Marketing Management – 12th Edition – Kotler/Keller



Chapter 8: Identifying Market Segments and Targets

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. Instead of scattering their marketing effort (a “shotgun” approach), many companies are now embracing target marketing where the focus is on those consumers that they have the greatest chance of satisfying (a ________ approach) with their products and services.

a. “rifle”

b. “focused”

c. “niche”

d. “macro”

e. “micro”

Answer: a Page: 240 Level of difficulty: Easy

1. In ________ marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers.

a. group

b. mass

c. general

d. segmented

e. differentiated

Answer: b Page: 240 Level of difficulty: Medium

2. The argument for ________ marketing is that it creates the largest potential market, which leads to the lowest costs, which in turn can lead to lower prices or higher margins.

a. niche

b. micro

c. macro

d. differentiated

e. mass

Answer: e Page: 240 Level of difficulty: Medium

3. A ________ consists of a group of customers who share a similar set of needs and wants.

a. market target

b. market group

c. market slice

d. market segment

e. market level

Answer: d Page: 240 Level of difficulty: Medium

4. A ________ consists of two parts: a naked solution and discretionary options.

a. differentiated market offering

b. flexible market offering

c. rigid market offering

d. vertical market offering

e. horizontal market offering

Answer: b Page: 241 Level of difficulty: Hard

5. If a marketing manager observes that his or her market shows no natural segments and consumers seem to have roughly the same preferences, the marketing manager will most likely be faced with a ________ preferences pattern.

a. homogeneous

b. heterogeneous

c. diffused

d. clustered

e. scattered

Answer: a Page: 241 Level of difficulty: Medium

6. Procter & Gamble has many soap brands. One reason for this is that soap users tend to group together in terms of preferences such as bleaching action, softness, stain-removal, et cetera. Which of the following preferences pattern would most likely apply to P&G’s method of response to market needs?

a. Homogeneous preferences.

b. Diffused preferences.

c. Clustered preferences.

d. Psychological preferences.

e. Cultural preferences.

Answer: c Page: 242 Level of difficulty: Medium

7. Marketers usually identify niches by ________.

a. dividing a segment into subsegments

b. conducting VALS tests

c. allowing consumers to gravitate toward product brands

d. examining the demographics section of The Handbook of Marketing

e. producing products that can be used in a variety of ways

Answer: a Page: 242 Level of difficulty: Medium

8. A niche is characterized as being all of the following EXCEPT ________.

a. the customers in the niche have a distinct set of needs

b. the customers will pay a premium to the firm that satisfies their needs

c. the niche is not likely to attract other competitors

d. the customers generally have smaller amounts of income

e. the nicher gains certain economies through specialization

Answer: d Page: 242 Level of difficulty: Medium

9. Which of the following has greatly facilitated niche marketing?

a. The Internet

b. Globalization

c. Industrialization

d. Recession

e. Excessive demand

Answer: b Page: 243 Level of difficulty: Medium

10. When Nike attempts to get close to its customers at the local level by sponsoring local school teams and providing shoes, equipment, and clothing to many of them, Nike is using which of the following marketing formats?

a. Differentiated marketing

b. Consumer marketing

c. Instructional marketing

d. Partner marketing

e. Grassroots marketing

Answer: e Page: 244 Level of difficulty: Medium

11. According to thoughts expressed by Pine and Gilmore about a new economic era that is rapidly approaching, if you charge for the time customers spend with you, then and only then are you in the ________ business.

a. niche

b. grassroots

c. experience

d. service

e. goods

Answer: c Page: 245 Level of difficulty: Hard

12. Through customer experience management (CEM), brands can create five different types of experiences: sense, feel, think, relate, and ________.

a. remembering

b. forgetting

c. simulation

d. act

e. bargain

Answer: d Page: 245 Level of difficulty: Medium

13. ________ combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product service offering of their choice.

a. Consumptionization

b. Viral marketing

c. Virtual marketing

d. Regionalization

e. Customerization

Answer: e Page: 246 Level of difficulty: Medium

14. Two broad groups of variables are used to segment consumer markets. One method uses descriptive characteristics such as geography. The other method is to form segments by looking at ________ considerations.

a. gender

b. income

c. cultural

d. interest

e. behavioral

Answer: e Page: 247 Level of difficulty: Medium

15. If a marketer decides that segmenting a market based on neighborhoods, the marketer will have chosen the ________ method of segmentation.

a. demographic

b. psychographic

c. geographic

d. cultural

e. social class

Answer: c Page: 247 Level of difficulty: Easy

16. According to established methods of segmenting markets, all of the following would an appropriate segment category if the family life cycle was the segmentation base ACCEPT ________.

a. young, single

b. male, female

c. young, married

d. older, married, no children under 18

e. young, married, youngest child 6 or over

Answer: b Page: 248 Level of difficulty: Medium

17. A marketing manager is considering several options to market to market segments identified as being either culture-oriented, sports-oriented, or outdoor-oriented. This manager has selected the ________ format for segmenting markets.

a. personality

b. behavioral occasions

c. user status

d. psychographic lifestyle

e. readiness stage

Answer: d Page: 248 Level of difficulty: Medium

18. PRIZM (Potential Rating Index by Zip Markets) identifies clusters of consumers based on a variety of characteristics such as education and affluence. Which of the following clusters would match to a consumer group that is characterized as being in their late forties and fifties, college-educated, upper-middle-class homeowners that married late and are still raising children in comfortable suburban subdivisions and are still pursuing kid-centered lifestyles.

