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Chapter 08: Segmenting and Targeting Markets
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Page 1
1. In the context of product positioning, the distinctions between products can be either real or perceived.
a.
True
b.
False
ANSWER:
True
2. Women tend to accumulate money for the sake of accumulation and rarely associate it with security, independence, or
quality of life.
a.
True
b.
False
ANSWER:
False
3. According to family life cycle segmentation, young married or divorced couples with children have high liquid assets.
a.
True
b.
False
ANSWER:
False
4. Ethnic segmentation involves segmenting potential customers into neighborhood lifestyle categories.
a.
True
b.
False
ANSWER:
False
5. Dynamic segmentation approaches adjust to fit the changes that occur in customers' lives.
a.
True
b.
False
ANSWER:
True
6. Customers looking for luxury want products that exhibit careful craftsmanship, timeless design, prestige, and
exclusivity. This type of market is segmented by ethnicity.
a.
True
b.
False
ANSWER:
False
7. A market is people or organizations with needs or wants and with the ability and the willingness to buy.
a.
True
b.
False
ANSWER:
True
8. A concentrated strategy can be disastrous for a firm that is not successful in its narrowly defined target market.
a.
True
b.
False
ANSWER:
True
9. The final step in market segmentation is selecting segmentation descriptors.
a.
True
b.
False
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Chapter 08: Segmenting and Targeting Markets
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Page 2
ANSWER:
False
10. A market segment is a subgroup of people or organizations having different characteristics that cause them to have
distinct product needs.
a.
True
b.
False
ANSWER:
False
11. Market segmentation helps decision makers to more accurately define marketing objectives and better allocate
resources.
a.
True
b.
False
ANSWER:
True
12. Wester Helix, a watch manufacturing company, is a brand most associated with men. They also manufacture products
for women, but these products are less popular. In order to increase the sale of these products, Wester Helix opens a sister
company that caters solely to women. In this scenario, Wester Helix uses age segmentation.
a.
True
b.
False
ANSWER:
False
13. Single-variable segmentation has the advantage of being more precise than multiple-variable segmentation.
a.
True
b.
False
ANSWER:
False
14. With the personal and targeted nature of customer relationship management (CRM), consumers spend more time
making purchase decisions.
a.
True
b.
False
ANSWER:
False
15. Cannibalization occurs when the sales of a firm's existing product increase with the introduction of a new product.
a.
True
b.
False
ANSWER:
False
16. Promotion is one of the components that forms a marketing mix.
a.
True
b.
False
ANSWER:
True
17. According to family life cycle segmentation, consumption patterns among people of the same age and gender differ
because they are in different stages of the family life cycle.
a.
True
b.
False
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Chapter 08: Segmenting and Targeting Markets
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Page 3
ANSWER:
True
18. In the context of age segmentation, baby boomers expect everything to be instantaneous because they have never been
introduced to a world without the Internet.
a.
True
b.
False
ANSWER:
False
19. Wesley Electronics Inc. is a company that manufactures electronic gadgets. The marketing team of the company
spends a great deal of money on advertising in order to create awareness about the company's products among potential
customers. It employs various methods of advertising, such as print, broadcast, and online advertising. According to the
steps of market segmentation, Wesley Electronics Inc. is most likely:
a.
selecting a market or product category for study.
b.
designing and implementing marketing mixes.
c.
profiling and analyzing market segments.
d.
selecting segmentation descriptors for a market.
ANSWER:
b
20. In the context of gender segmentation, which of the following statements is true?
a.
Women are increasingly part of all-male markets.
b.
Women are an inexperienced purchasing group, unlike men.
c.
Men make 70 to 80 percent of purchases of consumer goods each year.
d.
Men tend to research investments in-depth more than women do.
ANSWER:
a
21. Tennot Inc. sells used cars. It focuses solely on low-income customers who prefer to buy an old car rather than a new
one. Therefore, it develops one marketing mix that targets the low-income group. In this scenario, Tennot Inc. most likely
uses a(n)_____.
a.
undifferentiated targeting strategy
b.
multisegment targeting strategy
c.
concentrated targeting strategy
d.
universal targeting strategy
ANSWER:
c
22. Which of the following statements is true of markets?
a.
