grid is a framework to relate the segments of a market to the
products offered or potential marketing actions by the firm.
A business firm would segment its market when this strategy increases its sales revenue, profit,
and return on investment. When its increases in expenses more than offset the potentially
increased revenues from segmentation, it should:
a. terminate as many employees as possible to save money.

b. reduce production costs, which will lower quality.
c. act as its own distributor.
d. not attempt to segment its market.
e. discontinue manufacturing any products that are not in the mature stage of their product life
cycle.
Answer: d Page: 189

Rationale: A business firm goes to the trouble and expense of segmenting its
market when it expects that this will increase its sales, profit, and return on
investment. When expenses are greater than the potentially increased sales
from segmentation, a firm should not attempt to segment its market.
9-27 ONE PRODUCT, MULTIPLE MARKET SEGMENTS CONCEPTUAL
When a firm produces only a single product or service and attempts to sell it to two or more
market segments, it avoids __________, which often results extremely high research,
engineering, and manufacturing expenses.
a. the extra cost of developing and producing additional versions of the product
b. creating a service gap
c. indirect distribution and logistics problems
d. strategic planning
e. amortization costs
Answer: a Page: 190 Other Location: web

Rationale: The incremental costs of taking a product to new product segments
are rarely as large as those for developing an entirely new product.
524
9-28 ONE PRODUCT, MULTIPLE MARKET SEGMENTS APPLICATION
Which of the following is an example of a single product with multiple market segments?
a. Reebok shoes makes tennis shoes, running shoes, walking shoes, and Weeboks.
b. Reach Toothbrush makes several versions of its toothbrush, which are available in a soft,
medium, and hard bristle and a short or normal length head.
c. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for
women.
d. Kellogg's and Post both make bran cereals with raisins.
e. Quaker Oats oatmeal sells both its hot cereals and cold cereals to people of all ages.
Answer: c Page: 190

Rationale: A one product and multiple market segment strategy simply involves producing a
single product and selling it to two or more market segments, as is the case with Johnson's Baby
Oil.
When compared to a multiple-products-multiple-market segments strategy, a one-product-and-

multiple-market-segment strategy:
a. is a much more effective means of meeting consumers' individual needs.

b. is much more profitable.
c. creates greater economies of scale (cost savings) in manufacturing costs.
d. is a more effective way of meeting organizational objectives.
e. has significantly higher distribution costs.
Answer: c Page: 190

Rationale: When a firm produces only a single product or service and attempts to sell it to two
or more market segments, it avoids the extra cost of developing and producing additional versions
of the product, which often entails higher research, engineering, and manufacturing expenses.
What is the most likely way for consumers to benefit because a firm uses a strategy of one
product for multiple market segments?
a. increased satisfaction of consumer wants and needs

b. increased number of choices
c. lower retail prices because of lower production costs
d. improved service
e. lower retail prices because of lower marketing costs
Answer: c Page: 190

Rationale: Producing a single product and selling it to multiple market segments gives important
production economies of scale that may be passed on to consumers as lower prices (alternative c).
9-31 ONE PRODUCT, MULTIPLE MARKET SEGMENTS APPLICATION
Seventh Heaven is a television show that is designed to have a broad appeal to a wide number of
groups. It is a show that is appropriate to watch with young children without having to worry
about being embarrassed. It is a show that teaches the importance of moral values by showing
teens on the show learning to cope with real-life problems without being too moralistic. It
appeals to an older market because it is reminiscent of TV dramas of previous decades. This WB
television show is an example of:
a. one product with multiple market segments.

b. multiple products with multiple market segments.
c. synergy.
d. mass customization.
e. none of the above.
Answer: a Page: 190

Rationale: Television shows are single products frequently directed to two or more distinct
market segments.
9-32 MULTIPLE PRODUCTS, MULTIPLE MARKET SEGMENTS CONCEPTUAL
Which of the following is an example of a multiple products and multiple markets strategy?
a. College Football Magazine selects different covers for essentially the same magazine in
order to appeal to different geographic markets in the U.S.
b. A new movie used several different advertisements. One set of previews showed the action
scenes in order to attract one audience, and the other set showed romantic scenes to attract
another audience.
c. Betty Crocker carries one line of cake mixes for people with conventional ovens, and another
line of cake mixes for people with microwave ovens.
d. Arm and Hammer Baking Soda can be used for baking and to remove odors from
refrigerators and litter boxes.
e. Johnson's Baby Oil is advertised as a skin softener for babies and as a makeup remover for
women.
Answer: c Page: 189

Rationale: A multiple products and multiple markets strategy has a number of distinct products
each targeted to a different type of user. Only alternative c does not involve only one product.
526
9-33 MULTIPLE PRODUCTS, MULTIPLE MARKET SEGMENTS APPLICATION
Kellogg's different types of cereals, each targeted at a different type of user, are an example of
multiple products aimed at multiple markets. Manufacturing these different cereals is clearly
more expensive than producing one but seems worthwhile if it serves customers' needs better,
doesn't reduce quality or increase price, and:
a. conforms to all union regulations.

b. reduces the number of employees required.
c. decreases the cost of the physical plant.
d. stabilizes the sales revenues and profits.
e. adds to the manufacturer's sales revenues and profits.
Answer: e Page: 190

Rationale: Manufacturing multiple products for multiple market segments is
worthwhile under the conditions described if sales revenue and profits
increase.
9-34 MULTIPLE PRODUCTS, MULTIPLE MARKET SEGMENTS APPLICATION
You can go to your nearest Hallmark card store and buy a birthday greeting card for a friend and
pay $4.50, or you can buy a card that's not quite as nice but just as sentimental from the store's
new $.99 line of greeting cards. This is an example of:
b. synergy.
c. one product and multiple market segments.
d. price discrimination.
e. multiple products and multiple segments.
Answer: e Page: 190

Rationale: This is an example of multiple products (greeting cards at different price points)
offered to multiple segments. Many firms are now offering different product or services to high-
end or low-end segments.
9-35 MASS CUSTOMIZATION DEFINITION
__________ is tailoring goods or services to the tastes of individual customers on a high-volume

scale.
a. Mass customization.
b. Synergy.
c. One product and multiple market segments.
d. Price discrimination.
e. Multiple products in multiple segments.
Answer: a Page: 190

Rationale: Text term definition—mass customization
9-36 MASS CUSTOMIZATION APPLICATION
Custom Foot runs six retail locations. At first glance none look any different from your basic
old-fashioned shoe store, but the only shoes on hand are display models. There's no inventory for
sale, and customers go home empty-handed—at least initially. Customers browse the store,
mixing and matching design components such as style, color, and leather type. About 100
display shoes provide style guidelines. Once you choose a shoe style, you select materials,
colors, textures and a style of sole. The retailer sells 10,000 variations in women's shoes and
7,800 in men's. Custom Foot guarantees your shoes will be ready within three weeks. This is an
example of:
b. synergy.
c. one product and multiple market segments.
d. price discrimination.
e. multiple products in multiple segments.
Answer: a Page: 190

Rationale: Mass customization is tailoring goods or services (the style, color, and leather type of
the shoes) to the tastes of individual customers on a high volume scale.
Yahoo's shopping portal recently began to offer people who visited the site the ability to buy
songs from Imix's collection of more than 200,000 tracks from record labels that include BMG
and Sony Music Group. Customers can choose up to 70 minutes of music for around $1 per
song. Then they can choose an art design and a title for each CD and have a disc shipped for
$2.50. This is an example of:
b. how the 80/20 rule is implemented.
c. market augmentation.
d. market melding.
e. repositioning.
Answer: a Page: 190

Rationale: Mass customization is tailoring goods or services ( the CD art, title, and contents) to
the tastes of individual customers on a high volume scale.
528
Paris Miki enables customers to help design their own eyeglasses, using a system that eliminates
the need to try on countless pairs of eyeglasses to find the right one. This is an example of:
b. synergy.
c. target marketing.
d. how the 80/20 rule is implemented.
e. repositioning.
Answer: a Page: 190

Rationale: Mass customization is tailoring goods or services (their eyeglasses) to the tastes of
individual customers on a high volume scale.
9-39 BUILD-TO-ORDER DEFINITION
__________ is manufacturing a product only when there is an order from a customer.
a. Mass customization
b. Synergy
c. Build-to-order
d. Price discrimination
e. Multiple products in multiple segments
Answer: c Page: 190

Rationale: Text term definition—build-to-order
9-40 BUILD-TO-ORDER APPLICATION
Model E is a new type of car manufacturer that relies on the Internet to build new car designs for
an individual from prototypes to marketable vehicles much faster than ever before possible.
"Think of Model E as the Dell of the auto industry, designing products based on what consumers
truly want and leveraging best-in-class components and micro-factory approaches for rapid
design, launch, and direct delivery," said William Santana Li, president and CEO of Model E.
From this quote, you should recognize that Model E relies on:
a. mass aggregation.
b. a one-product-one-market-segment strategy.
c. repositioning.
d. perceptual mapping.
e. built-to-order (BTO).
Answer: e Page: 190

