Chapter 6—Target Markets: Segmentation and Evaluation
ESSAY
1. How do business markets differ from consumer markets?
2. What are the conditions under which an undifferentiated targeting strategy is effective? Why are these
conditions essential?
3. What are the major steps of the target market selection process?
4. Compare and contrast the concentrated and differentiated targeting strategies of market segmentation.
5. Would a person’s political views be an effective variable with which to segment a market? Why or
why not?
6. Identify the four major categories of segmentation of variables for consumer products, and give three
examples of each.
7. Why do marketers rely heavily on demographic characteristics when segmenting consumer markets?
8. What variables are used to segment business markets?
9. When evaluating market segments, which three major issues should be considered?
10. Why is it important for marketers to forecast sales potential for the entire industry as well as for the
individual company?
11. Discuss the differences between the breakdown and buildup approaches to measuring company sales
potential. What are the similarities between these two approaches?
12. Why is it important for marketers to assess competitors before entering a market segment?
13. Discuss the difference between sales forecasts and company sales potential. Why is it important for a
marketer to be able to forecast sales?
14. Discuss the advantages and disadvantages of using executive judgment in forecasting company sales.
15. Why would a firm survey its sales force to forecast company sales? Why would a firm choose an
expert forecasting survey instead?
MULTIPLE CHOICE
16. Any group of people who, as individuals or as organizations, have needs for products in a product
class and who have the ability, willingness, and authority to buy such products is a(n)
a.
business market.
b.
market.
c.
undifferentiated market
d.
segmented market
e.
market variable
17. Which of the following is not a characteristic of a consumer market?
a.
it consists of purchasers who intend to consume or benefit from the purchased products
b.
they do not buy products for the main purpose of making a profit
c.
they are sometimes referred to as B2C markets
d.
their purchasing decisions are always made by only one individual
e.
they may buy the product, but not use it themselves
18. Which of these statements is not true about business markets?
a.
the purchase may be made to resell the item
b.
the purchase is always made by more than one individual
c.
the purchase may be made to use in general daily operations
d.
the purchase may be made to use in production of another product
e.
they can also be referred to as organizational markets
19. Which of the following is not a requirement or characteristic of a market?
a.
The ability to purchase a product
b.
A large number of people or organizations
c.
The authority to buy a product
d.
The willingness to use buying power
e.
The need for a specific product in a specific product category
20. In order to be considered a market, people do not have to have
a.
a need or desire for a particular product.
b.
the ability to purchase the product.
c.
discretionary income to purchase the product.
d.
the willingness to use their buying power.
e.
the authority to buy the specific products.
21. Mia is pet-sitting for a friend’s dog while he is on vacation. Her friend has given Mia all sorts of
information, including the veterinarian’s name and phone number, pet emergency center location, and
the dog’s favorite bedtime snack. The first evening of the vacation, Mia realizes that her friend did not
bring the dog’s food over, and she has no idea what the dog eats. Her friend’s cell phone is “out of
range” at the moment, so Mia must go to the grocery store and shop for dog food, even though she has
never bought it before now. In this case, even though Mia is not a dog owner, she is likely to be part
of the market for dog food for all of the following reasons except _______.
a.
she has the authority to purchase the dog food.
b.
she possesses the buying power for purchasing dog food.
c.
she has the need or desire for dog food.
d.
her ability to purchase the dog food is questionable.
e.
she is willing to use her buying power.
22. The ability to purchase a product is a function of
a.
buying power.
b.
desire.
c.
willingness.
d.
authority.
e.
needs.
23. Jack has just joined a law firm as its purchasing agent for all supplies, equipment, and service
contracts. In his previous position at another company, Jack could make decisions for any purchase up
to $1 million; however, at the new law firm, he can only make decisions for purchases less than
$500,000. Recently, Jack has been working with a sales representative from a computer software firm
about a contract for new program to process the firm’s billing statements. Jack signs the contract, even
though it is for $950,000. In this case, Jack ___ part of the market for the software because _____.
a.
is; he has very little buying power.
b.
is; has the need for the software.
c.
is not; he is willing to spend the firm’s money.
d.
is; he has the desire for the software.
e.
is not; he does not have the authority to purchase.
