CH-5 Target Markets: Segmentation and Evaluation – Foundations of Marketing : Exam Guide

Chapter 5 - Target Markets: Segmentation and Evaluation 1. How do business markets differ from consumer markets? Answer: Markets fall into one of two categories: consumer markets and business markets. These categories are based on the characteristics of the individuals and groups that make up a specific market and the purposes for which they buy products. A consumer market consists of purchasers and household members who intend to consume or benefit from the purchased products and do not buy products to make a profit. Consumer markets are sometimes also referred to as business-to-consumer (B2C) markets. Each of us belongs to numerous consumer markets for all the purchases we make in categories such as housing, food, clothing, vehicles, personal services, appliances, furniture, recreational equipment, and so on. A business market consists of individuals or groups that purchase a specific kind of product for one of three purposes: resale, direct use in producing other products, or use in general daily operations. For instance, a producer that buys electrical wire to use in the production of lamps is part of a business market for electrical wire. Some products can be part of the business or consumer market, depending on their end use. For instance, if you purchase a chair for your home, that chair is part of the consumer market. However, if an office manager purchases the same chair for use in a business’ office, it is part of the business market. Business markets may be called business-to-business (B2B), industrial, or organizational markets and can be sub-classified into producer, reseller, government, and institutional markets. 2. What are the conditions under which an undifferentiated targeting strategy is effective? Why are these conditions essential? Answer: The undifferentiated targeting strategy is effective under two conditions. First, a large proportion of customers in a total market must have similar needs for the product, a situation termed a homogeneous market. A marketer using a single marketing mix for a total market of customers with a variety of needs would find that the marketing mix satisfies very few people. For example, marketers would have little success using an undifferentiated strategy to sell a “universal car” because different customers have varying needs. Second, the organization must have the resources to develop a single marketing mix that satisfies customers’ needs in a large portion of a total market and the managerial skills to maintain it. 3. What are the major steps of the target market selection process? Answer: Although marketers may employ several methods for target market selection, they generally follow a five-step process. These steps include: Step 1: Identifying the appropriate targeting strategy Step 2: Determining which segmentation variables to use Step 3: Developing market segment profiles Step 4: Evaluating relevant market segments Step 5: Selecting specific target markets 4. Compare and contrast the concentrated and differentiated targeting strategies of market segmentation. Answer: When an organization directs its marketing efforts toward a single market segment using one marketing mix, it is employing a concentrated targeting strategy. The chief advantage of the concentrated strategy is that it allows a firm to specialize. The firm analyzes the characteristics and needs of a distinct customer group and then focuses all its energies on satisfying that group’s needs. If the group is big enough, a firm may generate a large sales volume by reaching a single segment. Concentrating on a single segment can also permit a firm with limited resources to compete with larger organizations that have overlooked smaller market segments. Specialization, however, means that a company allocates all its resources on one target segment, which can be hazardous. If a company’s sales depend on a single segment and the segment’s demand for the product declines, the company’s financial health also deteriorates. With a differentiated targeting strategy, an organization directs its marketing efforts at two or more segments by developing a marketing mix for each segment. A benefit of a differentiated approach is that a firm may increase sales in the aggregate market because its marketing mixes are aimed at more customers. For this reason, a company with excess production capacity may find a differentiated strategy advantageous because the sale of products to additional segments may absorb excess capacity. Differentiated strategy, however, often demands more production processes, materials, and people because the different ingredients in each marketing mix will vary. Thus, production costs may be higher than with a concentrated strategy. 5. Would a person's political views be an effective variable in the process of market segmentation? Why or why not? Answer: Geodemographic segmentation clusters people by zip codes or neighbourhood units based on lifestyle and demographic information. It allows marketers to engage in micromarketing— a strategy that involves focusing precise marketing efforts on very small geographic markets, such as communities and even individual neighbourhoods. Lifestyle segmentation groups individuals according to how they spend their time, the importance of things in their surroundings (homes or jobs, for example), beliefs about them-selves and broad issues, and some demographic characteristics, such as income and education. Lifestyle analysis provides a broad view of buyers because it encompasses numerous characteristics related to people’s activities (e.g., work, hobbies, entertainment, sports), interests (e.g., family, home, fashion, food, technology), and opinions (e.g., politics, social issues, education, the future). 