a. The cosmopolitans

b. Beltway boomers

c. Young digerati

d. Winner’s circle

e. Blue bloods

Answer: b Page: 249 Level of difficulty: Hard

19. Jose and Erika have just divorced. This will obviously not only have an impact on their personal lives but their consumptive lives as well. Which of the following demographic segmentation subsegment formats might be used by marketers to reach Jose or Erika?

a. Life stage

b. Benefits

c. Age segment

d. User segment

e. Occasion segment

Answer: a Page: 250 Level of difficulty: Medium

20. Men and women tend to have different attitudinal and behavioral orientations, based partly on genetic makeup and partly on ________.

a. income

b. occupation

c. socialization

d. heredity

e. globalization

Answer: c Page: 250 Level of difficulty: Medium

21. Which of the following American Generations is characterized as being great acquisitors and are value- and cause-driven despite indulgences and hedonism?

a. GI generation

b. Silent generation

c. Baby boomers

d. Generation X

e. Millennials

Answer: c Page: 252 Level of difficulty: Hard

22. ________ is the science of using psychology and demographics to better understand consumers.

a. Psychographics

b. Segmentation

c. Clustering

d. Demographics

e. Social psychology

Answer: a Page: 252 Level of difficulty: Medium

23. To reach Generation Y, rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who “get the latest news, exclusive audio/video sneak previews, tons of chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family. Which of the following techniques for reaching Generation Y are the Foo Fighters using?

a. Student ambassadors

b. Unconventional sports

c. Cool events

d. Computer games

e. Online buzz

Answer: e Page: 253 Level of difficulty: Medium

24. In 2003, 4.1 million Americans turned 21. An interesting fact is that the share of college students who plan to move back home after graduation is ________.

a. 10 percent

b. 25 percent

c. 50 percent

d. 60 percent

e. 75 percent

Answer: d Page: 253 Level of difficulty: Hard

25. According to the VALS 8-part typology segmentation system, ________ are successful, sophisticated, active, “take-charge” people with high self-esteem. Their purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services.

a. innovators

b. thinkers

c. achievers

d. experiencers

e. believers

Answer: a Page: 254 Level of difficulty: Hard

26. According to the VALS 8-part typology segmentation system, ________ are considered to be elderly, passive people who are concerned about change. They are loyal to their favorite brands.

a. believers

b. strivers

c. makers

d. survivors

e. experiencers

Answer: d Page: 254 Level of difficulty: Medium

27. A housewife requests a new treadmill for her birthday. With respect to consumer decision roles, which role is the housewife currently playing?

a. Initiator

b. Influencer

c. Decider

d. Buyer

e. Gatekeeper

Answer: a Page: 255 Level of difficulty: Easy

28. With respect to occasion segmentation, Christmas, Valentine’s Day, and ________ account for just over half of gifters’ budgets.

a. Halloween

b. Father’s Day

c. Mother’s Day

d. Thanksgiving

e. Independence Day

Answer: c Page: 256 Level of difficulty: Medium

29. Mobil identified five different benefit segments for which products and services could be designed. ________ (27 percent of the market) shops Mobil outlets for fast fuel, fast service, and fast food.

a. Road warriors

b. Generation F

c. True blues

d. Home bodies

e. Price shoppers

Answer: b Page: 256 Level of difficulty: Hard

30. With respect to user status (a segmentation possibility), ________ tend to focus on attracting potential users because they have the most to gain.

a. smaller firms

b. niche firms

c. followers

d. aggressive specialists

e. market-share leaders

Answer: e Page: 256 Level of difficulty: Hard

31. If a market is segmented according to light, medium, and heavy product users, the marketer segmenting this market is using the ________ as the means to segment.

a. user status

b. usage rate

c. buyer-readiness stage

d. occasion

e. benefit

Answer: b Page: 256 Level of difficulty: Easy

32. If a buyer is loyal to two or three different brands of soap, this buyer’s loyalty status can be described as being among the ________.

a. switchers

b. shifting loyals

c. split loyals

d. hard-core loyals

e. anti-loyals

Answer: c Page: 256 Level of difficulty: Easy

33. A company can learn a great deal by analyzing the degrees of brand loyalty. For example, by studying the ________ the company can pinpoint which brands are most competitive with its own.

a. hard-core loyals

b. split loyals

c. shifting loyals

d. switchers

e. anti-loyals

Answer: b Page: 257 Level of difficulty: Hard

34. All of the following have been designated as groups that might be found using attitude as the primary segmentation variable EXCEPT ________.

a. synergistic

b. enthusiastic

c. positive

d. indifferent

e. hostile

Answer: a Page: 257 Level of difficulty: Medium

35. A snack chip manufacturer is concerned about consumers leaving its brand and going to competitive alternatives. Which of the following groups (based on strength of commitment) would be most likely to leave the company’s offering and go somewhere else for snack products?

a. Convertible

b. Shallow

c. Average

d. Entrenched

e. Hard rocks

Answer: a Page: 258 Level of difficulty: Medium

36. If a consumer group is designated based on their “balance of disposition,” the ________ group can be described as one that is made up of nonusers who are as attracted to a competing brand as they are to their current brands.