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. It is very similar to mass customization,
but because of production issues, a customer does not have the ability to specify an unlimited
number of features.
9-41 SYNERGY DEFINITION
Marketing strategies provide the organization with __________, the increased customer value
achieved through performing organizational functions more efficiently.
a. utopianization
b. innovation
c. dichotomy
d. transmogrification
e. synergy
Answer: e Page: 190

Rationale: 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 synergy, the increased customer value achieved through performing organizational
functions more efficiently.
9-42 SYNERGY CONCEPTUAL
The ultimate criterion in segmenting markets is that__________ as a result of increased synergy.
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

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, but the ultimate criterion is that customers should be better off as a result
of increased synergies.
9-43 SYNERGY DEFINITION
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: 190

Rationale: Key term definition—synergy
530
To create a _________ strategy, cmax.com allows customers to visit its website and design a
sneaker to their own personal specifications.
a. product sampling
c. mass customization
e. psychographic segmentation
Answer: c Page: 191

Rationale: Today’s Internet ordering and flexible manufacturing and marketing
processes have made mass customization possible, tailoring goods or
services to the tastes of individuals on a high-volume scale.
Cmax.com allows customers to visit its website and design a sneaker to their own personal
specifications. This website would particularly appeal to people who exercise regularly and are
very aware of what shoe styles fit comfortably on their feet. This would be descriptive of which
type of market segmentation variable?
a. psychographic
b. demographic
c. socioeconomic
d. usage
e. behavior

Rationale: Psychographic segmentation is used to divide people according to activities
(exercise) and interests (comfort and technology).
9-46 SEGMENTING AND TARGETING MARKETS DEFINITION
The first step in segmenting and targeting markets is to:
a. recognize a need.
b. form prospective buyers into groups.
c. create product groupings.
d. estimate size of the overall market.
e. develop a market-product grid
Answer: b Page: 191; Figure 9-3

Rationale: The process of segmenting and targeting markets involves five key steps: (1) form
prospective buyers into segments, (2) form products to be sold into groups, (3) develop a market-
product grid and estimate size of markets, (4) select target markets, and (5) take marketing
actions to reach target markets.
9-47 SEGMENTING AND TARGETING MARKETS DEFINITION
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

Rationale: The process of segmenting and targeting markets involves five key steps: (1) form
prospective buyers into segments, (2) form products to be sold into groups, (3) develop a market-
product grid and estimate size of markets, (4) select target markets, and (5) take marketing
actions to reach target markets.
9-48 CRITERIA FOR FORMING SEGMENTS APPLICATION
Between two and three percent of the population have some degree of allergic reaction, usually
mild, to preservatives used in salad bars. Restaurants might consider people with these
"allergies" as a separate segment. So these restaurants will need to have their regular salad bar
plus a special salad bar for the allergies segment. This multiple product and multiple market
segment strategy would have the greatest difficulty meeting which of the following criteria used
to form market segments?
a. instrumentality of sufficient marketing objectives to ignore that segment

b. different needs of buyers among different segments
c. similarity of needs of potential buyers within a segment
d. simplicity and cost of assigning potential buyers to segments
e. potential for increased profit and ROI
Answer: e Page: 192

Rationale: The segment would probably not be profitable—given the size of the market, the
limited benefit to consumers in the segment, and the high cost of running a duplicate salad bar.
9-49 CRITERIA FOR FORMING SEGMENTS CONCEPTUAL
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 return on investment.
Answer: e Page: 192

Rationale: One of the best criteria to use in forming segments is the opportunity for increased
profits and ROI.
532
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: 192

Rationale: There should be a difference of needs of buyers among segments.
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 means greater costs. If increased sales don’t offset extra costs, it
is best to combine segments and reduce the number of marketing actions.
When Mikki asked her father for his advice about marketing software for the disabled, he told
her, “Reaching a segment requires a simple but effective marketing action. If no such action
exists, don't segment.” Mikki's father is expressing concern about the:
a. feasibility of marketing actions to reach the segment.

b. different needs of buyers among different segments.
c. similarity of needs of potential buyers within a segment.
d. simplicity and cost of assigning potential buyers to segments.
e. potential for increased profit and ROI.
Answer: a Page: 192

Rationale: One of the five criteria to use in forming segments is the potential of a marketing
action to reach a segment. Reaching a segment requires a simple but effective marketing action.
If no such action exists, don’t segment.
9-52 FORMING SEGMENTS CONCEPTUAL
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 a marketing action to reach a segment
e. simplicity and cost of assigning potential buyers to segments
Answer: c Page: 192

Rationale: Competitive position is a reason for selecting a market, not for segmenting it.
Which of the following is NOT a criterion used in forming market segments?
a. potential for increased profit

b. similarity of needs of potential buyers within a segment
c. difference of needs of buyers among segments
d. cost of reaching the segment
Answer: d Page: 192

Rationale: Cost of reaching the segment is a reason for selecting a market, not for segmenting it.
A marketing manager must be able to put a market segmentation plan into effect. This means
being able to recognize the characteristics of potential buyers and __________ without
encountering excessive costs.
a. maximize internal considerations
b. diversify their interests
c. optimize their different needs
d. assign them to a segment
e. ignore any and all similarities
Answer: d Page: 192

Rationale: A marketing manager must be able to put a market segmentation
plan into effect. This means being able to recognize the characteristics of
potential buyers and then assigning them to a segment without encountering
excessive costs.
9-55 CONSUMER SEGMENTATION VARIABLES DEFINITION
Two general categories used to segment consumer markets are __________ and buying
situations.
a. demand frequency
b. demand volume
c. demand characteristics
d. customer characteristics
e. customer lifestyles
Answer: d Page: 192

Rationale: Two kinds of variables are generally used to segment consumer
markets: (1) customer characteristics and (2) buying situations.
534
9-56 CONSUMER SEGMENTATION VARIABLES CONCEPTUAL
Variables used to segment markets can be divided into two general categories. They are:
a. psychographic variables and buying power.

b. psychographics and demographics.
c. buying products and customer characteristics.
d. customer characteristics and buying situations.
e. demographics and buying situation.
Answer: d Page: 192

Rationale: Two kinds of variables are generally used to segment consumer
markets: (1) customer characteristics and (2) buying situations.
9-57 SEGMENTATION BY REGION APPLICATION
Which of the following statements demonstrates the formation of a segment based on region?
a. In China KFC sells a much spicier chicken the farther away its restaurants are from the
coastal areas.
b. GE built a downsized microwave oven to hang under kitchen cabinets.
c. Del Monte offers a line of canned fruit with no added sugar or artificial sweeteners.
d. A fast food hamburger restaurant is open for breakfast on Sunday mornings but not on
weekdays.
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: 192

Rationale: KFC has discovered that to be successful in globalization it must be willing to adapt
to the taste preferences of different regions.
Doris Lewis owns Lewis Edibles, Inc., a company that makes Tongue Tinglin' B.B.Q. Sauce.
She wants to target local people who like the special blend of flavors found only in North
Carolina mustard-based barbecue sauce. The easiest method for segmenting her market is to use
__________ segmentation variables.
a. age
b. behavior
c. socioeconomic
d. geographic
e. perceptual

Rationale: The key phrase is North Carolina barbecue sauce, which would mean that the easiest
market to target would be North Carolinians.
Universal Concerts is planning on bringing a series of concerts to Canada next year. In order for
its concerts to be a success it needs to know that Western Canadians like country music and that a
country music event in Eastern Canada is much more likely to have empty seats. This consumer
behavior requires Universal Concerts to segment its Canadian market according to:
a. geographic and psychographic characteristics.

b. demographic characteristics.
c. lifestyle and demographic characteristics.
d. usage rate and demographic characteristics.
e. demographic and geographic characteristics.
Answer: a Page: 192

Rationale: Psychographic includes consumer activities and interests—country music. There are
different music preferences in east and west Canada.
9-60 SEGMENTATION BY DEMOGRAPHICS APPLICATION
Modern Maturity magazine is a publication that is sent to all AARP members who by
organization definition have to be at least 50-years-old to join. The market segment for Modern
Maturity magazine was defined by:
a. usage rates.
b. usage patterns.
c. buyer situations.
d. demographic characteristics.
e. psychographic characteristics.