6. Identify the four major categories of segmentation of variables for consumer products, and give one example for each of these variables. Answer: A marketer that uses segmentation to reach a consumer market can choose one or several variables. Segmentation variables can be grouped into four major categories: demographic, geographic, psychographic, and behaviouristic. Demographic characteristics that marketers commonly use include age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, and social class. Age is a common variable for segmentation purposes. For example, a trip to the shopping mall high-lights the fact that many retailers, including Zara, Aeropostale, and American Eagle Outfitters, target teens and young adults. Markets may be divided using geographic variables, because differences in location, climate, and terrain will influence consumers’ needs. City size can be an important segmentation variable. A classic example is Walmart, which initially was located only in small towns and even today can be found in towns where other large retailers stay away. Marketers sometimes use psychographic variables, such as personality characteristics, motives, and lifestyles, to segment markets. Personality characteristics can be a useful means of segmentation. When appealing to a personality characteristic, a marketer almost always selects one that many people view positively. For example, the Ermenegildo Zegna advertisement for men’s luxury clothing and accessories clearly appeals to customers who are motivated by personal appearance and status and who care about fashion. Firms can divide a market according to consumer behavior toward a product, which commonly involves an aspect of consumers’ product use. For example, a market may be separated into users—classified as heavy, moderate, or light—and nonusers. To satisfy a specific group, such as heavy users, marketers may create a distinctive product and price, or initiate special promotion and distribution activities. 7. Why do marketers rely heavily on demographic characteristics when segmenting consumer markets? Answer: Demographers study aggregate population characteristics such as the distribution of age and gender, fertility rates, migration patterns, and mortality rates. Demographic characteristics that marketers commonly use include age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, religion, and social class. Marketers segment markets by demographic characteristics because they are often closely linked to customers’ needs and purchasing behaviors and can be readily measured. 8. What are the variables involved in the process of segmenting business markets? Answer: Like consumer markets, business markets are frequently segmented for marketing purposes. Marketers segment business markets according to geographic location, type of organization, customer size, and product use. Geographic segmentation may be especially appropriate for producers seeking to reach industries concentrated in certain locations, such as furniture and textile producers concentrated in the Southeast. A company sometimes segments a market by types of organization within that market because they often require different product features, distribution systems, price structures, and selling strategies. An organization’s size may affect its purchasing procedures and the types and quantities of products it needs. Size can thus be an effective variable for segmenting a business market. To reach a segment of a specific size, marketers may have to adjust one or more marketing mix ingredients. Because the needs of large and small buyers tend to be distinct, marketers frequently use different marketing practices to reach target customer groups. Certain products, particularly basic raw materials such as steel, petroleum, plastics, and lumber, can be used numerous ways in the production of goods. These variations will affect the types and amounts of products purchased, as well as the purchasing method. 9. What are the three major issues that need to be considered in the process of evaluating market segments? Answer: After analyzing the market segment profiles, a marketer should be able to narrow his or her focus to several promising segments that warrant further analysis. Marketers should examine sales estimates, competition, and estimated costs associated with each of these segments. Potential sales for a market segment can be measured along several dimensions, including product level, geographic area, time, and level of competition. Besides obtaining sales estimates, it is crucial to assess competitors that are already operating in the segments being considered. A market segment that initially seems attractive based on sales estimates may turn out to be much less so after a competitive assessment. To fulfill the needs of a target segment, an organization must develop and maintain a marketing mix that precisely meets the wants and needs of that segment, which can be expensive. 10. Define market potential. Explain the various factors that affect the same. Answer: Market potential is the total amount of a product that customers will purchase within a specified period at a specific level of industry-wide marketing activity. Market potential can be stated in terms of dollars or units. A segment’s market potential is affected by economic, sociocultural, and other environmental forces. The specific level of marketing effort will vary from one firm to another, but each firms’ marketing activities together add up to the industry-wide marketing effort total. A marketing manager must also estimate whether and to what extent industry marketing efforts will change over time. 11. Distinguish between the breakdown and buildup approaches to assess company sales potential. Answer: The two general approaches that measure company sales potential are breakdown and buildup. In the breakdown approach, the marketing manager first develops a general economic forecast for a specific time period. Next, the manager estimates market potential based on this forecast. The manager derives the company’s sales potential from the forecast and an estimate of market potential. In the buildup approach, the marketing manager begins by estimating how much of a product a potential buyer in a specific geographic area, such as a sales territory, will purchase in a given period. The manager then multiplies that amount by the total number of potential buyers in that area. The manager performs the same calculation for each geographic area in which the firm sells products and then adds the totals to calculate market potential. To determine company sales potential, the manager must estimate, based on planned levels of company marketing activities, the proportion of the total market potential the company can reasonably attain. 12. Why is it important for marketers to assess competitors before entering a market segment? Answer: Besides obtaining sales estimates, it is crucial to assess competitors that are already operating in the segments being considered. A market segment that initially seems attractive based on sales estimates may turn out to be much less so after a competitive assessment. Such an assessment should ask several questions about competitors: How many exist? What are their strengths and weaknesses? Do several competitors already have major market shares and together dominate the segment? Can our company create a marketing mix to compete effectively against competitors’ marketing mixes? Is it likely that new competitors will enter this segment? If so, how will they affect our firm’s ability to compete successfully? Answers to such questions are important for proper assessment of the competition in potential market segments. 