a. strongly unavailable

b. weakly unavailable

c. ambivalent

d. available

e. desirable

Answer: c Page: 258 Level of difficulty: Medium

37. If a marketer is seeking to segment a business market, which of the following variables is generally felt to be important enough by marketers to place it first among the list of other variables that can be used in segmentation process?

a. Personal characteristics

b. Demographic

c. Situational factors

d. Operating variables

e. Purchasing approaches

Answer: b Page: 258 Level of difficulty: Hard

38. A marketer is interested in segmenting a business market based on technology and customer capabilities. Which of the following major segmentation variables would most likely be used by the marketer to assist with the task?

a. Demographic

b. Purchasing approaches

c. Situational factors

d. Personal characteristics

e. Operating variables

Answer: e Page: 259 Level of difficulty: Hard

39. A marketer is interested in segmenting a business market on ________ if the marketer intends to eventually segment the market based on loyalty and attitudes toward risk.

a. situational factors

b. purchasing approaches

c. personal characteristics

d. operating variables

e. demographics

Answer: c Page: 259 Level of difficulty: Medium

40. A company can be said to have used ________ if the company distinguished customers buying on the basis of price, service, and quality.

a. macrosegmentation

b. microsegmentation

c. strategic segmentation

d. global segmentation

e. short-term segmentation

Answer: b Page: 260 Level of difficulty: Hard

41. Business buyers seek different bundles based on their stage in the purchase decision process. ________ are customers who are starting their purchasing relationship and they want easy-to-read manuals, hot lines, high levels of training, and knowledgeable sales reps.

a. First-time prospects

b. Sophisticates

c. Global partners

d. Trend-setters

e. Novices

Answer: e Page: 260 Level of difficulty: Hard

42. If your marketing department established a priority in reaching solution-oriented customers (e.g., those that want value through more benefits and advice), ________ would be the best means for connecting with these customers.

a. transaction selling

b. consultative selling

c. enterprise selling

d. dual selling

e. psychological selling

Answer: b Page: 261 Level of difficulty: Medium

43. During which step of the segmentation process would the marketer group customers into segments based on similar needs and benefits sought by the customer in solving a particular consumption problem?

a. Step 2—segment identification

b. Step 3—segment attractiveness

c. Step 6—segment “acid test”

d. Step 1—needs-based segmentation

e. Step 7—marketing-mix strategy

Answer: d Page: 261 Level of difficulty: Medium

44. If an organization’s marketing department wished to create “segment storyboards” to test the attractiveness of each segment’s positioning strategy, this action would most likely occur in the ________ step of the segmentation process.

a. needs-based segmentation

b. segment identification

c. segment profitability

d. segment “acid test”

e. marketing-mix strategy

Answer: d Page: 261 Level of difficulty: Hard

45. To be useful, market segments must rate favorably on five key criteria. In the ________ criterion, effective programs can be formulated for attracting and serving the segments.

a. measurable

b. substantial

c. accessible

d. differentiable

e. actionable

Answer: e Page: 262 Level of difficulty: Medium

46. In evaluating different market segments, the firm must look at two factors: the segment’s overall attractiveness and ________.

a. company’s objectives and resources

b. the product to be sold

c. the purchasing process

d. competition’s strategies

e. the global nature of the product

Answer: a Page: 262 Level of difficulty: Medium

47. Volkswagen concentrates on the small-car market and Porsche on the sports car market. These would be examples of what is called ________.

a. single-segment concentration

b. selective specialization

c. product specialization

d. market specialization

e. full market coverage

Answer: a Page: 262 Level of difficulty: Easy

48. All of the following are benefits of following the ________ approach to target market selection: a strong knowledge of the segment’s needs, a strong market presence, operating economies through specializing in production, distribution, and promotion.

a. single-segment concentration

b. selective specialization

c. product specialization

d. market specialization

e. full market coverage

Answer: a Page: 262 Level of difficulty: Medium

49. When a symphony orchestra targets people who have broad cultural interests, rather than only those who regularly attend concerts, the orchestra is targeting what are called ________.

a. market mavens

b. strategic segments

c. supersegments

d. occasion segments

e. psychodemographic segments

Answer: c Page: 262 Level of difficulty: Hard

50. Which of the following best represents the chief advantage of pursuing a multisegment strategy?

a. It makes the company almost bullet proof to competitors’ actions.

b. It diversifies the firm’s risk.

c. It creates synergy between markets.

d. It is a low cost strategy.

e. It treats all buyers the same and, therefore, lowers promotion costs.

Answer: b Page: 262 Level of difficulty: Medium

51. The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is that ________.

a. no synergy exists

b. logistics can become a nightmare

c. the product may be supplanted by an entirely new technology

d. competitors can easily copy any new product introductions

e. e-commerce becomes difficult for the company

Answer: c Page: 263 Level of difficulty: Hard

52. With ________ as a target market strategy, the firm concentrates on serving many needs of a particular customer group.

a. single-segment concentration

b. selective specialization

c. product specialization

d. market specialization

e. full market coverage

Answer: d Page: 263 Level of difficulty: Easy

53. The two ways that large firms can cover a whole market (e.g., full market coverage strategy) are through ________ and differentiated marketing.