They are composed of people or organizations.
b.
They thrive only on government funds and subsidies.
c.
They allow consumers to take products for free.
d.
They influence consumers to buy products they do not need.
ANSWER:
a
23. _____ is a common base of demographic segmentation.
a.
Product benefit
b.
Usage rate
c.
Geography
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d.
Income
ANSWER:
d
24. The editorial board of Gamers' Page, a magazine that primarily caters to people who are enthusiastic about sports and
gaming, targets people who enjoy games. In this scenario, Gamers' Page uses _____.
a.
gender segmentation
b.
geographic segmentation
c.
psychographic segmentation
d.
family life cycle segmentation
ANSWER:
c
25. Which of the following statements is true of lifestyle segmentation?
a.
It divides people into groups based on their traits, attitudes, and habits.
b.
It divides a market by the amount of product bought or consumed.
c.
It divides people into market segments according to the benefits they seek from a product.
d.
It divides people into groups based on socioeconomic characteristics such as income and education.
ANSWER:
d
26. Mass-marketing efforts will continue to be used by marketers:
a.
because consumers have more time to make purchase decisions.
b.
to gather detailed information on customers, which is not possible in direct marketing.
c.
to remind consumers of a product.
d.
because they allow marketers to target customers with extremely relevant offerings.
ANSWER:
c
27. Which of the following is a psychographic segmentation variable?
a.
Usage rate of a product
b.
Geodemographics
c.
Gender
d.
Ethnicities
ANSWER:
b
28. Volten Inc. is an apparel store. It has separate sections for casual wear, office wear, and party wear. It also has goods
of varying prices to suit people of various income levels. In this way, it caters to different sections of the society. Volten
Inc. demonstrates positioning by _____.
a.
product class
b.
application
c.
competitor
d.
product user
ANSWER:
d
29. A concentrated targeting strategy differs from an undifferentiated targeting strategy in that a concentrated targeting
strategy:
a.
results in cannibalization of products.
b.
involves the selection of a market niche to target the marketing efforts of a firm.
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c.
views the market as one big market with no individual segments.
d.
reduces the production and marketing costs of a firm.
ANSWER:
b
30. Nalpas Inc., an apparel company, manufactures clothes for men, women, and children. It further divides its core
customers on the basis of demographic variables such as income, ethnic background, and family life cycle. In this context,
these demographic variables are examples of _____.
a.
positioning bases
b.
segmentation bases
c.
product classes
d.
market positions
ANSWER:
b
31. Prisly Inc. is a multinational company that specializes in manufacturing and selling high-end cars. It launches a new
car Gwen 2.0 that becomes highly successful in the market because of its cheap price and excellent specifications.
However, this leads to a significant decline in the sales of Sanders Inc.'s other cars. This scenario exemplifies _____.
a.
segmentation
b.
differentiation
c.
cannibalization
d.
personalization
ANSWER:
c
32. In the context of family life cycle segmentation, middle-aged married couples with or without children:
a.
are hard to influence with advertising.
b.
are better off financially than young married couples with or without children.
c.
buy medical care products that aid health, sleep, and digestion.
d.
have the highest purchase rate.
ANSWER:
a
33. Kirksand Airlines is well known for providing excellent customer service to its flyers. The staff members enquire and
listen carefully to each flyer's wants and needs. If a flyer has any specific requests, the staff members ensure that they are
immediately attended to. In this scenario, Kirksand Airlines has based its customer relationship management on the trend
of _____.
a.
personalization
b.
mass marketing
c.
loyalty
d.
technology
ANSWER:
a
34. Which of the following statements is true of market segmentation?
a.
It helps marketers design marketing mixes that match the characteristics of one or more segments.
b.
It allows marketers to use an undifferentiated targeting strategy.
c.