13. Discuss the difference between sales forecasts and company sales potential. Why is it important for a marketer to be able to forecast sales? Answer: After a company selects a target market or markets, it must develop a sales forecast—the amount of a product the company expects to sell during a specific period at a specified level of marketing activity. The sales forecast differs from the company sales potential in that it concentrates on what actual sales will be at a certain level of company marketing effort. The company sales potential assesses what sales are possible at various levels of marketing activities, assuming certain environmental conditions exist. Businesses use the sales forecast for planning, organizing, implementing, and controlling activities. The success of numerous activities depends on the forecast’s accuracy. Common problems in failing companies are improper planning and lack of realistic sales forecasts. For example, overly ambitious sales forecasts can lead to overbuying, overinvestment, and higher costs that can weaken a firm’s strength and position. 14. Discuss the advantages and disadvantages of using executive judgment in forecasting company sales. Answer: Executive judgment is the intuition of one or more executives. This is an unscientific but expedient and inexpensive approach to sales forecasting. It is not a very accurate method, but executive judgment may work reasonably well when product demand is relatively stable and the forecaster has years of market-related experience. However, because intuition is heavily influenced by recent experience, the forecast may weight recent sales booms or slumps excessively. Another drawback to intuition is that the forecaster has only past experience as a guide for deciding where to go in the future. 15. Why would a firm survey its sales force to forecast company sales? Why would it choose an expert forecasting survey? Answer: In a sales force forecasting survey, the firm’s salespeople estimate anticipated sales in their territories for a specified period. A marketer may survey sales staff for several reasons, the most important being that the sales staff is the company personnel closest to customers on a daily basis. They therefore have first-hand knowledge about customers’ product needs. Moreover, when sales representatives assist in developing the forecast, they are invested in the process and are more likely to work toward its achievement. When a company wants an expert forecasting survey, it hires professionals to help prepare the sales forecast. These experts are usually economists, management consultants, advertising executives, college professors, or other individuals outside the firm with experience in a specific market. Drawing on this experience and their analyses of available information about the company and the market, experts prepare and present forecasts or answer questions. Using experts is a quick way to get information and is relatively inexpensive. 16. A group of individuals and/or organizations that have desire or needs for products in a product class and have the ability, willingness, and authority to purchase those products is a: A. business market. B. market. C. undifferentiated market D. segmented market E. market variable Answer: B 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. Purchasers do not buy products for the main purpose of making a profit. C. It is sometimes referred to as B2C markets. D. The purchasing decisions of a consumer market are always made by only one individual. E. Purchasers may buy the product but not use it themselves. Answer: D 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. These markets can also be referred to as organizational markets. Answer: B 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 Answer: B 20. In order to be considered a market, people do not require: A. a need or desire for a particular product. B. the ability to purchase the product. C. an organization of their own to purchase the product. D. the willingness to use their buying power. E. the authority to buy the specific products. Answer: C 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. Answer: D 22. 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 a 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. Answer: E 23. 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. Answer: C 24. 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. Answer: B 25. 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 turned five, she did not want to attend the school although 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 the authority. Answer: D 26. 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. Answer: C 27. 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. Answer: E 28. The Pillsbury Company defines all individual consumers who are purchasers of flour as its target market. It also defines all businesses that purchase flour as its target market. Which targeting strategy would be most appropriate in this case? A. Concentrated B. Undifferentiated C. Wide appeal D. Differentiated E. Clustered Answer: D 29. 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) ________ targeting strategy. A. concentrated targeting B. differentiated C. heterogeneous market D. undifferentiated E. single mix Answer: D 30. 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. Answer: C 31. 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 Answer: A 32. 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. Answer: D 33. 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. Which of the following targeting strategies has been implemented by this company? A. Extensive targeting strategy B. Concentrated targeting strategy C. Undifferentiated targeting strategy D. Intensive targeting strategy E. Differentiated targeting strategy Answer: B 34. 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 Answer: A 35. 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 Answer: B 36. 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 halfgallon 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 Answer: C 37. 