a. undifferentiated

b. logistical

c. psychological

d. niche

e. macromarketing

Answer: a Page: 263 Level of difficulty: Easy

54. In ________ marketing, the firm operates in several market segments and designs different products for each segment.

a. segmented

b. undifferentiated

c. differentiated

d. geodemographic

e. niche

Answer: c Page: 263 Level of difficulty: Easy

55. The best way to manage multiple segments is to appoint ________ with sufficient authority and responsibility for building the segment’s business.

a. a product champion

b. segment managers

c. promotion managers

d. strategic managers

e. mid-level managers

Answer: b Page: 263 Level of difficulty: Easy

56. All of the following costs are likely to be higher if a marketer pursues a differentiated marketing approach EXCEPT ________.

a. product modification costs

b. manufacturing costs

c. administrative costs

d. inventory costs

e. pricing costs

Answer: e Page: 264 Level of difficulty: Hard

57. ________ is the strategic coordination of economic, psychological, political, and public relations skills, to gain the cooperation of a number of parties in order to enter or operate in a given market.

a. Metamarketing

b. Macromarketing

c. Micromarketing

d. Megamarketing

e. Modular marketing

Answer: d Page: 265 Level of difficulty: Medium

58. One way to discover new market segments is to investigate the hierarchy of attributes consumers examine in choosing a brand if they use phased decision strategies. This process is called ________.

a. market partitioning

b. market positioning

c. market segmentation

d. strategic marketing

e. brand marketing

Answer: a Page: 266 Level of difficulty: Medium

59. Not all attempts to target children, minorities, or other special segments draw criticism. Which of the following is the best illustration of a company (or industry) that seems to be marketing to the above in a correct and ethical way?

a. McDonald’s marketing to inner-city youth.

b. R. J. Reynolds marketing of the Kool brand.

c. Colgate-Palmolive’s Colgate Junior toothpaste.

d. The cereal industry’s approaches to children.

e. G. Heileman Brewing’s approach to Colt 45 malt liquor.

Answer: c Page: 267 Level of difficulty: Medium

True/False

60. Markets are almost always homogeneous.

Answer: False Page: 239 Level of difficulty: Easy

61. To compete more effectively, many companies are now embracing target marketing.

Answer: True Page: 240 Level of difficulty: Easy

63. Effective target marketing requires that marketers use market segmentation, market targeting, and market positioning to achieve success in the marketplace.

Answer: True Page: 240 Level of difficulty: Medium

64. Henry Ford epitomized the market segmentation strategy when he offered the Model-T Ford.

Answer: False Page: 240 Level of difficulty: Hard

65. A market segment consists of a group of consumers who share a similar set of needs and wants.

Answer: True Page: 240 Level of difficulty: Easy

66. With respect to market offerings, if a marketer emphasizes a naked solution, he or she is emphasizing the product and service elements that all segment members value.

Answer: True Page: 241 Level of difficulty: Hard

67. A marketer glances at this month’s market-preference pattern diagram and notices that all of the customers are grouped in the middle of the diagram; therefore, customers are exhibiting clustered preferences.

Answer: False Page: 242 Level of difficulty: Hard

68. An attractive niche is characterized as having a distinct set of needs.

Answer: True Page: 242 Level of difficulty: Easy

69. Local marketing reflects a growing trend called macromarketing.

Answer: False Page: 244 Level of difficulty: Medium

70. Grassroots marketing done at the local level is associated with experiential marketing where experiences are more important than products or services.

Answer: True Page: 244 Level of difficulty: Medium

71. If you charge for the time customers spend with you, then and only then are you in the service business.

Answer: False Page: 245 Level of difficulty: Hard

72. When Nike and Gillette advertise and associate their products with the Boston Marathon, the two companies are engaged in a form of experiential marketing called co-branding.

Answer: True Page: 245 Level of difficulty: Medium

73. The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one marketing.”

Answer: True Page: 246 Level of difficulty: Easy

74. Two broad groups of variables are used to segment consumer markets: geographic and demographic variables.

Answer: False Page: 247 Level of difficulty: Medium

75. Typical groupings (segments) that might be designated using the geographic method of segmentation might be density, climate, or city/metro size.

Answer: True Page: 248 Level of difficulty: Hard

76. Illustrations of personality segmentation would include culture-oriented, sports-centered, or outdoor-oriented subsegments.

Answer: False Page: 248 Level of difficulty: Medium

77. According to a new PRIZM cluster configuration, the Cosmopolitan tends to locate in cities such as Las Vegas, Miami, or Albuquerque.

Answer: True Page: 249 Level of difficulty: Hard

78. A local service company has decided to segment its market based on occupation; therefore, it has chosen a form of demographic segmentation for its approach.

Answer: True Page: 249 Level of difficulty: Medium

79. Life stage defines a person’s age.

Answer: False Page: 250 Level of difficulty: Medium

80. Men and women have different attitudinal and behavioral orientations caused mainly by their genetic makeup.

Answer: False Page: 250 Level of difficulty: Hard

12 Research has shown that income is a highly accurate predictor of the “best” customers for a given product.

Answer: False Page: 251 Level of difficulty: Medium

82. If you went to college in the late 1960s, you are most likely to be in a cohort shaped by the Viet Nam War.

Answer: True Page: 251 Level of difficulty: Medium

83. The largest American generation of the twentieth century (78 million people) is considered to be the GI Generation that fought in World War II.

Answer: False Page: 252 Level of difficulty: Medium

A sixty year-old man is coping with his advancing hair loss; therefore, he is dealing with what is called physiographics.