24. Generally speaking, individuals who are unemployed would not be considered a target market for lawn
care services because
a.
they would not desire such products.
b.
they would not be willing to purchase such products.
c.
they would not have the ability to purchase such products.
d.
such markets are narrowly defined geographically.
e.
they would not be authorized to purchase such products.
25. Eighteen-year-old students do not form a market for alcoholic beverages because they
a.
lack sufficient buying power to form a market.
b.
lack the authority to purchase this type of product.
c.
do not want to purchase this type of product.
d.
do not have sufficient experience with this type of product.
e.
lack the money to purchase this type of product.
26. Prodigy Placement is a private elementary school located in the center of Manhattan. Students at the
school are considered in the top 1% of their age group in terms of IQ scores and aptitude. Parents who
want to send their children to the school must get on a waiting list as soon as the child is 12 months old
and must make a deposit of $5,000 to the school in order to hold the child’s “application” until they
reach the age of 5 years. Emma’s parents put her on the waiting list at the age of 1 year and paid the
deposit; however, when Emma became five years old, she did not want to attend the school even
though she tested above the requirement. Her parents made the decision to enroll her for the upcoming
school year. In this case, Emma ___ part of the market for Prodigy Placement, and her parents ____
part of the market
a.
was; were; because Emma needed to attend school.
b.
was; were; because Emma had the authority to attend the school.
c.
was; were; because they had the authority.
d.
was not; were; because Emma lacked the desire.
e.
was not; were; because Emma lacked willingness.
27. The first step in the target market selection process is
a.
determining which segmentation variables to use.
b.
selecting specific target markets.
c.
identifying an appropriate targeting strategy.
d.
evaluating relevant market segments.
e.
developing market segment profiles.
28. To find a target market, a firm can use the
a.
total market strategy and the undifferentiated strategy.
b.
product differentiation strategy and the customer differentiation strategy.
c.
demographic strategy and the psychographic strategy.
d.
socioeconomic strategy and the psychological strategy.
e.
undifferentiated strategy, the concentrated strategy, and the differentiated strategy.
29. The Pillsbury company defines all individual consumers who are purchasers of flour as its target
market. It also defines all businesses who purchase flour as its target market. What targeting strategy
would be most appropriate in this case?
a.
Concentrated
b.
Undifferentiated
c.
Wide appeal
d.
Differentiated
e.
Clustered
30. When a firm designs a single marketing mix and directs it at an entire market for a particular product,
the company is using a(n) ____ strategy.
a.
concentrated targeting
b.
differentiated
c.
heterogeneous market
d.
undifferentiated
e.
single mix
31. Why would a company use the undifferentiated strategy?
a.
The needs of individual consumers are dissimilar, and distinctive marketing mixes are
required to satisfy them.
b.
The undifferentiated strategy is the one strategy that provides maximum satisfaction to the
whole market.
c.
The needs of individual consumers in the target market for a specific product are similar,
so the organization can satisfy most customers with a single marketing mix.
d.
The undifferentiated strategy is expensive to implement but tends to produce the most
sales.
e.
The undifferentiated strategy requires less time and fewer resources.
32. When the needs of individual consumers in a target market for a specific product are similar and the
organization can satisfy most customers with a single marketing mix, the best approach to use may be
the ____ strategy.
a.
undifferentiated
b.
differentiated
c.
segmented
d.
concentrated
e.
heterogeneous
33. Which of the following statements about the undifferentiated targeting strategy is false?
a.
The undifferentiated targeting strategy should be used when the needs of individual
customers are similar.
b.
The undifferentiated targeting strategy uses one promotional program aimed at everyone
in the target market.
c.
The undifferentiated targeting strategy is good for use with staple items, such as sugar and
salt.
d.
The undifferentiated targeting strategy uses multiple distribution systems to best reach
individuals in the target market.
e.
The opposite of the undifferentiated targeting strategy is the differentiated targeting
strategy.
34. The ProMark Company manufactures a pencil that is about five inches long and has no eraser. It sells
the product primarily to golf courses and universities. What type of targeting strategy is the ProMark
Company using?
a.
Extensive
b.
Concentrated
c.