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. Answer: C 38. A market comprised of individuals or organizations with diverse product needs is called a(n) ________ market. A. undifferentiated B. concentrated C. homogenous D. differentiated E. heterogeneous Answer: E 39. 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’s 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 Answer: B 40. Individuals, groups, or organizations that share one or more similar characteristics that cause them to have relatively similar product needs are called: A. market segments. B. heterogeneous markets. C. concentrated markets. D. demographic segments. E. strategic segments. Answer: A 41. Mattel views the toy market as composed of four age groups, 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 Answer: C 42. 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. Answer: B 43. 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. Answer: A 44. 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. Answer: B 45. 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. Answer: E 46. 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 Answer: D 47. When markets are comprised of people with differing product needs, the marketing manager should use a(n) ________ targeting strategy. A. differentiated B. market-intensive C. integrated D. concentrated E. undifferentiated Answer: A 48. 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. Answer: A 49. 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 Answer: D 50. 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 Answer: E 51. 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 Answer: A 52. 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. Answer: B 53. 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 Answer: B 54. Volkswagen markets its Routan to large families, its R32 racecar to men, and its Jetta to young singles. Which of the targeting strategies is being implemented by Volkswagen? A. Concentrated targeting strategy B. Strategic targeting strategy C. Differentiated targeting strategy D. Undifferentiated targeting strategy E. Multi-segmented targeting strategy Answer: C 55. 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 Answer: A 56. 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 Answer: D 57. 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. Answer: C 58. 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 Answer: C 59. 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. Answer: E 60. 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. Answer: E 61. 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 Answer: D 62. 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 Answer: E 63. 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 being implemented by this ? A. Demographic variable B. Geographic variable C. Psychographic variable D. Product-related variable E. Education variable Answer: A 64. 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 Answer: A 65. 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 Answer: A 66. 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. Answer: D 67. 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. Answer: D 68. 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 Answer: D 69. 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. Answer: E 70. 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 Answer: D 71. 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. Answer: C 72. Population density and city size are ________ variables used for market segmentation. A. geographic B. demographic C. psychographic D. environmental E. geodemographic Answer: A 73. 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. This segmentation variable is known as ________. A. micromarketing B. population C. market density D. MSA E. PMSA Answer: C 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 being implemented by Zerex? A. Demographic variable B. Psychographic variable C. Lifestyle variable D. Geographic variable E. Behavioristic variable Answer: D 75. 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 Answer: B 76. Systems such as PRIZM and Acorn provide companies with lifestyle and demographic information about neighbourhoods 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. Answer: B 77. 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. Answer: C 78. 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 micro market will respond to the message. Answer: A 79. 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. behaviouristic segmentation. D. environmental segmentation. E. micromarketing. Answer: E 80. Which of the following is the biggest drawback to using psychographic variables? A. These variables are not strongly reflective of consumer behavior. B. These variables are difficult to measure. C. These variables give poor information about consumer needs. D. These variables do not reflect socioeconomic characteristics of consumers. E. The resulting segments are difficult to be reached. Answer: B 81. 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. Answer: E 82. 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 be implemented by Seventh Generation? 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 Answer: D 83. 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. Answer: D 84. 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. Answer: E 85. 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. Answer: B 86. 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. behaviouristic B. social class C. lifestyle D. personality E. family life cycle Answer: C 87. A widely used system for classifying individuals on the basis of lifestyle is: A. VALS. B. PRIZM. C. CMSA. D. LIFO. E. Prospect Zone. Answer: A 88. Which of the following is an example of a behaviouristic segmentation variable? A. Family size B. Climate C. Age D. Usage rate E. Personality characteristics Answer: D 89. 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. behaviouristic variables. B. benefits. C. lifestyles. D. psychographic variables. E. demographic variables. Answer: A 90. The Gap Inc. 