Rationale: Age is a commonly used demographic segmentation variable.
When the Benihana Frozen Foods Corporation began to offer its Famous Restaurant Classics
meals in single serving packages, it was relying on a __________ segmentation variable to define
a market based on serving size.
a. regional
b. demographic
c. lifestyle
d. geographic
e. psychographic
Answer: b Page: 192

Rationale: Household size is a demographic variable.
536
When a telemarketer calls to sell a consumer vinyl siding for his or her home, the first question
the telemarketer asks is if the person answering the phone is a homeowner. Whether the prospect
is a homeowner indicates the use of which type of consumer segmentation variable?
a. usage
b. behavior
c. demographic
d. buying situation
e. psychographic
Answer: c Page: 192

Rationale: Residence tenure is a demographic variable.
9-63 SEGMENTATION BY DEMOGRAPHICS DEFINITION
Which of the following is a demographic variable?
a. personality
b. gender
c. usage state
d. needs
e. MSA
Answer: b Page: 192

Rationale: Demographics are observable differences among people, such as gender, age, race,
household size, and so on.
9-64 SEGMENTATION BY DEMOGRAPHICS DEFINITION
All of the following are consumer demographic variables EXCEPT:
a. gender.
b. age.
c. NAIC code.
d. household size.
e. race.
Answer: c Page: 192

Rationale: Alternative c is a segmentation variable for organizational, not consumer markets.
The State of Alabama Board of Tourism ran a series of ads showing traditional families enjoying
various attractions in the state. Since the apparent target of these is traditional families, it appears
the State of Alabama Board of Tourism has segmented the market using __________ variables.
a. regional
b. demographic
c. socioeconomic
d. geographic
e. psychographic
Answer: b Page: 192

Which of the following statements demonstrates the formation of a segment based on household
size?
a. Campbell's makes spicier nacho cheese sauce for its distributors in Texas than it does in
Maine.
weekdays.
though there is a much larger-audience rock station in the area.
Answer: b Page: 192

Rationale: Household size is a demographic customer characteristic. Because smaller
households have smaller kitchens, GE downsized its microwave oven, and restyled it to hang
under cabinets.
538
At a Hallmark store you can find several different product lines of greeting cards, including Fresh
Ink, Nature's Sketchbook, Shoebox, Maxine, Mahogany, and Tree of Life cards—all made by
Hallmark for sale in its stores and intended to appeal to different target markets. The Mahogany
line is designed to appeal to African-Americans. This is an example of __________
segmentation.
a. regional
b. demographic
c. lifestyle
d. geographic
e. psychographic
Answer: b Page: 192

9-68 SEGMENTATION BY DEMOGRAPHICS; PSYCHOGRAPHICS APPLICATION
Ford Motor Company uses the slogan “No Boundaries” for its ad campaigns for Ford SUVs. It
invites people who want ultimate people-carrying and gear-storing capabilities “to be outfitted
with the most far-reaching sports utility vehicle on earth.” If the SUV campaign were simply
geared to household size, it would be using __________ segmentation, but because the campaign
is trying to appeal to people who don't like the restrictions of a sedan, who want to be able to pack
up and leave at a moment's notice, and who enjoy freedom and independence, it is relying on
__________ segmentation.
a. socioeconomic; demographic
b. psychographic; lifestyle
c. geographic; usage rate
d. demographic; usage rate
e. demographic; psychographic
Answer: e Page: 192

Rationale: Household size is a demographic variable. The attitude that sedans are inadequate
and that freedom and independence are desirable reflect psychographic segmentation variables.
9-69 SEGMENTATION BY PSYCHOGRAPHICS APPLICATION
Magazines like Fitness, Field & Stream, Golf Digest, and Health all use a
____________________ segmentation strategy.
a. demographic.
b. age.
c. geographic.
d. sociocultural.
e. psychographic.
Answer: e Page: 192

Rationale: Lifestyle is a psychographic variable. These magazines are designed to appeal to
people who enjoy certain lifestyles.
9-70 SEGMENTATION BY PSYCHOGRAPHICS APPLICATION
Nike recently debuted the Air Jordan XVII with a price tag of $200. The shoes arrived at shoe
stores in a metallic silver briefcase instead of a shoebox. Nike is targeting a market it identifies
as “keepers,” people who buy the shoes, keep them under their bed and when friends come over,
show them the shoes. Selling to the market segment called “keepers” probably means that Nike
is using which of the following types of customer characteristic variables to segment this market?
a. demographics
b. psychographics
c. usage
d. benefits sought
e. behavior
Answer: b Page: 192 Other Locations: web

Rationale: Alternative a refers to gender, age, race, and household size, for example.
Alternatives c, d, and e describe buying situation variables. Psychographic characteristics like
personality (gregarious, introverted, compulsive) and lifestyle (consumer activities, interests,
opinions) describe this segmentation variable Nike is using.
9-71 SEGMENTATION BY PSYCHOGRAPHICS DEFINITION
Consumer activities, interests, and opinions are considered:
a. psychological variables.
b. consumer behavior.
c. attitudes.
d. psychographic variables.
e. demographic variables.
Answer: d Page: 192

Rationale: Psychographic characteristics include personality (gregarious, introverted,
compulsive) and lifestyle (consumer activities, interests, opinions).
540
9-72 SEGMENTATION BY SOCIOECONOMIC APPLICATION
At a Hallmark store you can find several different product lines of greeting cards, including Fresh
Ink, Nature's Sketchbook, Shoebox, Maxine, Mahogany, and Tree of Life cards—all cards made
by Hallmark for sale in its stores and intended to appeal to different target markets. The Shoebox
line sells for $.99, which is a significantly lower price than some of the other Hallmark brands
sell for. The Shoebox line is designed to appeal to people on limited budgets and is an example
of __________ segmentation.
a. psychographic
b. behavior
c. buying situation
d. socioeconomic
e. geographic
Answer: d Page: 192

Rationale: Socioeconomic variables include income, education and occupation.
9-73 SEGMENTATION BY SOCIOECONOMIC APPLICATION
At the Daniels College of Business many different degrees are offered such as the Bachelor of
Science, the MBA, the MS-Marketing Strategy, the MS-Integrated Marketing Communication,
and each is intended to appeal to different target markets. The MBA and MS degrees are targeted
to people who already have a bachelor’s degree and are examples of __________ segmentation.
a. psychographic
b. behavior
c. buying situation
d. socioeconomic
e. geographic
Answer: d Page: 192

Rationale: Socioeconomic variables include income, education and occupation.
9-74 SEGMENTATION BY CUSTOMER CHARACTERISTICS DEFINITION
Several customer characteristics used in segmenting consumer markets are based on those from
the 2000 U.S. Census and include:
a. psychographics.
b. usage rate.
c. buying situation.
d. time of purchase.
e. type of retail store used.
Answer: a Page: 192

Rationale: Customer characteristics used in segmenting consumer markets include geographic,
demographics, socioeconomic variables, and psychographic characteristics.
a. usage rate.
b. geographic variables.
c. buying situation.
d. time of purchase.
e. type of retail store used.
Answer: b Page: 192

a. buying situation
b. usage rate
c. demographics
d. time of purchase
e. type of retail store used
Answer: c Page: 192

9-77 SEGMENTATION BY BENEFITS SOUGHT APPLICATION
Nike recently debuted the Air Jordan XVII with a price tag of $200. The shoes arrived at shoe
stores in a metallic silver briefcase instead of a shoebox. Nike is targeting a market it identifies
as “keepers,” people who buy the shoes, keep them under their bed and when friends come over,
show them the shoes. Selling to the market segment called “keepers” probably means that Nike
is using which of the following types of buying situation variables to segment this market?
a. demographics
b. psychographics
c. geographic
d. benefits sought
e. socioeconomic
Answer: d Page: 193

Rationale: Alternatives a, b, c, and e describe customer characteristics. The benefit would be
the ability to show the shoes and hopefully to have something that no one else did.
542
The headline of the ad for the Sleep Number bed by Select Comfort read, “5 Reasons Why You'll
Sleep Better on a Sleep Number Bed.” From this information, you know that Select Comfort
uses __________ segmentation.
a. benefits sought
b. psychographic
c. demographic
d. socioeconomic
e. behavior

Rationale: Benefits sought includes product features and customer needs. Customers and
prospects for the Sleep Number bed are seeking the benefit of a better night's sleep.
The slogan for General Foods International Coffee is “It Stirs the Soul.” Based on that
trademarked slogan, you should realize the product is using a __________ segmentation strategy.
a. geographic
b. socioeconomic
c. benefits sought
d. product knowledge
e. demographic
Answer: c Page: 193

Rationale: Benefits sought is a situational characteristic. General Foods was trying to get
consumers to think about how drinking a cup of rich-flavored coffee is indulgent.
Nyquil advertises that it alleviates “the nighttime, sniffling, sneezing, coughing, aching, stuffy
head, fever” and helps you get the rest you need to get better. Nyquil uses a segmentation
strategy based on __________ variables.
a. geographic
b. socioeconomic
c. benefits sought
d. product knowledge
e. demographic