It allows marketers to adopt a single marketing mix across all market segments.
d.
It helps marketers focus on satisfying customer needs rather than meeting the organization's objectives.
ANSWER:
a
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35. _____ is a means of displaying or graphing, in two or more dimensions, the location of products, brands, or groups of
products in customers' minds.
a.
Multidimensional scaling
b.
Product differentiation
c.
Perceptual mapping
d.
Product tracing
ANSWER:
c
36. In the context of customer relationship management (CRM), _____ offers marketers a more cost-effective way to
reach customers and enables businesses to personalize their messages.
a.
repositioning
b.
undifferentiated targeting
c.
cannibalization
d.
new technology
ANSWER:
d
37. Which of the following is an advantage of a multisegment targeting strategy?
a.
It significantly reduces the risk of product cannibalization.
b.
It provides economies of scale in manufacturing and marketing.
c.
It does not require firms to tailor marketing mixes to the preferences of market segments.
d.
It decreases the costs involved in product design, marketing research, and management.
ANSWER:
b
38. Pine Groove, a cosmetics brand that primarily caters to women, wants to reach out to the less-traditional male market.
It conducts research and develops a new product especially for men. In this context, Pine Groove uses _____.
a.
ethnicity segmentation
b.
age segmentation
c.
gender segmentation
d.
psychographic segmentation
ANSWER:
c
39. In the context of family life cycle segmentation, which of the following statements is true?
a.
Young divorced couples without children have the lowest purchase rate.
b.
Middle-aged married couples with or without children have high average purchase of durables.
c.
Young married couples with children have high liquid assets.
d.
Middle-aged divorced couples without dependent children are least satisfied with their financial position.
ANSWER:
b
40. Which of the following statements is true of a concentrated targeting strategy?
a.
It allows a firm to serve two or more well-defined market segments simultaneously.
b.
It is often adopted by small firms to compete effectively with much larger firms.
c.
It follows a mass-market philosophy by viewing the market as one big market without any individual
segments.
d.
It results in cannibalization of products.
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ANSWER:
b
41. Trower Inc. has launched a new smartphone in two different variants. Both variants of the smartphone have a similar
design but have different hardware specifications. The company uses this strategy so that the smartphone can be afforded
by most people. In this scenario, Trower Inc. most likely uses _____.
a.
usage-rate segmentation
b.
income segmentation
c.
gender segmentation
d.
age segmentation
ANSWER:
b
42. Starlight Jewelry sends Lauren a birthday card along with a pendant as a token of appreciation for shopping frequently
at its store. The trend portrayed in this customer relationship management technique is _____.
a.
loyalty
b.
technology
c.
time savings
d.
standardization
ANSWER:
a
43. _____ is market segmentation on the basis of personality, motives, lifestyles, and geodemographics.
a.
Benefit segmentation
b.
Family life cycle segmentation
c.
Usage-rate segmentation
d.
Psychographic segmentation
ANSWER:
d
44. A firm using a(n) _____ essentially adopts a mass-market philosophy, viewing the market as one big market with no
individual segments.
a.
undifferentiated targeting strategy
b.
niche targeting strategy
c.
individual targeting strategy
d.
concentrated targeting strategy
ANSWER:
a
45. A firm that adopts an undifferentiated targeting strategy assumes that:
a.
a market is composed of narrowly defined market segments.
b.
small firms can compete effectively with large firms.
c.
concentrating all resources on understanding the needs of a single market results in cannibalization.
d.
individual customers have similar needs that can be met with a common marketing mix.
ANSWER:
d
46. _____ refers to segmenting markets by region of a country or the world, market size, market density, or climate.
a.
Geographic segmentation
b.
Benefit segmentation
c.
Demographic segmentation
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d.
Usage-rate segmentation
ANSWER:
a
47. _____ helps marketers develop marketing programs tailored to prospective buyers who live in small regions or who
have very specific lifestyle.
a.
Benefit segmentation
b.
Family life cycle segmentation
c.
Ethnic segmentation
d.