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 Answer: E 91. Alli Inc. segments its diet pills based on those who have morning cravings, those who tend to overeat near the end of the day, those who need all day long appetite suppression, and those who want appetite control and more energy. This is an example of market segmentation based on variables of: A. demographics. B. lifestyles. C. psychographics. D. behavior. E. personality characteristics. Answer: D 92. Crest toothpaste is available in several different versions, such as Crest Whitening, Crest Tartar Control, Crest Whitening with mouthwash, and Crest Total Effects. Given these different variations of the product, it appears that the marketers of Crest are segmenting the market by using ________ segmentation. A. psychographic B. product usage C. benefit D. end-purpose E. advantage Answer: C 93. Variables such as geographic location, type of organization, customer size, and type of product usage are used to segment ________ markets. A. consumer B. business C. government D. international E. most target Answer: B 94. Dell Inc. segments its business markets into small business, corporate, government agencies, K-12 schools, and higher education institutions. The primary segmentation variable used in this example is: A. geographic location. B. type of organization. C. secondary product use. D. customer size. E. market potential. Answer: B 95. Which of the following variables would most likely be used to segment a business market? A. An attitude of the company's CEO B. The geographic location of the company C. The lifestyle of the company's buying agent D. Net income generated by the company E. Common opinions of the company's employees Answer: B 96. Through marketing newsprint to newspaper publishers and glass manufacturers that use it in packing, International Paper Inc. segments its market based on: A. customer size. B. psychographics. C. demographics. D. use of product. E. geographic location. Answer: D 97. Bethlehem Steel Corp. provides steel for a variety of uses to its various customers. Customers have different needs for the steel and thus Bethlehem has to prepare the raw steel differently depending on how customers will use it in their production processes. The primary business segmentation variable in this example is: A. geographic location. B. customer size. C. product use. D. customer importance. E. organization classification. Answer: C 98. After an organization has determined which of the many segmentation variables it will use, the next Step in the target market selection process is: A. evaluating each of the relevant market segments. B. selecting the specific target markets. C. reviewing the appropriate marketing strategy. D. analyzing the interaction between segmentation variables. E. developing market segment profiles. Answer: E 99. ________ describe the similarities among potential customers within a market segment and explain the differences among people in different market segments. A. Market segmentation variables B. Market segment profiles C. Segmentation grids D. Market differentiation indexes E. Market concentrations Answer: B 100. Yvonne and Garret are looking at information about how their organization's products could fit potential customers' needs. This information deals with demographic characteristics, product benefits sought, lifestyles, geographic factors, brand preferences, and usage rates. They are most likely looking at: A. the sales force survey results. B. the results of sales forecasting. C. a market trend analysis. D. a market segmentation discrimination analysis. E. a market segment profile. Answer: E 101. The total amount of a product that customers will purchase within a specified period at a specific level of industrywide marketing activity is the ________. A. competitor sales potential B. sales objective C. forecasted sales D. company sales potential E. market potential Answer: E 102. The maximum percentage of market potential that an individual firm can expect to obtain for a specific product is the ________. A. sales forecast B. market potential C. company sales potential D. company sales objective E. market share goal Answer: C 103. General Electric Corp calculates that the total number of light bulbs sold to consumers in the next year by all light bulb producers is 1 billion, given anticipated marketing efforts by the firms involved. This figure represents the industry's: A. sales potential. B. market potential. C. target growth rate. D. sales forecast. E. sales objective. Answer: B 104. If Baskin-Robbins calculates that it could sell up to 25 percent of all ice cream cones sold in the United States, this percentage would represent the ice cream marketer's ________. A. target growth rate B. sales forecast C. sales objective D. company sales potential E. market potential Answer: D 105. Using the breakdown approach to sales potential, estimates are made: A. by referring to specific geographic factors. B. by establishing levels of marketing effort that will be required to achieve specific levels of sales. C. without reference to industry marketing efforts. D. without reference to general economic conditions. E. by starting with general economic conditions. Answer: E 106. Nathan, the manager at a local recreational vehicle store, Off-Road Rage, believes the next two years will be difficult because of an economic recession. Using this forecast, he determines the effect on the industry's market potential and then estimates how his company's potential sales will look based on this outlook. This manager is using a ________ approach to estimate sales potential. A. breakdown B. recessionary C. buildup D. pyramid E. dimensional Answer: A 107. Alex Wren of Owens Corning Fiberglass Corp talks to Terry Jones, a homebuilder, to find out how much fiberglass insulation he intends to use in building homes during the next year. Albert then multiplies that number by the total number of builders in the territory. He is using a ________ approach to measure sales potential. A. multivariable B. use of product C. breakdown D. regression E. buildup Answer: E 108. The buildup approach measure of sales potential: A. starts with broad estimates of general economic activity. B. ends with an estimate of a single firm's sales of a specific product. C. starts with forecasts about demand for a specific product within a relatively small area. D. does not use sales estimates. E. is seldom employed by industrial firms. Answer: C 109. When evaluating market segments, assessment of competitors is important because: A. it is difficult to segment a market when it has multiple competitors. B. an absence of competitors usually creates difficulties in accurately measuring segment sales potential. C. sales estimates may cause a segment to appear to be lucrative, but there may be several competitors that together have a large share of that segment. D. a competitive analysis may lead to confusion as to who are the key competitors. E. competition is