Answer: True Page: 252 Level of difficulty: Hard

85. Psychographics is the science of using psychology and demographics to better understand consumers.

Answer: True Page: 252 Level of difficulty: Easy

86. Generation X is considered to be a hot market because of their size, consumer savvy, and their ability to be “wired-in” to contemporary trends.

Answer: False Page: 253 Level of difficulty: Medium

87. Forty-seven percent of 21-year-olds own a mobile phone.

Answer: True Page: 253 Level of difficulty: Medium

88. In the VALS segmentation system, Thinkers are characterized as being successful, sophisticated, active, “take-charge” people with high self-esteem.

Answer: False Page: 254 Level of difficulty: Hard

89. According to the VALS segmentation system, the Strivers are at bottom of the typology with the lowest resources and lowest with respect to innovation.

Answer: False Page: 254 Level of difficulty: Medium

90. When Mobil Oil Company researched its market based on benefit expectations, it found that the largest segment (Price Shoppers) with a 27 percent share wanted fast fuel, branded products, and convenience.

Answer: False Page: 256 Level of difficulty: Hard

91. An organization that could benefit from using User Status as a means for segmenting its market would be a local blood bank.

Answer: True Page: 256 Level of difficulty: Medium

92. Marketers would rather attract one heavy user than several light users.

Answer: True Page: 256 Level of difficulty: Easy

93. With respect to loyalty status, if a consumer is loyal to two or three brands, he or she is called shifting loyal.

Answer: False Pages: 256–257 Level of difficulty: Medium

94. The most important variable in segmenting a business market is demographics.

Answer: True Page: 258 Level of difficulty: Medium

95. Typical categories that would appear under the heading of situational factor segmentation variables in the business marketplace would be urgency, specific application, and size of order.

Answer: True Page: 259 Level of difficulty: Hard

96. The last step in the seven-step marketing segmentation process would be to develop a marketing-mix strategy reflective of segment positioning strategies.

Answer: True Page: 261 Level of difficulty: Medium

97. To be useful, market segments must have as one of their characteristics the ability to be measured.

Answer: True Page: 262 Level of difficulty: Medium

98. As a pattern found in target market selection, market specialization means that the company offers one product to as many markets as possible.

Answer: False Page: 262 Level of difficulty: Medium

99. If a marketer is blocked from entering a market, the strategy of megamarketing can be used to assist in breaking into that market.

Answer: True Page: 265 Level of difficulty: Medium

100. Market partitioning is process of focusing on a desired position in the marketplace and then accumulating the resources to protect and defend that position.

Answer: False Page: 266 Level of difficulty: Medium

Essay

101. Market segments can be defined in many different ways. One way to carve up a market is to identify preference segments. List and briefly characterize three preference segments cited in the text.

Suggested Answer: The three preference segments cited in the text are: (1) homogeneous preferences—a market where all consumers basically have the same preferences; (2) diffused preferences—a market where preferences are scattered indicating consumers vary greatly in their preferences; and, (3) clustered preferences—where distinct natural market clusters develop.

Pages: 241–242 Level of difficulty: Medium

102. Columbia University’s Bernd Schmitt believes that marketers can provide experiences for customers through a set of experience providers. List and briefly discuss the seven experience providers recommended by Schmitt.

Suggested Answer: The seven experience providers are: (1) communications, (2) visual/verbal identity, (3) product presence, (4) co-branding, (5) environments, (6)

Web sites and electronic media, and (7) people. For descriptions see Marketing Insight (Experiential Marketing).

Page: 245 Level of difficulty: Hard

103. A new trend in marketing is toward customerization. Describe what customerization is and how marketers are using it.

Suggested Answer: Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product or service offering of their choice. A company is customerized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis.

Page: 246 Level of difficulty: Medium

104. There are several major segmentation variables that might be used by a marketer to address a consumer market. If the marketer were to use social class, psychographic lifestyle, and readiness stage to segment its market, identify possible segmentation subcategories under each of the three. For example, if we were to segment based on usage rate, subcategories would be light user, medium user, and heavy user.

Suggested Answer: First, social class would yield the subcategories of lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, and upper uppers. Second, psychographic lifestyles would yield culture-oriented, sports-oriented, and outdoor-oriented. Lastly, readiness stage would yield unaware, aware, informed, interested, desirous, and intending to buy. Other sub-categories might be possible. The list above comes from Table 8.1. If you wish to deviate from this table, be sure set ground rules for the students.

Page: 248 Level of difficulty: Hard

105. Briefly profile the American generations labeled as Baby boomers, Generation X, Generation Y, and Millennials.

Suggested Answer: According to information presented in the text, (1) Baby boomers (78 million people) were born 1946–1964 and are depicted as great acquisitors, they are value- and cause-driven despite indulgences and hedonism; (2) Generation X (57 million people) were born 1966–1977 and are depicted as cynical and media-savvy, they are more alienated and individualistic; (3) Generation Y (60 million people) were born 1977–1994 and are depicted as edgy, focused on urban style, they are more idealistic than Generation X; and, (4) Millennials (42 million people) were born 1994–2002 and are depicted as multicultural, they will be tech-savvy, educated, grow up in an affluent society, and have big spending power.