Geodemographic segmentation
ANSWER:
d
48. _____ is a positioning base that focuses on a personality or type of consumer.
a.
Product class
b.
Attribute
c.
Product user
d.
Emotion
ANSWER:
c
49. To be useful, a segmentation scheme must produce segments that:
a.
are composed of people with different product needs.
b.
are composed of people with different characteristics.
c.
are large enough to warrant developing and maintaining a special marketing mix.
d.
are divided according to the North American Industry Classification System.
ANSWER:
c
50. Terra Corp. produces a wide range of furniture, such as cabinets, book cases, and wardrobes. It divides its consumer
market into several groups of people who have similar interests in wooden furniture. In this context, dividing its consumer
market most likely:
a.
allows Terra Corp. to meet the markets' needs with a single marketing mix.
b.
enables Terra Corp. to define customer needs and wants precisely.
c.
eliminates the need for defining marketing objectives.
d.
allows Terra Corp. to use an undifferentiated targeting strategy.
ANSWER:
b
51. The purpose of market segmentation is to:
a.
change consumer attitudes and beliefs toward a product.
b.
divide a market into submarkets of equal size and equal number of customers.
c.
eliminate the need for defining marketing objectives.
d.
enable a marketer to tailor marketing mixes to meet the needs of one or more specific segments.
ANSWER:
d
52. Which of the following occurs when sales of a new product cut into sales of a firm's existing products?
a.
Cannibalization
b.
Product churning
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c.
Backward invention
d.
Commodification
ANSWER:
a
53. In the context of age segmentation, the tween and teenage cohort following the Millennials is sometimes called _____.
a.
Generation X
b.
the baby boomer generation
c.
Generation Z
d.
the Silent Generation
ANSWER:
c
54. Companies that successfully implement customer relationship management (CRM) tend to:
a.
use an undifferentiated targeting strategy.
b.
customize the goods and services offered to their customers.
c.
assume that customers have similar needs that can be met with a common marketing mix.
d.
minimize the use of database technology.
ANSWER:
b
55. _____ involves dividing a market into groups such as newborns, infants, young children, tweens, Millennials,
Generation X, baby boomers, and seniors.
a.
Ethnic segmentation
b.
Family life cycle segmentation
c.
Age segmentation
d.
Psychographic segmentation
ANSWER:
c
56. In the context of the strategies for selecting target markets, which of the following is a disadvantage of an
undifferentiated targeting strategy?
a.
It results in market segments that are either too small or that shrink because of environmental changes.
b.
It often results in sterile, unimaginative product offerings that have little appeal to anyone.
c.
It results in cannibalization of products.
d.
It increases the production and marketing costs of a firm.
ANSWER:
b
57. Which of the following statements is true of product positioning?
a.
It assumes that consumers compare products solely on the basis of price.
b.
There are two positioning bases, application and price.
c.
The quality of competing products does not influence product positioning.
d.
Consumer goods marketers are particularly concerned with positioning.
ANSWER:
d
58. Which of the following is a similarity between a stock market and a labor market?
a.
Both use a barter system to facilitate the exchange of products.
b.
Both are composed of people who are unwilling to spend large sums of money for products or services.
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Chapter 08: Segmenting and Targeting Markets
c.
Both are composed of people with specific wants that can be satisfied by particular product categories.
d.
Both deal in selling high-end, consumer durable products.
ANSWER:
c
59. Laelle is a confectionery company that manufactures candies. It does not use specific strategies to target children
while marketing its products. Instead, it uses the same strategies to promote its candies among all consumers in the
market. In this scenario, Laelle uses a(n) _____.
a.
multisegment targeting strategy
b.
individual targeting strategy
c.
undifferentiated targeting strategy
d.
concentrated targeting strategy
ANSWER:
c
60. Explain product differentiation as a positioning strategy used by marketers to distinguish their products from
competitors.