generally not a major problem as long as a marketer is aware of it. Answer: C 110. Estimating the cost of entering a market and focusing on a specific target segment is important because: A. cost estimates are crucial to assess sales potential accurately. B. higher costs will keep other potential competitors from entering that particular segment. C. customers are more likely to be attracted to marketers that invest heavily in the target segment. D. the organization's marketers need to know if they can reach the segment at costs equal to or below competitors' costs. E. higher cost generally ensures long-term success. Answer: D 111. The final step in the target market selection process is: A. implementing the appropriate marketing mix for the target market. B. evaluating relative market segments. C. eliminating market segments that are cost prohibitive. D. selecting specific target markets. E. revising the final segmentation variables based on target selection. Answer: D 112. Frito-Lay Snack Foods is currently conducting market segmentation studies. For several segments, they have completed competitive assessments and cost estimates. The next major step they must take is to: A. determine which segmentation variables to use. B. develop market segment profiles. C. identify the appropriate targeting strategy. D. select specific target markets. E. develop sales forecasts. Answer: D 113. Meghan intends to open a house-cleaning business and is considering several market segments. She has identified four segments for consideration; young urban singles, young married professionals, senior citizens, and college students. She has just completed an analysis of these four segments by assessing such factors as sales estimates, competition, and estimated costs. Meghan is now ready for implementing the next step in the target market selection process, which is to: A. identify the appropriate targeting strategy. B. determine which segmentation variables to use. C. develop market segment profiles. D. evaluate relevant market segments. E. select specific target markets. Answer: E 114. When selecting specific target markets, a firm should: A. revert to an undifferentiated approach if the market is deemed heterogeneous. B. choose the segments most in line with the firm's objectives and long-term growth. C. choose all segments that are determined to be profitable for the organization. D. choose the minimum number of segments necessary to achieve company sales potential. E. pick the segments with the best sales forecasts for the upcoming period of time. Answer: B 115. Guess Inc. will be spending $22 million on marketing activities next year and expects to sell 30 million pairs of jeans. These 30 million pairs represent the company's: A. sales potential. B. market potential. C. sales forecast. D. market sales. E. selected market. Answer: C 116. The amount of product a company expects to sell during a specific period at a specified level of marketing activity is called the ________. A. company sales potential B. revenue estimate C. company sales prediction D. market potential E. sales forecast Answer: E 117. Relying on executive judgment for forecasting may be adequate when: A. levels of marketing efforts put forth by competitors vary considerably. B. recent events give the executive specific impressions of product demand. C. product demand is erratic. D. the executive conducts surveys. E. the executive has considerable experience and product demand is relatively stable. Answer: E 118. Intuition and expediency are primary characteristics of the sales forecasting method of ________. A. surveys B. executive judgment C. cycle analysis D. market tests E. industry indicators Answer: B 119. Company sales forecasts are least likely to be based on: A. executive judgment. B. customer surveys or sales force surveys. C. time series analysis. D. market tests. E. single-variable segmentation. Answer: E 120. When a business has a relatively small number of customers, a preferred method of forecasting is ________. A. regression analysis B. trend analysis C. the Delphi technique D. a market test E. a customer forecasting survey Answer: E 121. The most important reason that a firm might use a sales force forecasting survey to determine its sales forecast is: A. salespeople are generally optimistic about the future and will provide excellent forecast targets. B. most salespeople tend to have a pessimistic outlook, which is more likely to result in an achievable sales forecast. C. this tends to be the fastest way to determine a good sales forecast for the upcoming period. D. the averaging and other statistical techniques applied to these forecasts result in extremely accurate numbers. E. the sales staff is closer to the actual customers on a regular basis than anyone else in the organization. Answer: E 122. When a company has its sales forecasts prepared by management consultants, economists, or college professors, it is using a(n) ________. A. expert forecasting survey B. Delphi technique C. random factor analysis D. external judgment survey E. market test Answer: A 123. Often, the Delphi technique is used in conjunction with an expert forecasting survey. The major objective is to: A. allow an opportunity to obtain diverse expert opinions. B. allow experts to work separately to reach a consensus as to their forecasts. C. reach an accurate sales forecast through the use of multiple sales forecasting techniques. D. determine if the expert forecasting survey is superior to regression analysis. E. assess the extent to which this year's sales forecast is more accurate than that of previous years. Answer: B 124. The forecasting techniques that assume past sales patterns will continue into the future are all variations of: A. regression analysis. B. random factor analysis. C. seasonal analysis. D. time series analysis. E. past sales forecasting surveys. Answer: D 125. A forecasting method that predicts sales based on relationships between past sales and one or more independent variables is called ________. A. regression analysis B. customer forecasting surveys C. the Delphi technique D. random factor analysis E. time series analysis Answer: A 126. Brian works for a manufacturer of sports equipment and is currently developing a company sales forecast for golf clubs. While reviewing data, he discovered a pattern in sales volume over the past ten years that peaked during two months of each year. Thus, Brian likely used ________ to forecast sales. A. the Delphi technique B. executive judgment C. time series analysis D. market