Rationale: Nyquil is appealing to people who suffer from colds and who would really like to
sleep and feel better.
Many families today hold potluck meals during holidays or special events. Participants bring
casseroles, vegetables, breads, and desserts and all share the food. 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, attractive and inexpensive disposable dishes for transporting food.
Reynolds has recognized how to use _________ variables to segment its market.
a. user status
b. benefits sought
c. demographics
d. family size
e. geographic
Answer: b Page: 193

Rationale: Understanding what benefits are important to different customers is often a useful
way to segment markets because it can lead directly to specific marketing actions. The slogan
Reynolds uses with this new product says it all, “Make every dish forgettable.”
Many companies have cut travel budgets, so that very few business people are authorized to fly
first class. Despite the shrinking pool of business-class travelers, British Airways (BA) has
grown market share for its transatlantic business class by offering greater comfort. Promotions to
frequent fliers stress that passengers can sleep in fully reclining seats and arrive refreshed to carry
out a full day's schedule. BA's strategy is an example of segmenting the market by:
a. life stage.
b. lifestyle.
c. industry sector.
d. benefits sought.
e. psychographics.
Answer: d Page: 193

Rationale: British Airways is offering customers important benefits in time. They are able to
rest during the flight and to work more effectively upon arrival. Other airlines are rushing to
compete because BA has captured market share in this profitable segment at their expense.
544
9-83 SEGMENTATION BY USAGE APPLICATION
Pepperidge Farm has developed a new thick-sliced French Toast Swirl bread. The company
realizes most people who eat toast for breakfast, see it as a side dish. Pepperidge Farm's ads
advise consumers of this bread that this new product, “doesn't go with breakfast. It is breakfast.”
Which segmentation variable is being used in this example?
a. usage
b. benefits sought
c. demographics
d. family size
e. geographic
Answer: a Page: 193

Rationale: Pepperidge Farm is trying to change light users into medium users and medium users
into heavy users.
9-84 SEGMENTATION BY USAGE DEFINITION
The quantity consumed or patronage (store visits) during a specific period is called:
a. trial.
b. inventory.
c. usage rate.
d. consumption rate.
e. turnover.
Answer: c Page: 193

Rationale: Key term definition—usage rate
Miller beer once called itself "the champagne of bottled beer," and ads showed elegant women in
long white dresses sipping beer from crystal goblets. Then the company discovered that most
beer in the U.S. is consumed by men 18 to 30 years of age, and it changed the thrust of its
marketing message to reflect the more productive target market. What segmentation variable has
it focused on with the newer approach?
a. benefits sought
b. usage
c. product awareness
d. buyer intentions
e. buying condition
Answer: b Page: 193

Rationale: The quantity consumed or patronage (store visits) during a specific period is called
usage rate. In this case, the quantity of beer consumed caused Miller to change its marketing
message to appeal to the men 18 to 30 years of age—the heavier users.
Which of the following statements demonstrates the formation of a segment based on usage?
a. Campbell's soup makes spicier nacho cheese sauce for its distributors in Texas than it does in
Maine.
weekdays.
though there is a much larger-audience Top 40 station in the area.
Answer: d Page: 193

Rationale: The quantity consumed or patronage (store visits) during a specific period is called
the usage rate. In this case, the restaurant appears to have insufficient usage (patronage. during
weekdays), and more potential usage for breakfast on weekends.
Post Grape-Nuts cereal has been marketed since early in the 20th century. Its market share has
been steadily declining as consumers began associating it with something their grandfather ate.
Post recently launched a campaign to increase consumption of the cereal by inviting consumers to
try the crunchy cereal on top of their yogurt, their salad, or their bowl of soup as a delicious
addition. Post was trying to convince people who had never tried the cereal to try, and people
who were familiar with the product to use it a variety of different ways. Post is using which
segmentation variable to define its target market?
a. usage
b. demographic
c. behavior
d. lifestyle
e. life stage
Answer: a Page: 193

Rationale: Usage rate refers to the quantity consumed, which Post is trying to increase by
suggesting other product uses.
546
A national car rental firm targets 50 percent of its advertising to salespeople who travel more than
1,000 miles per week. Its market is segmented by:
a. usage.
b. benefits offered.
c. demographics.
d. family size.
e. psychographics.
Answer: a Page: 193

Rationale: The quantity consumed or patronage—store visits—during a specific period is the
usage rate. In this case, "more than 1,000 miles per week" is a measure of usage rate.
Golden Gallon convenience stores sell Golden Gallon brand milk. Every time a customer
purchases a gallon of this brand and gives the clerk his or her Golden Gallon card, the card is
punched. When the customer has accumulated enough marks, then he or she gets a free gallon of
milk. This is an example of segmentation by:
a. usage.
b. benefits offered.
c. demographics.
d. family size.
e. psychographics.
Answer: a Page: 193

Rationale: The quantity consumed or patronage—store visits—during a specific period is the
usage rate. In this case, the heavier users are those that get the Golden Gallon card punched
enough to obtain a free gallon of milk.
9-90 80/20 RULE DEFINITION
The 80/20 rule is a concept, which suggests:
a. eighty percent of a firm's inventory should be readily available, and twenty percent should be
reserved for emergency demand.
b. 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.
c. eighty percent of a firm's sales are obtained from twenty percent of its customers.
d. eighty percent of a firm's expenditures are tax deductible and twenty percent are not.
e. eighty percent of a firm's products will ultimately be sold at the original markup price, and
twenty percent will not.

Rationale: Key term definition—80/20 rule
9-91 80/20 RULE APPLICATION
Todd Harris and Associates, a New York sales promotion agency, discovered from analysis of its
files that one-fifth of its clients accounted for more than three-quarters of its fees and
commissions. This is an example of what classic concept?
a. the law of inverse proportions

b. the 80/20 rule
c. the survival of the fittest
d. the law of eminent domain
e. the primogeniture rule
Answer: b Page: 194

Rationale: The 80/20 rule is a concept that suggests 80 percent of a firm’s sales are obtained
from 20 percent of its customers.
9-92 80/20 RULE DEFINITION
The 80/20 rule is most closely related to which consumer segmentation variable?
a. geographic
b. psychographic
c. benefits sought
d. behavior
e. usage
Answer: e Page: 194 Other Locations: web

Rationale: According to the 80/20 rule, eighty percent of a firm's sales are obtained from twenty
percent of its customers.
9-93 80/20 RULE APPLICATION
If the owners of a bakery want to increase sales of its baked goods by directing its marketing
efforts towards the relatively small number of consumers who are responsible for the majority of
the baked goods sold, it would be:
a. augmenting its market.

b. segmenting its market based on the 80/20 rule.
c. segmenting its market based on family size.
d. segmenting its market according to consumer interest.
e. segmenting its market according to consumer needs.
Answer: b Page: 194

Rationale: Research has shown that approximately 80 percent of an organization's sales are
accounted for by 20 percent of its customers. While the percentages are merely meant as a
guideline, the rule is accurate in that there are heavy users of some products and services and a
relatively small proportion of the buying public is responsible for a majority of the sales of those
products.
548
9-94 FREQUENCY MARKETING DEFINITION
Airlines have developed frequent-flier programs to encourage passengers to use the same airline
repeatedly—a technique sometimes called__________.
a. convenience marketing
b. quality marketing
c. frequency marketing
d. quantity marketing
e. benefit marketing
Answer: c Page: 193

Rationale: Text term definition—frequency marketing
9-95 SEGMENTATION BY BUYING SITUATION DEFINITION
One buying situation used in segmenting consumer markets is:
a. psychographics.
b. usage rate.
c. demographics.
d. geographic.
e. socioeconomic.
Answer: b Page: 194

Rationale: Buying situations include benefits sought (product features, quality, service,
warranty) and usage (heavy user, light user, nonuser).
9-96 SEGMENTATION BY BUYING SITUATION DEFINITION
One buying situation used in segmenting consumer markets is:
a. psychographics.
b. benefits sought.
c. demographics.
d. geographic.
e. socioeconomic.
Answer: b Page: 194

Rationale: Buying situations include benefits sought (product features, quality, service,
warranty) and usage (heavy user, light user, nonuser).
9-97 NONPROSPECTS DEFINITION
People who do NOT use a firm's product or service, and most likely never will, are called:
a. nonqualified prospects.
b. leads.
c. undefined prospects.
d. nonprospects.
e. disenfranchised prospects.
Answer: d Page: 194

Rationale: Among nonusers of a product, people who might become users are
prospects and people who are never likely to become users are
nonprospects.
9-98 NONPROSPECTS APPLICATION
The 11 percent of adult Americans who don't go to fast-food restaurants in a typical month, and
are never likely to become users, are __________.
a. cold leads
b. nonqualified prospects
c. remote chances
d. undefined prospects
e. nonprospects
Answer: e Page: 194