Undifferentiated
d.
Intensive
e.
Differentiated
35. The producers of C & H Cane Sugar sell the product in five-pound bags, one-pound bags, and one-
pound boxes. When developing its advertising strategy, C & H will most likely use a(n) ____ approach
in defining a target market.
a.
undifferentiated
b.
differentiated
c.
product strategy
d.
cost-benefit
e.
demographic
36. If Morton Salt saw all table salt customers as pretty much alike and thus offered only one marketing
mix, it would be using the ____ strategy.
a.
directed
b.
undifferentiated
c.
segmented
d.
differentiated
e.
product-use
37. Smart Balance produces a line of milk products that are lactose-free. The milk comes in pint, quart,
and half-gallon cartons, as well as 16–ounce glass bottles. Smart Balance sells its pint cartons to
school systems, its quart and half-gallon cartons to grocery stores, and its glass bottles to vending
machine operators. Smart Balance appears to use a(n) _____ strategy in marketing its product to a
target market that is likely to be _______.
a.
undifferentiated; homogeneous
b.
undifferentiated; heterogeneous
c.
differentiated; homogenous
d.
differentiated; heterogeneous
e.
concentrated; heterogeneous
38. The undifferentiated targeting strategy for finding a target market will likely not be successful if
a.
product positioning is needed.
b.
the firm defines the total market as its target market.
c.
people within the market have heterogeneous needs.
d.
people within the market have homogeneous needs.
e.
the firm is capable of developing a single marketing mix that satisfies all people’s needs.
39. Most markets for products are made up of individuals or groups with diverse needs for products and
are called ____ markets.
a.
undifferentiated
b.
concentrated
c.
homogenous
d.
differentiated
e.
heterogeneous
40. Walmart sells numerous products, including packaged food, produce, automotive maintenance
services, eyeglasses, clothing, and toys. Walmart advertises itself as a store where “we save people
money so they can live better,” focusing on its low prices as the customer’s most important need.
Walmart’s advertising appears to use a(n) _____ strategy to a market that is _____.
a.
undifferentiated; homogeneous.
b.
undifferentiated; heterogeneous.
c.
differentiated; homogeneous.
d.
homogeneous; differentiated.
e.
heterogeneous; undifferentiated.
41. Individuals, groups, or organizations with one or more similar characteristics that cause them to have
similar product needs are classified as
a.
market segments.
b.
heterogeneous markets.
c.
concentrated markets.
d.
demographic segments.
e.
strategic segments.
42. Mattel views the toy market as composed of four age groupings, each with different needs and desires.
Mattel is using a(n) ____ targeting strategy for its groups, which are known as _____.
a.
undifferentiated market; market segments
b.
undifferentiated market; heterogeneous.
c.
differentiated; market segments.
d.
differentiated; the marketing mix.
e.
concentrated market; heterogeneous.
43. The purpose of market segmentation is to
a.
differentiate products.
b.
divide a total market to enable a marketer to develop a more precise marketing mix.
c.
reduce the overall cost of marketing activities.
d.
identify a single marketing mix that will be satisfactory for the general market.
e.
meet the needs of homogeneous markets.
44. The process of dividing a total market into market groups because people within each group have
relatively similar product needs is called
a.
segmentation.
b.
diversification.
c.
target marketing.
d.
concentration.
e.
customization.
45. Several conditions must exist for market segmentation to be successful. These conditions include all of
the following except
a.
the total market should be divided so that segments can be compared on sales potential,
costs, and profits.
b.
customers’ needs for the product must be homogeneous.
c.
the company must be able to reach the chosen segment with a particular marketing mix.
d.
segments must be identifiable and divisible.
e.
at least one segment must have enough profit potential to justify developing and
maintaining a special marketing mix for that segment.
46. A business advantage of the concentrated targeting strategy for any company is that it
a.
requires less market research and information.
b.
requires less intensive analysis of customers’ characteristics and needs.
c.
allows a firm to utilize all of its production capacity.
d.
maintains the firm’s flexibility in moving into other market segments.
e.
allows a firm to develop a special marketing mix for a single market segment.