Page: 252 Level of difficulty: Medium

106. Marketing to Generation Y is a challenge because of their size and characteristics. Because they are often turned off by overt branding practices and a “hard sell,” marketers have tried many different approaches to reach and persuade Gen Y. The text mentions seven methods for accomplishing this task. List and briefly discuss four of those methods.

Suggested Answer: The seven methods are: (1) online buzz, (2) student ambassadors, (3) unconventional sports, (4) cool events, (5) computer games, (6) videos, and (7) street teams. See Marketing Insight (Marketing to Generation Y) for additional details and discussion. Students may select any of the above four for discussion and characterization.

Page: 253 Level of difficulty: Hard

107. The VALS segmentation system has evolved into an 8-part typology. List and briefly describe any four categories of that 8-part typology.

Suggested Answer: The eight parts of the VALS segmentation system include the following: (1) innovators, (2) thinkers, (3) achievers, (4) experiencers, (5) believers, (6) strivers, (7) makers, and (8) survivors. Students may choose any of the above four of the above eight for their discussion unless otherwise directed. See the chapter section for characterization and discussion of each of the eight categories.

Page: 254 Level of difficulty: Hard

108. If a marketer were to segment a business market on the basis of demographics, what three subcategory segmentation variables would probably be used to assist with this form of segmentation? What questions would be asked in each of the three categories to advance the segmentation effort?

Suggested Answer: The three subcategories (and associated questions) would be: (1) industry—which industries should we serve?, (2) company size—what size companies should we serve?, and (3) location—what geographical areas should we serve?

Page: 259 Level of difficulty: Medium

109. To be useful, market segments must rate favorably on five key criteria. What are those criteria?

Suggested Answer: The five criteria are: (1) measurable, (2) substantial, (3) accessible, (4) differentiable, and (5) actionable. For additional information, see the chapter section.

Page: 262 Level of difficulty: Medium

110. The text describes five possible patterns for target market selection. Describe the pattern called selective specialization.

Suggested Answer: In selective specialization, a firm selects a number of segments, each objectively attractive and appropriate. There may be little of no synergy among the segments, but each promises to be a moneymaker. This multi-segment strategy has the advantage of diversifying the firm’s risk.

Page: 262 Level of difficulty: Medium

APPLICATION QUESTIONS

Multiple Choice

111. According one expert from J. Walter Thompson’s Mature Marketing Group, “everyone over 45 is lumped into a category called old.” However, the expert points out that this strategy is faulty. Seniors, particularly boomers-turned-seniors, often make buying decisions based on ________.

a. price, not quality

b. lifestyle, not age

c. age perception

d. what their children buy

e. dreams, not realities

Answer: b Page: 239 Level of difficulty: Medium

112. When Coca-Cola sold only one kind of Coke in a 6.5-ounce bottle, it was practicing what is called ________.

a. primary marketing

b. micromarketing

c. macromarketing

d. segmented marketing

e. mass marketing

Answer: e Page: 240 Level of difficulty: Medium

113. The marketer ________ the segments; the marketer’s task is to identify the segments and decide which one(s) to target.

a. plans

b. creates

c. does not create

d. rarely controls

e. controls

Answer: c Page: 240 Level of difficulty: Hard

114. Anderson and Narus have urged marketers to present flexible market offerings to all members of a segment. A flexible market offering consists of two parts. Which of those parts contains the product and service elements that all segment members’ value?

a. Naked solution

b. Discretionary solution

c. Maximum solution

d. Pseudo solution

e. Virtual solution

Answer: a Page: 241 Level of difficulty: Medium

115. Enterprise Rent-A-Car has challenged Hertz’s supremacy in the rental car market by tailoring its marketing program to a relatively neglected target market. Which of the following would be the most accurate description of that market?

a. The singles market.

b. The soccer mom market.

c. The business traveler market.

d. The low-budget, insurance-replacement market.

e. The vacationer market.

Answer: d Page: 242 Level of difficulty: Hard

116. The recipe for Internet niching success is to ________.

a. find a need and fill it

b. choose a hard-to-find product that customers do not need to see and touch

c. choose a low-budget product that is heavily demanded by Gen Y

d. choose an exclusive product sold primarily to seniors

e. find a product that has some attraction to a health-conscious market

Answer: b Pages: 243–244 Level of difficulty: Medium

117. One marketing commentator said, “The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life.” Which of the following forms of marketing was the commentator describing?

a. Experiential marketing

b. Niche marketing

c. Benefit marketing

d. Viral marketing

e. Virtual marketing

Answer: a Page: 244 Level of difficulty: Hard

118. If you were a marketing manager that was considering implementing the concept of customer experience management (CEM), you would follow all of the following steps EXCEPT ________.

a. analyzing the experiential world of the customer

b. building the experiential platform

c. designing the segmentation portfolio

d. structuring the customer interface

e. engaging in continuous innovation

Answer: c Page: 245 Level of difficulty: Hard

119. Home furnishing retailer Bed Bath & Beyond’s ability to cater to local tastes has fueled its phenomenal growth. Bed Bath & Beyond’s managers pick ________ of their own merchandise, and this local focus has helped the chain evolve from one that began selling little more than bed linens to the “beyond” part—products ranging from picture frames and pot holders to imported olive oil and designer door mats.

a. 40 percent

b. 50 percent

c. 25 percent

d. 70 percent

e. 90 percent

Answer: d Page: 248 Level of difficulty: Hard

120. If a marketing researcher saw such names (categories) Blue Blood Estates, Winner’s Circle, Hometown Retired, or Shotguns and Pickups when doing segmentation research, the marketing researcher would most likely be dealing with ________ clusters.

a. PRIZM

b. geodemographic

c. psychographic

d. demographic

e. VALS

Answer: a Page: 249 Level of difficulty: Medium

121. The Scion by Toyota has a hip look and feel—and an industrial strength stereo—and is sold in chrome and black showrooms tucked inside Toyota dealerships. According to Toyota, to which of the following audiences is the Scion positioned?

a. Wealthy baby boomers.

b. African American Generation X members.

c. Hispanic American millennials.

d. Generation Y.

e. The silent majority.