Rationale: Among nonusers of a product, people who might become users are
prospects and people who are never likely to become users are
nonprospects.
9-99 PROSPECTS DEFINITION
People who use the type of good or service your firm sells although they do NOT use your firm's
product now are called:
a. ultimate consumers.
b. leads.
c. prospects.
d. non-prospects.
e. undefined prospects.
Answer: c Page: 194

Rationale: Consumers who use a product category but not a particular brand
are viewed as prospects.
550
9-100 ORGANIZATIONAL MARKET SEGMENTATION DEFINITION
Variables such as location, the North American Industry Classification System (NAICS) code,
and number of employees are examples of ways to:
a. get around gatekeepers and reach buyers.

b. forecast sales to a consumer market.
c. segment an organizational market.
d. segment a consumer market.
e. promote buyer loyalty.
Answer: c Page: 195

Rationale: There are a number of variables that might be used to segment
organizational markets including location, NAICS code, number of employees
(related to usage), and benefits sought.
9-101 ORGANIZATIONAL MARKET SEGMENTATION APPLICATION
Evergreen Air Center in Marana, Arizona, is the world's biggest parking lot for unwanted
commercial aircraft. Airlines pay from $750 to $5,000 a month for its storage service. The
warm, dry air where the operation is located serves as a cheap and effective airplane preservative.
Which organizational segmentation variable might Evergreen use to segment its market?
a. NAICS codes and benefits sought

b. number of locations and benefits sought
c. location and demographics
d. NAICS sectors and number of locations
e. number of employees and population density
Answer: a Page: 195

Rationale: The NAICS sectors would reveal other companies that fly commercial planes that
might be interested in Evergreen's services. Also, the companies storing their planes at the
facility want the planes preserved—a benefit sought.
William Morris talent agency represents country singer Trace Adkins in negotiations with various
venues in which he could perform. Imagine that the agency decided the singer would not perform
at venues located in communities that had less than 100,000 people. This would be segmenting
the market by __________ variables.
a. nature of good
b. psychographic
c. location
d. usage
e. buying condition
Answer: c Page: 195

Rationale: Population density is closely related to MSA classifications, the location
segmentation variable.
Australia-based Renewable Energy Ltd. sells a device that converts manure into energy. One of
the $10 million devices is capable of generating energy equal to $2 million of natural gas per
year. The company believes its target market is businesses that use a lot of energy like its first
customer, a fertilizer manufacturer, and that are located in rural areas. It will use which of the
following strategies to segment its market:
a. benefits sought and geographic.

b. number of employees and benefits sought.
c. purchase location and purchase type.
d. NAICS codes and location.
e. benefits sought and NAICS codes.
Answer: d Page: 195

Rationale: Renewable Energy could use NAICS codes to locate other fertilizer manufacturers
and location segmentation because prospects need to be in rural areas where there is a ready
supply of manure.
9-104 ORGANIZATIONAL SEGMENTATION BY LOCATION APPLICATION
When evaluating entry into the large Boston market, Seattle-based Starbucks Coffee Company
found that Coffee Connection, a well-established local chain, already occupied many prime
locations. Starbucks entered the market anyway because it based its decision on:
a. number of employees, a geographic variable.

b. the NAICS code, a demographic variable.
c. population density, a location variable.
d. nature of good, a customer characteristic variable.
e. buying conditions, a demographic variable.
Answer: c Page: 195

Rationale: Coffee Connection was a strong competitor: well-established, locally owned, and
occupying excellent locations. However, Starbucks' criteria still favored entry. Boston is a large
market (population density-a location variable), with potential for growth in coffeehouses owing
to many students and young professionals. Starbucks bought Coffee Connection and converted
its locations to reach the segment faster and more effectively. None of the pairings in the
alternatives is a correct combination except alternative c.
552
Harmony Products makes fertilizers used on golf courses. Which organizational market
segmentation variable would provide the greatest benefit to the organization?
a. NAICS codes
b. annual sales
c. buying condition
d. nature of good
e. number of locations
Answer: a Page: 195

Rationale: Organizational market segmentation variables include location, NAICS code, number
of employees, and benefits sought. In this case, Harmony could use the NAICS codes to find golf
courses to sell its fertilizers to.
9-106 ORGANIZATIONAL MARKET SEGMENTATION CONCEPTUAL
Which of the following is NOT a basis used to segment organizational markets?
a. location
b. psychographic
c. NAICS code
d. number of employees
e. benefits sought
Answer: b Page: 195

Rationale: Organizational market segmentation variables include location, NAICS code, number
of employees, and benefits sought. Alternative b is a segmentation variable for consumer
markets.
Best Foods Company is considering expanding beyond the regional market segments now served
by its Hellmann's mayonnaise. 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. This is an example of which criterion used to pick new target market segments?
a. Best Food's competitive position in the segment

b. Best Food's created product groupings
c. expected growth of the market segment
d. size of the market segment
e. compatibility with Best Food's objectives and resources
Answer: e Page: 195

Rationale: New equipment to reach a new market segment relates to the organization's
resources.
9-108 PRODUCT GROUPING DEFINITION
__________ occur(s) when products are put into meaningful categories so buyers can relate to
them.
a. Market-product combinations
b. Categorical marketing
c. 80/20 grouping
d. Product groupings
e. Organizational segmentation
Answer: d Page: 195

Rationale: Products are put into meaningful categories using product grouping, so buyers can
relate to them.
9-109 PRODUCT GROUPING APPLICATION
Hallmark groups its products into five categories. They are flowers and gifts, cards and e-cards,
Hallmark collectibles, gift wrappings, and photo albums and scrapbooks. Why does Hallmark
use product groupings?
a. The groupings increase the number of market-product combinations on the market-product

grid into a more manageable framework for subsequent analysis.
b. Consumers buy more in illogically organized environments.
c. The products are grouped into meaningful categories using product grouping so buyers can
relate to these products.
d. Product groupings can be generated quantitatively to show which adhere to the 80/20 rule.
e. All of the above are reasons why Hallmark would use product groups.
Answer: c Page: 195

Rationale: Products are put into meaningful categories using product grouping, so buyers can
relate to them.
9-110 PRODUCT GROUPING APPLICATION
In developing a marketing strategy for Hallmark the company decides that what it was really
selling was memory keeping, and not photo albums, scrapbooks, and related supplies. Thus, store
layouts are defined to reflect this buyer experience, rather than a collection of books and related
supplies. This is an example of:
a. target market selection.

b. product grouping.
c. market-product grid development.
d. taking marketing actions to reach target markets.
e. market segmentation of prospects.
Answer: b Page: 195

Rationale: Products are put into meaningful categories (memory keeping) using product
grouping (putting the photo albums, scrapbooks, and related supplies together in the store), so
buyers can relate to them.
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9-111 PRODUCT GROUPINGS APPLICATION
Hallmark grouped its scrapbook supplies, photo albums and such into one product group because:
a. competitors relate to them better for benchmarking purposes.

b. customers relate to them better since all of these products may be used to record memories.
c. it is easier to estimate the industry sales for fewer market-product combinations.
d. it is more profitable to define product groupings in terms of large market segment because it
reduces manufacturing and marketing costs.
e. its competitors engage in no product groupings.
Answer: b Page: 195 Other Location: web

Rationale: Products are put into meaningful categories (items used to record memories) using
product grouping (the scrapbook supplies and photo albums), so buyers can relate to them.
9-112 MARKET-PRODUCT GRID CONCEPTUAL
In developing a marketing strategy for your Wendy's restaurant, you determine that as many as
400 lunches per day are purchased by local college students who commute and eat at your
restaurant. This is part of the process for:
a. implementing the 80-20 rule.

b. forming products to be sold into groups.
c. developing a market-product grid and estimating size of markets.
d. implementing a harvesting strategy.
e. repositioning a product.
Answer: c Page: 196

Rationale: Estimating how many lunches (product) per day a market (commuter students) will
eat at your restaurant is one of the activities in the process of developing a market-product grid
and estimating the size of markets in each of the cells in the grid. In this case, the commuter
student-lunch cell is being estimated.
9-113 SELECTING TARGET SEGMENTS CONCEPTUAL
Which of the following is a criterion used for selecting a target segment?
a. size of the market

b. expected growth
c. cost of reaching the segment
d. compatibility with the organization’s objectives and resources
e. All of the above are used for selecting a target segment.
Answer: e Page: 197

Rationale: The five criteria to use in actually selecting the target segments are: (1) market size,
(2) expected growth, (3) competitive position, (4) cost of reaching the segment, (5) compatibility
with the organization’s objectives and resources.
Which of the following is NOT a criterion used for selecting a target segment?
a. size of the market

b. similarities of needs of potential buyers
e. compatibility with the organization’s objectives
Answer: b Page: 197