47. A targeting strategy in which an organization targets a single market segment using one marketing mix
is called a(n) ____ strategy.
a.
selective
b.
focused
c.
differentiated
d.
concentrated
e.
undifferentiated
48. When markets are comprised of people with differing product needs, the marketing manager should
use a(n) ____ strategy.
a.
concentrated or differentiated targeting
b.
market-intensive
c.
integrated
d.
product-oriented
e.
undifferentiated
49. A disadvantage of the concentrated targeting strategy is that
a.
the firm’s financial condition is tied to a single and specialized marketing mix.
b.
large sales volumes cannot be generated.
c.
production costs may be higher than with other strategies.
d.
marketing personnel may become dissatisfied with the limited opportunities provided by
this approach.
e.
marketing costs are often higher than for other strategies.
50. If Georgia-Pacific, a producer of home siding, decking, and other wood products, focused its
marketing efforts to home construction companies only, it would be using a(n) ____ strategy. If it sold
the same products to both construction companies and DIY retailers such as Home Depot, it would be
using a(n) ____ strategy.
a.
undifferentiated; undifferentiated
b.
undifferentiated; differentiated
c.
differentiated; multisegmented
d.
concentrated; differentiated
e.
concentrated; concentrated
51. Tiffany’s markets its exclusive jewelry and gifts to high-income individuals interested in high-quality
products and a well-known brand name. It uses the same marketing mix to reach this market. Tiffany‘s
uses a(n) ____ strategy.
a.
undifferentiated
b.
differentiated targeting
c.
exclusive targeting
d.
heterogeneous
e.
concentrated targeting
52. Interior Designs Inc. sells expensive custom-made draperies, bedding, and accessories through sales
representatives who are also interior designers. It also has another, slightly less expensive line that it
sells through stores such as Nordstrom’s and Saks Fifth Avenue. Interior Designs Inc. is most likely
using a(n) ____ targeting strategy.
a.
differentiated
b.
undifferentiated
c.
concentrated
d.
homogeneous
e.
heterogeneous
53. The primary advantage of a concentrated targeting strategy is
a.
it meets the needs of a wide range of consumers.
b.
it allows a firm to specialize to meet specific customer needs.
c.
it is more flexible than any other approach.
d.
it is the least risky targeting approach.
e.
its customers are the most willing to repurchase the same brands.
54. Procter & Gamble markets Cheer detergent to young singles and couples and Tide detergent to
families. Procter & Gamble is using a(n) ____ targeting strategy for laundry detergents.
a.
multiuse
b.
differentiated
c.
stratified
d.
undifferentiated
e.
concentrated
55. Volkswagen markets its Routan to large families, its R32 racecar to men, and its Jetta to young singles.
What targeting approach is Volkswagen using?
a.
Concentrated
b.
Strategic
c.
Differentiated
d.
Undifferentiated
e.
Multisegmented
56. A targeting strategy in which an organization directs its marketing efforts at several segments is called
a(n) ____ targeting strategy.
a.
differentiated
b.
total market
c.
concentrated
d.
undifferentiated
e.
integrated
57. Which of the following products is most likely to be marketed, using an undifferentiated approach?
a.
bicycle
b.
computer
c.
notebook
d.
seasoning salt
e.
oscillating fan
58. After a firm has identified an appropriate targeting strategy, the next step in the target market selection
process is
a.
determining the demographic variables of the target market.
b.
developing market segment profiles.
c.
determining which segmentation variables to use.
d.
selecting specific target markets.
e.
evaluating relevant market segments.
59. Characteristics of individuals, groups, or organizations that are used for dividing a total market into
smaller homogeneous groups are called ____ variables.
a.
marketing
b.
classification
c.
segmentation
d.
stratification
e.
dividing
60. Age, rate of product use, location, and gender are all examples of common
a.
demographic variables.
b.
geographic characteristics.
c.
targeting strategies.
d.
psychographic variables.
e.
segmentation variables.
61. Segmentation variables are usually grouped into four categories:
a.
demographic, geographic, religion, and income.
b.
geopolitical, income, behavioristic, and psychographic.
c.
attitudes, lifestyles, behaviors, and gender.
d.
geographic, demographic, psychographic, and attitudes.
e.
demographic, geographic, psychographic, and behavioristic.