Answer: d Page: 250 Level of difficulty: Medium

122. Increasingly, companies are finding that their markets are ________ as middle-market Americans migrate toward more premium products.

a. “triangle-shaped”

b. “inverted”

c. “hourglass-shaped”

d. “circular”

e. “linear”

Answer: c Page: 251 Level of difficulty: Hard

123. Which of the following statements accurately describes what demographers are calling the “boom-boom effect”?

a. Consumers are demanding more “bang for their buck.”

b. Baby boomers still rule the marketplace.

c. Generation X and their taste for violence will dominate the market in the future.

d. Products that appeal to 20-somethings also appeal to baby boomers.

e. Companies must have success quickly or go bust.

Answer: d Page: 252 Level of difficulty: Medium

124. If a marketing manager employs such marketing techniques as online buzz, student ambassadors, cool events, and street teams to reach target markets, the manager is most likely appealing to the ________ market.

a. pre-school

b. Generation X

c. Generation Y

d. Generation Z

e. latent baby boomers

Answer: c Page: 253 Level of difficulty: Easy

125. A hardware store has decided to use the VALS segmentation system to target consumers. The store is particularly interested in reaching people who are characterized by the VALS system as being practical, down-to-earth, and self-sufficient who like to work with their hands. Which of the following VALS categories most likely matches to the hardware store’s segment of interest?

a. Believers

b. Strivers

c. Survivors

d. Experiencers

e. Makers

Answer: e Page: 254 Level of difficulty: Hard

126. Users of a brand can be segmented into several groups based on the strength of commitment to the brand. If a brand manager is seeking to identify those users who are most likely to defect to another brand, he or she should look for users that are labeled as being ________.

a. convertible

b. shallow

c. average

d. entrenched

e. latent

Answer: a Page: 258 Level of difficulty: Medium

127. A purchasing manager has decided to take a “purchasing approach” to segmenting a proposed business market. All of the following would be potential means (sub-segments) for segmenting under the “purchasing approach” EXCEPT ________.

a. purchasing-function organization

b. power structure

c. specific application

d. nature of existing relationships

e. purchasing criteria

Answer: c Page: 259 Level of difficulty: Hard

128. If your assignment was (for each segment) to create a “value proposition” and product-price positioning strategy based on the segment’s unique customer needs and characteristics, you would be in which of the following steps of the segmentation process?

a. Needs-based segmentation

b. Segment identification

c. Segment attractiveness

d. Segment positioning

e. Segment “acid-test”

Answer: d Page: 261 Level of difficulty: Medium

129. As a brand manager you have decided to use the full market coverage approach in marketing to your customers. Within the full market coverage approach, you have selected a(n) ________ strategy whereby your firm will operate in several market segments and design different products for each segment.

a. undifferentiated

b. differentiated

c. concentrated

d. introverted

e. parallel

Answer: b Page: 263 Level of difficulty: Medium

130. In the past, most car buyers first decided on the manufacturer and then on one of its car divisions. This type of buying strategy has been labeled as a ________.

a. brand-dominant hierarchy

b. nation-dominant hierarchy

c. promotional hierarchy

d. geographic hierarchy

e. service-value hierarchy

Answer: a Page: 266 Level of difficulty: Medium

Short Answer

131. A starting point for discussing segmentation is mass marketing. Explain this concept.

Suggested Answer: In mass marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers.

Page: 240 Level of difficulty: Easy

132. Most companies today are turning to micromarketing at one of four levels. What are those levels?

Suggested Answer: The levels are: (1) segments, (2) niches, (3) local areas, and (4) individuals.

Page: 240 Level of difficulty: Medium

133. Assume that you have decided to use a niche strategy to advance your marketing goals. Characterize an attractive niche.

Suggested Answer: An attractive niche is distinguished as follows: (1) the customers in the niche have a distinct set of needs; (2) they will pay a premium to the firm that best satisfies their needs; (3) the niche is not likely to attract other competitors; (4) the nicher gains certain economies through specialization; and (5) the niche has size, profit, and growth potential.

Page: 242 Level of difficulty: Hard

134. Local marketing reflects a growing trend called grassroots marketing. Characterize grassroots marketing.

Suggested Answer: In grassroots marketing, marketing activities concentrate on getting as close and personally relevant to individual customers as possible.

Page: 244 Level of difficulty: Easy

135. According to one marketing expert, “The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life.” What form of marketing is this expert referring to?

Suggested Answer: The expert is referring to what is called experiential marketing.

Page: 244 Level of difficulty: Medium

136. Pine and Gilmore have argued that we are on the brink of what might be called the “Experience Economy.” What are the four varieties of experiences that Pine and Gilmore assert will be salable in the future?