Rationale: Similarities of needs of buyers within a segment is a criterion for segmenting a
market, not for selecting one.
Five general criteria are often used to pick target segments. They include the size of the market,
expected growth of the market, competitive position of the firm with respect to the market, and
compatibility with the organization's objectives and resources. What is the fifth criterion?
a. cost of reaching the segment

b. time required to create awareness
c. need to conform to government regulations
d. how long target market members have been customers
e. amount of publicity likely to result

Rationale: There are two different kinds of criteria present in the market
segmentation process: (1) those used to divide the market into segments;
and (2) those used in picking the target segments. The five criteria to use in
actually selecting the target segments are: (1) market size, (2) expected growth, (3) competitive
position, (4) cost of reaching the segment, (5) compatibility with the organization’s objectives
and resources.
9-116 SELECTING 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. In terms of the criteria used for selecting a target
segment, this market would:
a. have no expected growth.

b. not be compatible with the company's current resources.
c. be very small.
d. be readily accessible to the firm's marketing programs.
e. be accurately described by all of the above.
Answer: c Page: 197

Rationale: The market would grow as people continue skiing—although it may be slow growth.
This market would use the rehabilitation services that the company now provides. Because it
would be so small, it would not be readily accessible by marketing programs.
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9-117 SELECTING TARGET SEGMENTS APPLICATION
In developing a marketing strategy for the newly released Nike Air Jordan XVII with a price tag
of $200, Nike decided to concentrate on affluent teens rather than members of high school
basketball teams. This is an example of:
a. selecting target market segments to reach.

b. forming products to be sold into groups.
c. developing a market-product grid and estimating size of markets.
d. taking marketing actions to reach target markets.
e. forming prospective buyers into segments.
Answer: a Page: 197

Rationale: A decision to concentrate on affluent teenagers is the selection of a target market
segment.
Which of the following is a criterion for selecting a target segment?
a. similarity of needs of potential buyers within a segment

b. difference of needs of sellers between segments
c. feasibility of a marketing action to reach a segment
d. amount of competition in the segment
Answer: d Page: 197

and resources. Competitive position is a criterion for selecting a target market. The less the
competition, the more attractive the segment is.
Which of the following is a criterion for selecting a target market?
a. similarity of needs of potential buyers within a segment

b. difference of needs of buyers between segments
c. feasibility of a marketing action to reach a segment
d. simplicity and cost of assigning potential buyers to segments
e. expected growth of segment
Answer: e Page: 197

and resources. Expected growth is a criterion for selecting a target market. Although the size of
market in the segment may be small now, perhaps it is growing significantly or is expected to
grow in the future.
Which of the following is NOT a criterion for selecting a market segment?
a. similarity of needs of potential buyers

b. expected growth
e. compatibility with the company's objectives
Answer: a Page: 197

and resources. Similarity of needs is a criterion for segmenting a market, not for selecting one.
558
9-121 TAKING MARKETING ACTIONS APPLICATION
Doris Lewis owns Lewis Edibles, Inc., a company that makes Tongue Tinglin' B.B.Q. Sauce.
She wants to target local people who like the special blend of flavors found only in North
Carolina barbecue sauce. In developing a marketing strategy to sell the sauce, Lewis decided to
join Goodness Grows in North Carolina, a specialty food association, that advertises local
products and distributes them to local supermarkets and gourmet shops. Lewis has just:
a. selected target market segments to reach.

b. formed products to be sold into groups.
c. developed a market-product grid and estimating size of markets.
d. taken marketing actions to reach target markets.
e. formed prospective buyers into segments.
Answer: d Page: 197

Rationale: Alternative d is the final result in the process of segmenting and targeting markets.
Kellie Johnson makes jams and jellies that sell under the brand name of Yesterday's Kitchen. In
developing a marketing strategy to sell her product line, she decided to buy an ad in the local
shopper's newspaper that is well-read in her region of the country. Johnson has just:

Answer: d Page: 197 Other Locations: web

developing a marketing strategy to sell her product line, she decided to package her jams and
jellies with a tag that indicates the products have been hand-made. Johnson has just:

Answer: d Page: 197

developing a marketing strategy to sell her product line, she decided to hire an independent sales
agent to sell her product on the East coast. Johnson has just:

Answer: d Page: 197

developing a marketing strategy to sell her product line, she decided to sell her product not only
to retailers, but also to ultimate consumers using a website. Johnson has just:

Answer: d Page: 197

developing a marketing strategy to sell her product line, she decided to develop a website so that
she could sell her product all across the United States. Johnson has just:

Answer: d Page: 197

560
developing a marketing strategy to sell her product line, she decided to use overnight shipping
during the holidays so that customers would receive her products in time. Johnson has just:

Answer: d Page: 197

9-128 APPLE'S SEGMENTATION STRATEGY APPLICATION
In 1998 Apple re-focused on the consumer and education markets, introducing the iMac—the
most innovative PC ever created according to many PC and business analysts. By the end of the
year, 800,000 units had been sold, making the iMac the greatest PC product launch ever. This
strategy was successful primarily because it identified:
a. innovative distributors.
b. competitive advertising.
c. important corporate computer needs.
d. target market segments.
e. usage rates among younger consumers.
Answer: d Page: 199

Rationale: Steve Jobs returned to Apple in 1997 and changed its segmentation strategy. In 1998
Apple re-targeted the consumer and education markets, delivering a powerful new PC at a lower
price. Introducing colorful iMac in five fruit flavors in 1999 enhanced appeal to these target
market segments.
9-129 MARKETING NEWSNET DEFINITION
In the early 1980s Apple Computer Company was often called "Camp Runamok" because the
innovative company had no:
a. profits.
b. coherent product lines targeted to identifiable market segments.
c. distributors.
d. investment capital.
e. competitors.
Answer: b Page: 199

Rationale: Apple’s lack of a segmentation strategy in the early 1980s has been
replaced by one which Steve Jobs is using to compete in what he sees as the
Age of the Digital Lifestyle.
9-130 APPLE'S REPOSITIONING STRATEGY APPLICATION
In 2001, Steve Jobs believed that the personal computer entered the Age of the Digital Lifestyle.
Jobs proclaimed that “the Mac can become the digital hub of this new digital lifestyle.” By
__________ Apple as the “digital hub” with “killer apps,” such as iTunes, iMovie, iDVD, and
iPhoto, bundled as iLife, Jobs believe consumers can take full advantage of the new digital
lifestyle era.
a. repositioning
b. distributing
c. targeting
d. using
e. underestimating
Answer: a Page: 201; Figure 9-8

Rationale: Steve Jobs returned to Apple in 1997 and changed its segmentation strategy. In 1998
Apple re-targeted the consumer and education markets, delivering a powerful new PC at a lower
price. Introducing colorful iMac in five fruit flavors in 1999 enhanced appeal to these target
market segments.
9-131 MARKET-PRODUCT SYNERGIES DEFINITION
__________ are opportunities for efficiency in terms of market segments and research and
development and production.
a. Product perceptions
b. Relative positionings
c. Competitive positionings
d. Market-product synergies
e. Selective perceptions
Answer: d Page: 200

Rationale: Marketing synergies are opportunities for efficiency in terms of a market segment;
one example is focusing on a single consumer segment. Product synergies are opportunities for
efficiency in terms of research and development and production; one example is focusing on a
single product. Both of these minimize costs but do not take into account synergies, which may
come about by overlap in positioning several products to one or more market segments or selling
one product to multiple segments.
562
9-132 MARKET-PRODUCT SYNERGIES CONCEPTUAL
Market-product synergies are:
a. opportunities for efficiency in terms of market segments.

b. opportunities for efficiency in terms of research and development and production.
c. vital to success in selecting target market segments.
d. vital to success in making marketing decisions.
e. described by all of the above statements.
Answer: e Page: 200

Rationale: Marketing synergies are opportunities for efficiency in terms of a market segment;
one example is focusing on a single consumer segment. Product synergies are opportunities for
efficiency in terms of research and development and production; one example is focusing on a
single product. Both of these synergies are vital to success in both selecting target market
segments and making marketing decisions.
9-133 PRODUCT POSITIONING DEFINITION
The place an offering occupies in consumers' minds on important attributes relative to

competitive offerings is called:
a. product perception.
b. relative positioning.
c. competitive positioning.
d. product positioning.
e. selective perception.
Answer: d Page: 201

Rationale: Key term definition—product positioning
9-134 PRODUCT POSITIONING DEFINITION
What does the term product positioning refer to?
a. a careful analysis of cross tabulations

b. shelf locations in major chain, grocery, and department stores
c. geographic segmentation, often within major metropolitan areas
d. the place a product offering occupies in consumers' minds on important attributes
e. an old and outdated concept no longer worthy of consideration in marketing planning
Answer: d Page: 201