62. Which of the following is not one of the major categories of consumer market segmentation variables?
a.
Demographic characteristics
b.
Geographic variables
c.
Psychographic dimensions
d.
Situational variables
e.
Behavioristic characteristics
63. Alpine Ski Shops is looking for new markets for both its brick and mortar retail stores and its catalog
division. Alpine Ski Shops would most likely use a(n) ______ base for market segmentation of its
stores and a(n) base for market segmentation of its catalog division?
a.
behavioristic; geographic
b.
geographic; demographic
c.
demographic; psychographic
d.
environmental; demographic
e.
geographic; behavioristic
64. TimeWarner Cable uses a segmentation strategy for its cable TV packages based on market
characteristics such as age, gender, or income. Which of the following segmentation variables is
TimeWarner using?
a.
Demographic
b.
Geographic
c.
Psychographic
d.
Product-related
e.
Education
65. With its Venus razor, Gillette was the first marketer to offer a triple blade razor specifically designed
for women. This is an example of market segmentation using ____ variables.
a.
demographic
b.
psychographic
c.
geographic
d.
family life cycle
e.
product use
66. Kelly’s Kids is a home-based business that sells high-quality children’s clothing at premium prices
using in-home parties. These in-home parties typically cater to families with small children and
middle- to upper-middle-class income. Kelly’s Kids is using ____ variables to segment its market.
a.
demographic
b.
psychographic
c.
sociographic
d.
behavioristic
e.
geographic
67. Cosmopolitan magazine, Car and Driver magazine, Secret deodorant, and Axe body wash are all
products whose marketers have used segmentation based on
a.
behavior.
b.
psychographics.
c.
product use.
d.
gender.
e.
income.
68. A marketer that targets customers based on marital status and the presence and age of children is using
a.
behavioristic segmentation.
b.
lifestyle variables.
c.
psychographic variables.
d.
family life cycle.
e.
phase of life segmentation.
69. Which of the following products is most likely to have its market segment based on age?
a.
Nike shoes
b.
Lipton Iced Tea
c.
Bic pens
d.
Legos
e.
Carpet
70. If Campbell were to offer single serving “Soup for One” packages to household markets, it would be
using segmentation based on
a.
income.
b.
age.
c.
preferences.
d.
geographic considerations.
e.
family life cycle.
71. Which of the following products is least likely to be segmented according to stages in the family life
cycle?
a.
Single-family homes
b.
Cars and SUVs
c.
European vacations
d.
Soft drinks
e.
General Electric appliances
72. Family life cycle is most typically based on
a.
income.
b.
geographic location.
c.
marital status and age of children.
d.
occupation.
e.
buying power.
73. Population density and city size are ____ variables used for market segmentation.
a.
geographic
b.
demographic
c.
psychographic
d.
environmental
e.
geodemographic
74. Zerex markets its radiator liquid to different markets; one as a coolant and the other as antifreeze.
Which of the following segmentation variables is Zerex most likely using?
a.
Demographic
b.
Psychographic
c.
Environmental
d.
Geographic
e.
Behavioristic
75. Many marketers are concerned about the number of potential customers within a certain area of land
because of the different requirements to serve dissimilar areas. What is this segmentation variable
called?
a.
Micromarketing
b.
Population
c.
Market density
d.
MSA
e.
PMSA
76. Subaru is producing a new seven-passenger van with all-wheel drive. Which of the following would be
the best variables for segmenting the market for this new model?
a.
Gender and age
b.
Geographic location and family life cycle
c.
Income and geographic location
d.
Family life cycle and income
e.
Geographic location and gender
77. Systems such as PRIZM and Acorn provide companies with lifestyle and demographic information
about neighborhoods throughout the United States. This information is used to aid
a.
behavioristic segmentation.
b.
geodemographic segmentation.
c.
market density analysis.
d.
demographic segmentation.
e.
geographic segmentation.
78. Justin Franklin’s company is interested in locating areas where the average income is high, the average
age range is 25-35 years, and the lifestyles of the people involve extreme adventures and dangerous
leisure activities. His company would most likely find possible markets through
a.