tests E. regression analysis Answer: C 127. Katy Ramirez is a marketer for a company that produces in-ground swimming pools. When forecasting company sales, she finds a direct association between past sales and per capita income. Which sales forecasting technique is being implemented by Katy? A. The Delphi technique B. Executive judgment C. Time series analysis D. Market tests E. Regression analysis Answer: E 128. The sales prediction technique based on the correlation between sales and other factors such as population density, per capita income, or family size is: A. executive judgment. B. time series analysis. C. regression analysis. D. a market test. E. an expert survey. Answer: C 129. The Sara Lee Company is attempting to forecast sales for a new ice cream cake. To come up with an accurate forecast, Sara Lee places the product in Atlanta supermarkets for a period of four months. In this instance, Sara Lee is the forecasting method of ________. A. time series analysis B. market test C. executive judgment D. regression analysis E. survey Answer: B 130. The sales forecasting method that involves making a product available to buyers in one or more test areas and measuring purchases and consumer responses to the product, distribution, promotion, and price is called ________. A. a market test B. regression analysis C. trend analysis D. a survey E. the Delphi technique Answer: A 131. The forecasting method that utilizes a firm's historical sales data to find patterns in the firm's sales volume over time is: A. the regression method. B. customer forecasting. C. a market test. D. sales force forecasting. E. time series analysis. Answer: E 132. DeShon has just become the new marketing analyst for a company that produces vinyl siding for homes. In an effort to forecast his firm's sales for the coming year, he needs to find where the greatest opportunities are for selling his product. DeShon looks at the sales for the last five years and calculates a growth trend. He then collects data from a combination of other factors, such as population density, family size, home ownership, and per capita income. Finally, DeShon looks at the correlation between the sales trend data and the various combinations of demographic data. DeShon is employing the ________ forecasting method for the sales growth trend and the ________ method for the correlation. A. time series analysis; regression analysis B. executive judgment; regression analysis C. market tests; regression analysis D. regression analysis; time series analysis E. market tests; time series analysis Answer: A 133. Which of the following sales forecasting techniques would generally be most suitable for estimating sales of a new product? A. Executive judgment B. Customer surveys C. Time series analysis D. Market tests E. Regression methods Answer: D 134. Which of the following forecasting methods is least dependent on historical sales data? A. Regression analysis B. Trend analysis C. Time series analysis D. Cycle analysis E. Market tests Answer: E 135. What is the primary disadvantage of using a market test as a forecasting tool? A. It is difficult to interpret. B. It is expensive. C. It is inaccurate. D. It is unacceptable to consumers. E. It is overused. Answer: B Scenario 5.1 Use the following to answer the questions. Lil' Angels Kids Spa offers various treatments designed to appeal to the younger customers. Treatment options include manicures, pedicures, facials, tea parties, and dress up photos. Parents can even purchase a birthday party package. Currently, Lil' Angels offers its services only to girls under the age of 14. Originally begun in Delaware, Lil' Angels is considering opening its spa/salons in other parts of the country and is planning to expand its offerings to girls aged 14 to 17. The company realizes that some changes may be needed. For example, the management wants to find out if the older girls will be interested in their birthday party and tea party services. 136. Refer to Scenario 5.1. Lil' Angels Kids Spa is currently using a(n)________ targeting strategy. A. undifferentiated B. exclusive C. concentrated D. differentiated E. selective Answer: C 137. Refer to Scenario 5.1. Which of the following best describes Lil' Angels' current approach to the market? A. It is segmenting the market according to demographic variables. B. It is segmenting the market according to product-related variables. C. It has chosen a segment that is not identifiable and divisible. D. Its market is impossible to reach because of legal constraints. E. It is not segmenting the market but is attempting to reach everyone with the product. Answer: A 138. Refer to Scenario 5.1. Which method should Lil' Angels use to forecast sales in new regions? A. Sales force survey B. Time series analysis C. Correlation method D. Market test E. Regression analysis Answer: D 139. Refer to Scenario 5.1. In calculating the sales forecast for the next year, marketers at Lil’ Angels use data from the past five years in order to identify any trends that surface. Additionally, marketers want to find out what family variables relate to those sales. Which of the following variables should the marketers use in relating to sales? What type of forecast method will they implement to relate the variables to sales trends? A. behavioristic; time series analysis B. psychographic; time series analysis C. demographic; regression analysis D. income; regression analysis E. family life cycle; market tests Answer: C Scenario 5.2 Use the following to answer the questions. GE Transportation Corp produces locomotive engines for sale in countries around the world. After looking at the total market for locomotive engines, the company found that various rail lines wanted different types of engines. Major rail lines in the U.S. and South America wanted engines to haul heavy freight. Rail lines in Sweden and Germany were interested in a cleaner, greener locomotive engine. Rail lines operated by several Eastern European countries wanted locomotive engines for running short distances between cities in their own country. GE Transportation is currently manufacturing its GE 4400 for heavy freight, its Hybrid Eco-Engine, and its Dash 9, suited for shortline transport. 