Rationale: Key term definition—product positioning
9-135 PRODUCT POSITIONING APPLICATION
Children's Advil pain reliever positioned itself against Children's Tylenol pain reliever by running
ads, which claimed that the Advil brand is superior because it works faster and longer than the
Tylenol brand. This is an example of:
b. lateral positioning.
c. differentiation.
d. consumer positioning.
e. cognitive positioning.
Answer: a Page: 201

Rationale: Product positioning refers to the place an offering occupies in consumers’ minds on
important attributes relative to competitive offerings. In this case Advil is positioned as faster
and longer-lasting than Tylenol.
9-136 PRODUCT POSITIONING APPLICATION
There are a lot of skateboard manufacturers on the market, but the BMW Streetcarver is the only
one with stabilizers and wheel design based on BMW's automobile. This technology gives the
BMW Streetcarver better control at high speeds and around sharp turns than any other brand.
What type of positioning is BMW using with its $495 skateboard?
a. parallel market positioning

b. distinction positioning
c. competitive positioning
d. product positioning
e. head-to-head positioning

Rationale: Product positioning refers to the place an offering occupies in consumers’ minds on
important attributes relative to competitive offerings. In this case BMW has positioned their
skateboard as having important attributes (better control at high speeds and around sharp turns)
relative to competitive offerings.
9-137 PERCEPTUAL MAP DEFINITION
Marketers use perceptual maps as a means to display or graph in two dimensions the location of
products or brands:
a. with respect to the geographic areas in which they are manufactured.

b. as they are clustered by type of outlet, normally in major metropolitan areas.
c. within selected retail outlets, indicating accessibility by consumers.
d. in the minds of consumers.
e. within distribution channels.
Answer: d Page: 201

Rationale: Key term definition—perceptual map
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9-138 PERCEPTUAL MAP CONCEPTUAL
A perceptual map is most like a:
a. consumer map of likes and dislikes.

b. database.
c. two-dimensional graph.
d. pyramid design.
e. three-dimensional cube.

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. The map is based on perceptions of:
a. intermediaries.
b. competitors.
c. consumers.
d. competitors, consumers, and the firm itself.
e. independent rating organizations such as Consumer Reports.
Answer: c Page: 201

A graph displaying consumers' perceptions of product attributes across two or more dimensions is
a:
a. payoff table.
b. growth matrix.
c. market-product grid.
d. perceptual map.
e. consumer preference matrix.
Answer: d Page: 201

Rationale: A perceptual map is a means of displaying or graphing in two dimensions the
location of products or brands in the minds of consumers to enable a manager to see how
consumers perceive competing products or brands and then take marketing actions.
9-141 REPOSITIONING DEFINITION
Changing a the product's position in consumers' minds is called:
a. perceptual mapping.
b. product positioning.
d. repositioning.
e. psychographics.

Rationale: Repositioning is changing the position a product holds in the consumer’s mind.
9-142 REPOSITIONING CONCEPTUAL
SwissAir recently tried to expand, but because of a variety of reasons, it failed and had to declare
bankruptcy. Prior to declaring bankruptcy, SwissAir engaged in several cost-cutting efforts,
which alienated its customer base. After much effort, the company began operations again with
the hope of attracting its previous customers back. Because it feared that a __________ strategy
would not undo the damage to the brand name, the company opted for a totally new name and
new look.
a. segmentation
b. differentiation
c. repositioning
d. probability
e. inference

Rationale: SwissAir did not believe that its customers would forgive it for the cutbacks it made
and, more importantly because it wanted to target the same customers, a repositioning strategy
was inappropriate.
9-143 REPOSITIONING APPLICATION
Post Grape-Nuts cereal has been marketed since early in the 20th century. Its market share has
been steadily declining as consumers began associating it with something their grandfather ate.
Post recently launched a campaign which invited consumers to try the crunchy cereal on top of
their yogurt, their salad, or their bowl of soup as a delicious addition. This is an example of a
__________ strategy.
a. perceptual mapping
b. product positioning
d. repositioning
e. psychographics

Rationale: Repositioning is changing a product's place in consumers' minds. In this case,
expanding the use of the product from breakfast time to all day is the repositioning strategy.
566
9-144 VIDEO CASE: NOKIA APPLICATION
The segmentation strategy used by first generation cellular phones was based on:
a. geography.
b. demography.
c. lifestyles.
d. socioeconomics.
e. buying situations.
Answer: a Page: 204

Rationale: Although market segmentation began with geography, Nokia’s strategy later changes
to focus on different types of customers, since over time, penetration rates were different for
different areas of the world.
By dividing its market into categories, which it labels Basic, Expression, Classic, Fashion,
Premium, and Communicator, Nokia is using:
a. consumer differentiation.
b. behavioral segmentation variables.
c. market delineation.
e. aggregation marketing.
Answer: d Page: 204

have common needs and (2) will respond similarly to a marketing action. Market segmentation
helps Nokia best service different consumers’ needs.
By developing and introducing a communication device, which includes a built-in stopwatch, a

thermometer, downloaded game packs, a personalized logo, a personal information manager and
a cellular phone that appeals to young adults, Nokia is taking advantage of __________.
a. product sampling strategy.

b. product extrapolation strategy.
c. market-product synergy.
d. usage segmentation.
e. market differentiation.
Answer: c Page: 204

Rationale: Marketing synergies represent efficiency in terms of reaching a market segment such
as young adults. Product synergies represent efficiency in terms of developing the device, which
includes a built-in stopwatch, a thermometer, downloaded game packs, a personalized logo, a
personal information manager and a cellular phone. Since Nokia is considering both, they are
taking advantage of market-product synergy.
By developing and introducing a communication device, which includes a built-in stopwatch, a

thermometer, downloaded game packs, a personalized logo, a personal information manager and
a cellular phone, Nokia is using a __________.strategy.
a. product sampling strategy

b. product extrapolation strategy
e. market differentiation
Answer: c Page: 204

Rationale: Product differentiation involves a firm’s using different marketing mix activities,
such as product features and advertising, to help consumers perceive the product as being
different and better than competing products. In this case Nokia is using physical product
features to differentiate their product.
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CHAPTER 9
SHORT ESSAY QUESTIONS
Define market segmentation. How does it link needs with marketing actions?
Answer:
Market segmentation is aggregating prospective buyers into groups that have common needs and
will respond similarly to a marketing action. Segmentation links needs to actions. 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. Such needs
and benefits must be related to specific, tangible marketing actions the firm can take.
Page: 187; Figure 9-1
9-149 PRODUCT DIFFERENTIATION CONCEPTUAL
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. In
its broadest sense it involves a firm's using different marketing mix activities, such as product
features and advertising, to help consumers perceive the product as being different and better than
competing products. Differences may involve nonphysical features as well, such as image or
price. Thus, product differentiation relates to competitive positioning, where perhaps the same or
similar target markets are more likely to buy the product differentiated as having greater
reliability or lower price. In a narrower sense, product differentiation involves a firm's selling
two or more products with different features targeted to different market segments, because
clearly defined and different target markets have different needs that can be satisfied with
different products of the same general type, as the text points out in connection with Reebok. As
long as a new product does not take a significant amount of sales away from an existing product,
though, it can contribute to increased revenues for the firm.
Page: 187
9-150 SINGLE PRODUCT, MULTIPLE MARKETS CONCEPTUAL
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, which
often entails high research, engineering, and manufacturing expenses. The additional marketing
costs of a single-product, multiple-market strategy—primarily in connection with promotion and
distribution—are usually relatively low.
Page: 189
9-151 MULTIPLE PRODUCTS, MULTIPLE MARKETS CONCEPTUAL
Why would an organization produce multiple products or services and then attempt to sell them
to two or more market segments?
Answer:
1) The additional profits derived from increased sales would exceed the additional research,
engineering, manufacturing, and marketing expenses; and/or
2) the marginal production costs could be lowered because of increased economies of scale (if
existing excess capacity rather than new plant capacity were used..
Page: 189
9-152 SYNERGY CONCEPTUAL
Explain the segmentation trade-off: customer relationship management (CRM) versus synergies.
Be sure to define CRM and synergy in your answer.
Answer:
CRM recognizes that every customer is unique, has unique wants and needs, and desires
exceptional service from the seller. Synergy is the increased customer value achieved through
performing organizational functions more efficiently. The trade off is finding the ideal balance
between these two concepts. The “increased customer value” can take many forms: more
products, improved quality of existing products, lower prices, easier access to product through
improved distribution, and so on. The ultimate criterion for an organization’s marketing success
is that customers should be better off as a result of the increased synergies.
Page: 190
570
A marketing manager should develop segments for a market that meet five principal criteria. List
these important factors in marketing planning.
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) feasibility of a marketing action to reach a segment
5) simplicity of cost of assigning potential buyers to segments.
Each relates to efficiency and productivity with respect to allocation of the firm's resources.
Page: 192
9-154 CRITERIA FOR FORMING SEGMENTS APPLICATION
A nonprofit food bank was gathering and handing out food to anyone who requested it. It now
wants to only give free food to people who go hungry on a regular basis. This will be the market
segment it targets. How will the evaluation of its market segment strategy differ from that used
for a retail store?
Answer:
There is one difference between for-profit and nonprofit criteria. The potential for increased
profit and ROI is replaced by the potential for serving client users more effectively. Based on the
food bank's previous policy, it is much more likely to serve its clients more effectively with the
new segmentation strategy.
Page: 192
9-155 SEGMENTING AND TARGETING A MARKET CONCEPTUAL
What are the steps needed to segment and target a market?
Answer:
The process of segmenting and targeting a market includes five steps.
1) Form prospective buyers into segments.
2) Form products to be sold into groups.
3) Develop a market-product grid to relate the market segments to the firm's products and
estimate the size of the market in each cell.
4) Select the target market segments toward which the firm will direct its marketing actions.
5) Take marketing actions to reach target markets.
Page: 192; Figure 9-3