ANSWER:
Answers will vary. A positioning strategy that many firms use to distinguish their products from competitors
is based on product differentiation. The distinctions between products can be either real or perceived. For
example, Kentucky Fried Chicken differentiates itself from other fast-food fried chicken restaurants with its
secret blend of eleven herbs and spices (perceived), as well as unique offerings like the Double Down,
Famous Bowl, and Bucket & Bites Meal (real). However, many everyday products, such as bleaches, aspirin,
unleaded regular gasoline, and some soaps, are differentiated by such trivial means as brand names,
packaging, color, smell, or "secret" additives. The marketer attempts to convince consumers that a particular
brand is distinctive and that they should demand it.
61. How do marketers use customer relationship management (CRM) as a targeting tool?
ANSWER:
Answers will vary. CRM entails tracking interactions with customers to optimize customer satisfaction and
long-term company profits. Companies that successfully implement CRM tend to customize the goods and
services offered to their customers based on data generated through interactions between carefully defined
groups of customers and the company. CRM can also allow marketers to target customers with extremely
relevant offerings. A detailed and segmented understanding of customers can be advantageous. There are at
least four trends that will lead to the continuing growth of CRM: personalization, time savings, loyalty, and
technology.CRM is a huge commitment and often requires a 180-degree turnaround for marketers who spent
the last half of the twentieth century developing and implementing mass-marketing efforts. Although mass
marketing will probably continue to be used, especially to create brand awareness or to remind consumers of
a product, the advantages of CRM cannot be ignored.
62. What is geographic segmentation? Briefly explain why consumer goods companies take a geographic approach to
marketing.
ANSWER:
Answers will vary. Geographic segmentation refers to segmenting markets by region of a country or the
world, market size, market density, or climate. Market density means the number of people within a unit of
land, such as a census tract. Climate is commonly used for geographic segmentation because of its dramatic
impact on residents' needs and purchasing behavior.Consumer goods companies take a regional approach to
marketing because firms continually need to find ways to grow. Target's growth strategy includes opening
smaller stores in urban locations such as San Francisco, Chicago, and Washington, DC. These stores are
designed to provide quick-trip shopping, customized product assortments, and services tailored to customers
living in large cities.
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Chapter 08: Segmenting and Targeting Markets
identify marketing opportunities.
• Select a market or product category for study: Define the overall market or product category to be
studied. It may be a market in which the firm already competes, a new but related market or product
category, or a totally new market.
• Choose a basis or bases for segmenting the market: This step requires managerial insight, creativity,
and market knowledge. There are no scientific procedures for selecting segmentation variables.
However, a successful segmentation scheme must produce segments that meet the four basic criteria:
substantiality, identifiability and measurability, accessibility, and responsiveness.
• Select segmentation descriptors: After choosing one or more bases, the marketer must select the
segmentation descriptors. Descriptors identify the specific segmentation variables to use.
• Profile and analyze segments: The profile should include the segments' size, expected growth,
purchase frequency, current brand usage, brand loyalty, and long-term sales and profit potential. This
information can then be used to rank potential market segments by profit opportunity, risk,
consistency with organizational mission and objectives, and other factors important to the firm.
• Select markets: Selecting markets is not a part of but a natural outcome of the segmentation process.
It is a major decision that influences and often directly determines the firm's marketing mix.
• Design, implement, and maintain appropriate marketing mixes: The marketing mix has been
described as product, place (distribution), promotion, and pricing strategies intended to bring about a
mutually satisfying exchange relationship with a market.
64. Discuss the importance of market segmentation.
ANSWER:
Answers will vary. Market segmentation is the process of dividing a market into meaningful, relatively
similar, and identifiable segments or groups. It plays a key role in the marketing strategy of almost all
successful organizations and is a powerful marketing tool for several reasons. Most important, nearly all
markets include groups of people or organizations with different product needs and preferences. Market
segmentation helps marketers define customer needs and wants more precisely. Because market segments
differ in size and potential, segmentation helps decision makers to more accurately define marketing
objectives and better allocate resources. In turn, performance can be better evaluated when objectives are
more precise.