Suggested Answer: The four varieties may be described as being: (1) entertainment, (2) education, (3) esthetic, and (4) escapist.

Page: 245 Level of difficulty: Hard

137. When a marketer attempts to segment a consumer market, two broad groups of variables may be used. What are those two broad groups of variables? Give an example of each broad group.

Suggested Answer: The first broad group is labeled descriptive characteristics such as geographic, demographic, and psychographic variables. The second broad group is labeled behavioral considerations such as consumer responses to benefits, use occasions, or brands.

Page: 247 Level of difficulty: Medium

138. PRIZM was developed by Claritas, Inc. Explain what PRIZM is intended to do.

Suggested Answer: PRIZM stands for Potential Rating Index by Zip Markets. It is a method for geoclustering that classifies over half a million U.S. residential neighborhoods into 15 distinct groups and 66 distinct lifestyle segments called PRIZM Clusters. For more information, see the chapter section.

Page: 249 Level of difficulty: Hard

139. Silverstein and Fiske say that Panera bakery cafes are a good illustration of luxury good-oriented establishments that deliver three benefits that are common to new luxury good organizations. What are the three benefits listed by Silverstein and Fiske?

Suggested Answer: The benefits are: (1) technical benefits, (2) functional benefits, and (3) emotional benefits.

Page: 251 Level of difficulty: Medium

140. Meredith, Schewe, and Karlovich developed a framework called The Lifestage Analytic Matrix. What does this matrix do and what are the variables that might be contained in such a matrix?

Suggested Answer: The matrix combines information on cohorts, life stages, physiographics, emotional effects, and socioeconomics in analyzing a segment or individual.

Page: 252 Level of difficulty: Hard

141. Characterize psychographic segmentation.

Suggested Answer: In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values.

Page: 252 Level of difficulty: Medium

142. According to the VALS Segmentation System, what four groups belong in the category that displays lower resources?

Suggested Answer: The four groups are: (1) believers, (2) strivers, (3) makers, and (4) survivors.

Page: 254 Level of difficulty: Medium

143. People play five roles in a buying decision. What are those roles?

Suggested Answer: The roles are: (1) initiator, (2) influencer, (3) decider, (4) buyer, and (5) user.

Page: 255 Level of difficulty: Medium

144. Buyers can be classified according to the benefits they seek. Even car drivers who what to stop for gas may seek different benefits. Through its research, Mobil identified five different benefit segments. What are those segments and what benefits are associated with each segment?

Suggested Answer: The different benefit segments are: (a) Road Warriors—premium products and quality service, (b) Generation F—fast fuel, fast service, and fast food, (c) True Blues—branded products and reliable service, (d) Home Bodies—convenience, and (e) Price Shoppers—low price.

Page: 256 Level of difficulty: Hard

145. Consumer attitude(s) is(are) an interesting way to segment a market. Research has shown that five attitude groups can be found in the market. What are those five attitude groups?

Suggested Answer: The five attitude groups are: (1) enthusiastic, (2) positive, (3) indifferent, (4) negative, and (5) hostile. For more information, see the chapter section.

Page: 257 Level of difficulty: Medium

146. A Conversion Model is proposed in the text. What is the purpose of a conversion model in assessing behavioral segmentation?

Suggested Answer: The Conversion Model has been developed to measure the strength of the psychological commitment between brands and consumers and their openness to change. To determine the ease with which a consumer can be converted to another choice, the model assesses commitment based on such factors as consumer attitudes toward and satisfaction with current brand choices in a category and the importance of the decision to select a brand in the category. For information on the various segments, see chapter material.

Pages: 257–258 Level of difficulty: Medium

147. Assuming you were a marketing manager that was interested in segmenting business buyers’ benefit bundles based on their stage in the purchase decision process, what three categories would be appropriate?

Suggested Answer: Categories would include: (1) first-time prospects, (2) novices, and (3) sophisticates. For descriptions of each category, see chapter materials.

Page: 260 Level of difficulty: Hard

148. One proposed segmentation scheme classifies business buyers into three groups, each warranting a different type of selling. The groups are (1) price-oriented customers, (2) solution-oriented customers, and (3) strategic-value customers. What types of selling (specific selling type name) would be associated with these three groups?

Suggested Answer: The selling types would be: (1) price-oriented customers match to transactional selling, (2) solution-oriented customers match to consultative selling, and (3) strategic-value customers match to enterprise selling.

Page: 261 Level of difficulty: Medium

149. Differentiated marketing typically creates more total sales than undifferentiated marketing. However, it also increases the costs of doing business. Assume that you are a marketing manager that is considering using differentiated marketing. What five costs that you encounter on a rather regular basis would most likely be higher because of your decision to pursue differentiated marketing?

Suggested Answer: The categories of costs that would most likely be higher include: (1) product modification costs, (2) manufacturing costs, (3) administrative costs, (4) inventory costs, and (5) promotion costs. For additional information, see chapter section.

Page: 264 Level of difficulty: Hard

150. As a marketing manager, you have decided to update your segmentation scheme. In the process of doing this, you have decided to use a process called market partitioning. Explain what market portioning is.

Suggested Answer: One way to discover new segments is to investigate the hierarchy of attributes consumers examine in choosing a brand if they use phased decision strategies. This is called market partitioning. See chapter section for additional information and examples of the process.

Page: 266 Level of difficulty: Medium

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