U.S. Census Bureau information.
b.
geographic segmentation variables.
c.
geodemographic segmentation.
d.
climate information.
e.
psychographic segmentation.
79. Micromarketing is
a.
a market segmentation approach in which firms focus precise marketing efforts on very
small geographic markets.
b.
developing a very specific marketing mix that will effectively meet the needs of only a
small segment of the market.
c.
marketing efforts that are tightly controlled by high-level executives in the organization.
d.
a way to segment the market to meet the needs of individuals with the same motives and
personality attributes.
e.
creating advertising that is so specific to a certain type of individual that few people
outside that micromarket will respond to the message.
80. Retail-site location analyses, unique product offerings, and special advertising campaigns are all
examples of the use of
a.
market density.
b.
demographic segmentation.
c.
behavioristic segmentation.
d.
environmental segmentation.
e.
micromarketing.
81. Which of the following is the biggest drawback to using psychographic variables?
a.
They are not strongly reflective of consumer behavior.
b.
They are difficult to measure.
c.
They give poor information about consumer needs.
d.
They do not reflect socioeconomic characteristics of consumers.
e.
The resulting segments are difficult to be reached.
82. The three most commonly used psychographic segmentation variables are
a.
personality, perception, and learning.
b.
personality, perception, and behavior.
c.
motives, attitudes, and lifestyles.
d.
attitudes, personality, and perception.
e.
personality, motives, and lifestyles.
83. Seventh Generation is a company producing products that limit the amount of negative impact on the
environment. Their product line includes dishwashing liquid, toilet paper, paper towels, baby wipes,
and laundry detergent, to name a few. Seventh Generation is now interested in producing a new line
of clothing; mostly t-shirts, shorts, and long pants for both men and women. Their research indicates
that they should use psychographic segmentation in their marketing strategy. Which group of
segmentation variables will Seventh Generation be using?
a.
Geographic location
b.
Age, sex, and socioeconomic characteristics
c.
Social class variables
d.
Personality characteristics, motives, and lifestyles
e.
Family life cycle, social class, and religion
84. When using personality characteristics as a market segmentation variable, marketers generally
a.
conduct personality assessments of their potential target market to determine which
personality characteristics they possess.
b.
use research developed by clinical psychologists to determine which personality
characteristics consumers using their products are most likely to have.
c.
use generic characteristics that all members of the population have.
d.
use a positively viewed characteristic they assume much of their target market has or
would like to have.
e.
conduct a series of focus groups to determine both the positive and negative characteristics
members of their target market are perceived to have.
85. The psychographic variable that includes numerous characteristics related to people’s activities,
interests, and opinion is
a.
motive.
b.
social class.
c.
personality.
d.
stage in family life cycle.
e.
lifestyle.
86. If a company segments its market on the basis of their reasons for purchasing a particular product, the
primary segmentation variable in use is
a.
lifestyle.
b.
motives.
c.
personality.
d.
benefit expectations.
e.
personality attributes.
87. Demographic variables such as income and occupation, as well as how people spend their time and the
importance of things in their surroundings, are all factors considered in ____ segmentation.
a.
psychographic
b.
social class
c.
lifestyle
d.
personality
e.
family life cycle
88. A widely used system for classifying individuals on the basis of lifestyle is
a.
VALS.
b.
PRIZM.
c.
CMSA.
d.
LIFO.
e.
Prospect Zone.
89. Which of the following is an example of a behavioristic segmentation variable?
a.
Family size
b.
Climate
c.
Age
d.
Usage rate
e.
Personality characteristics
90. Budweiser may choose to segment its market based on heavy, moderate, and light drinkers of its
alcoholic beverages. This is an example of market segmentation based on
a.
behavioristic variables.
b.
benefits.
c.
lifestyles.
d.
psychographic variables.
e.
demographic variables.
91. The Gap has recently produced a new line of athletic wear that closely competes with a designer label
in its quality, utility, and appearance. However, it is about half the cost of the designer brand. Product
managers for The Gap line plan to use price sensitivity, brand loyalty, and end use as variables to
segment their target market. These are all _______ variables for market segmentation.
a.
psychographic
b.
usage
c.
demographic
d.
lifecycle
e.
behavioristic