9-156 CONSUMER SEGMENTATION VARIABLES CONCEPTUAL
What are the dimensions by which consumer markets can be segmented?
Answer:
Major divisions are customer characteristics and buying situations, under which consumer
markets are segmented according to the following factors: geographic, demographic,
socioeconomic and psychographic customer characteristics; and benefits sought, and usage
buying situations.
Page: 192
9-157 SEGMENTATION VARIABLES APPLICATION
Assume you are manager of The Outback Steak House, a franchised restaurant that has opened in
St. Louis. Describe how you would segment the market according to dimension, using as many
segmentation variables as you can, and explaining why each variable is appropriate.
Answer:
Students might select any segmentation variables described on pages 192-193. However, 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. They
could be defined by ZIP Code, census tract, or subdivision. The next dimension should be
demographics, including homeowners, young adults, married, probably with children. Also
important would be household income, perhaps related to occupations. The Outback manager
would seek those people who had not only the need, but also the means to dine at the restaurant,
and demographic correlations can be rather easily made with regard to those factors. The
psychographic dimension would include variables such as extroverted, gregarious, and those fond
of pleasures such as eating out. Segmentation according to the benefits dimension could include
convenience, and economy relative to more expensive restaurants. As for the usage dimension, it
would be well to seek medium and heavy users including, perhaps, those people who might dine
at The Outback more than once a month, since repeat business is the key to success in this sort of
venture.
Page: 192-193
9-158 CHOOSING TARGET MARKET SEGMENTS CONCEPTUAL
Why is it important for a firm to choose its target market segments carefully?
Answer:
A firm must choose its target market segments carefully because, if it picks too narrow a group of
segments, it may fail to reach the volume of sales and profits it needs. On the other hand, if it
selects too broad a group of segments, it may spread its marketing efforts so thin that the extra
expenses more than cancel out the increased sales and profits.
Page: 192
572
9-159 80/20 RULE CONCEPTUAL
Explain the 80/20 rule and explain how it is used in market segmentation.
Answer:
The 80/20 rule suggests that 80 percent of a firm’s sales are obtained from 20 percent of its
customers. The percentages in the 80/20 rule are not really fixed at exactly 80 percent and 20
percent but suggest that a small fraction of customers provide a large fraction of a firm’s sales.
One of the segmentation variables is buying situation. Under this are included benefits sought
and usage in terms of a heavy user, a light user, and nonusers. Clearly the 20 percent of
customers referred to above in the description of the 80/20 rule are heavy users and are important
to any company.
Page: 193-194
9-160 WAYS TO SEGMENT ORGANIZATIONAL MARKETS CONCEPTUAL
What are the variables that may be used to segment organizational markets?
Answer:
There are 4 variables that may be used to segment organizational markets:
(1)location, (2) NAICS code, (3) number of employees, (4) benefits sought.
Page: 195
9-161 CHOOSING TARGET MARKET SEGMENTS CONCEPTUAL
What are the criteria to be used in selecting target segments?
Answer:
The five criteria to be used in actually selecting the target segments are size of market, expected
growth, competitive position, cost of reaching the segment, and compatibility with the
organization's objectives and resources. As is often the case in marketing decisions, a particular
segment may appear attractive according to some criteria, and unattractive according to others.
Page: 197
9-162 APPLE’S MARKET-PRODUCT GRID CONCEPTUAL
Explain how Apple Computer uses a market-product grid to target its various lines of Macintosh
computers at specific market segments.
Answer:
A market-product grid is a figure that is developed labeling the horizontal rows as the markets
and the vertical rows as the product offerings. The market-product combination is then shown in
each cell and evaluated for use in the segmentation strategy. In Apple’s case, the markets served
are the consumer and professional markets, while the products include the Power Macintosh G4,
the PowerBook G4, the iMac, the iBook, the eMac, and the iPod (as of mid-2003). A consumer
or small home office might be targets for all of the products except the iPod, whereas the iMac
could be positioned in the mind of both the consumer and the professional as meeting their
respective needs.
Page: 199
9-163 MARKET-PRODUCT SYNERGIES CONCEPTUAL
Why is it that achieving market-product synergies may be something of a balancing act?
Answer:
A choice to take advantage of marketing synergies can often come at the expense of production
synergies because a single consumer segment will likely require a variety of products—each of
which will have to be designed and manufactured. The company saves money on marketing, but
spends more in production. Conversely, if product synergies are emphasized, marketing will
have to address the concerns of a wide variety of consumers, which costs more time and money.
Marketing managers responsible for developing a company’s product line must thus balance both
product and marketing synergies as they try to increase the company’s profits.
Page: 200-201
9-164 DATA NEEDED FOR PERCEPTUAL MAP CONCEPTUAL
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, companies obtain three types
of data from consumers. They are:
1) the important attributes for a product class
2) judgments of where existing products or brands are located on these attributes
3) the location of the firm’s own product or brand on these attributes
Page: 201
574

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Chap 009

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Chapter 9

IDENTIFYING MARKET SEGMENTS AND TARGETS

Major Section of the Level of Learning

Video Case: Nokia 144, 145, 146, 147

Note: Bold numbers indicate short essay questions.

MULTIPLE CHOICE QUESTIONS

9-1 CHAPTER OPENING EXAMPLE: SNEAKERS CONCEPTUAL

Answer: a Page: 186

9-2 CHAPTER OPENING EXAMPLE: SNEAKERS CONCEPTUAL

Answer: a Page: 186

9-3 MARKET SEGMENTATION DEFINITION

Answer: c Page: 187

a. pay attention to marketing messages.

Answer: b Page: 187 Other Location: web

9-5 MARKET SEGMENTATION CONCEPTUAL

To be identified as a market segment, its members must:

Answer: b Page: 187

9-6 MARKET SEGMENTATION DEFINITION

Answer: c Page: 187

Answer: a Page: 187

9-8 MARKET SEGMENTS CONCEPTUAL

Answer: a Page: 187

9-9 PRODUCT DIFFERENTIATION CONCEPTUAL

Answer: c Page: 187 Other Location: web

Answer: c Page: 187

9-11 PRODUCT DIFFERENTIATION APPLICATION

Answer: c Page: 187

Answer: c Page: 187

9-13 PRODUCT DIFFERENTIATION APPLICATION

Answer: c Page: 187

Answer: c Page: 187

9-15 PRODUCT DIFFERENTIATION APPLICATION

a. compete for the same segment.

Answer: c Page: 187

a. self-regulatory industry standards

Answer: d Page: 187; Figure 9-1

9-17 MARKET SEGMENTATION CONCEPTUAL

a. self-regulatory industry standards.

Answer: c Page: 187; Figure 9-1

9-18 MARKET SEGMENTATION CONCEPTUAL

Market segmentation is only a means to an end. In economist's terms, it relates supply

a. self-regulatory industry standards

Answer: c Page: 187; Figure 9-1

Market segmentation is only a means to an end. In economist's terms, market segmentation

Answer: c Page: 187; Figure 9-1

9-20 MARKET SEGMENTATION CONCEPTUAL

a. increase sales and profitability.

Answer: a Page: 187

9-21 MARKET SEGMENTATION CONCEPTUAL

Marketers use market segmentation to:

a. link market needs to an organization's marketing program.

Answer: e Page: 187 Other Location: web

Answer: c Page: 188

9-23 MARKET-PRODUCT GRID DEFINITION

A __________ is a framework to relate the segments of a market to products offered or potential

Answer: c Page: 188

9-24 MARKET-PRODUCT GRID DEFINITION

A market-product grid is a framework to relate:

a. estimated expenses for products sold to various market segments.

Answer: d Page: 188 Other Location: web

One advantage of a market-product grid is that it can be used to:

a. make optimal decisions under conditions of uncertainty.