140. Refer to Scenario 5.2. GE Transportation is most likely using a (an) ________ targeting strategy, segmenting by ________ variables. A. undifferentiated; benefit expectations B. differentiated; benefit expectations C. differentiated; volume usage D. concentrated; volume usage E. concentrated; geographic location Answer: B 141. Refer to Scenario 5.2. Currently, GE uses several sales forecasting methods. One method is to sell the different locomotive engines to buyers in different countries, and then measuring the purchasing response in each. In this case, GE Transportation is using the ________ method to forecast future sales. A. Delphi B. market test C. regression analysis D. volume usage E. trend analysis Answer: B 142. Refer to Scenario 5.2. Suppose that GE Transportation decided to produce only locomotive engines for rail lines in the United States. The segmentation variable then would be: A. geographic location. B. type of organization. C. market density. D. product use. E. customer size. Answer: A 143. Refer to Scenario 5.2. Researchers at GE Transportation estimate that 1,000 rail lines throughout the world will purchase some kind of locomotive engine next year. That number represents the: A. company sales potential. B. breakdown approach. C. market potential. D. buildup approach. E. company sales forecast. Answer: C 144. Refer to Scenario 5.2. If a GE Transportation researcher analyzes monthly sales data for a four-year time frame, looking for periodic fluctuations, the researcher is doing a ________ analysis. A. trend B. seasonal C. cycle D. random factor E. regression Answer: C 145. A market is a group of people who, as individuals, have needs for products in a product class and have the ability, willingness, and authority to purchase such products. A. True B. False Answer: True 146. Individuals' ability to buy depends on the amount of their buying power. A. True B. False Answer: True 147. The four requirements of a market are that the individuals in the market must have a need for the product and the ability, willingness, and authority to buy it. A. True B. False Answer: True 148. A person who has buying power also has the authority to buy. A. True B. False Answer: False 149. The five-step process usually used for target market selection includes identifying the appropriate targeting strategy, determining which segmentation variables to use, developing market segment profiles, evaluating relevant market segments, and deciding which targeting strategy to use. A. True B. False Answer: False 150. There are only two basic strategies for selecting target markets: the undifferentiated targeting strategy and the concentrated targeting strategy. A. True B. False Answer: False 151. A company sometimes defines a total market as its target market. A. True B. False Answer: True 152. One condition for effective segmentation is that at least one segment must have substantial profit potential. A. True B. False Answer: True 153. A firm using a concentrated targeting strategy aims its marketing activities at one segment of a market. A. True B. False Answer: True 154. The undifferentiated strategy can be effective for an organization that has a homogeneous market and can develop and maintain a single marketing mix. A. True B. False Answer: True 155. An undifferentiated targeting strategy does not target a single market with one marketing mix. A. True B. False Answer: False 156. The concentrated targeting strategy is one in which an organization directs its marketing efforts toward a single market segment through one marketing mix. A. True B. False Answer: True 157. A differentiated targeting strategy is when the organization targets two or more markets by developing a single marketing mix. A. True B. False Answer: False 158. Only one variable can be used to segment a market. A. True B. False Answer: False 159. Segmentation variables are characteristics of individuals, groups, or organizations in a total market. A. True B. False Answer: True 160. A segmentation variable is used to group smaller markets into one larger market. A. True B. False Answer: False 161. Demographic characteristics are commonly used to segment a market because they are closely related to consumers' product needs and purchasing behavior. A. True B. False Answer: True 162. Family life cycle is a psychological dimension used for segmenting markets. A. True B. False Answer: False 163. A firm operating in a one-state market would not regionalize its market. A. True B. False Answer: False 164. The term market density refers to the number of potential customers per unit of land area, such as per square mile. A. True B. False Answer: True 165. One problem with using psychographic variables for segmentation purposes is that they are difficult to measure accurately. A. True B. False Answer: True 166. Motives can be used to segment markets. A. True B. False Answer: True 167. Lifestyle is a product-related variable. A. True B. False Answer: False 168. Lifestyle analysis focuses on people's activities, interests, and opinions. A. True B. False Answer: True 169. The ways in which customers use a particular product may be a basis for segmenting the market. A. True B. False Answer: True 170. One way marketers can segment business markets is according to their geographic location. A. True B. False Answer: True 171. A marketer may segment a market in terms of the benefits that customers expect to receive from a particular product. A. True B. False Answer: True 172. A market segment profile deals primarily with demographic characteristics. A. True B. False Answer: False 173. A market segment profile describes the similarities among potential customers within a segment and explains the differences among people across market segments. A. True B. False Answer: True 174. A market segment profile may cover such aspects as demographic characteristics, geographic factors, product benefits sought, lifestyles, brand preferences, and usage rates. A. True B. False Answer: True 175. A market segment profile provides customers with an understanding of how a business can use its capabilities. A. True B. False Answer: False 176. Market segment profiles help determine the most desirable segment or segments in relation to the firm's strengths, weaknesses, objectives, and resources. A. True B. False Answer: True 177. The information yielded by market segment profiles usually is not very useful later in the marketing process. A. True B. False Answer: False 178. The two general approaches to measuring company sales potential are the breakdown and the buildup approach. A. True B. False Answer: True 179. Company sales potential is the maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product. A. True B. False Answer: True 180. Market potential is the amount of a product that an organization could sell during a specified time period. A. True B. False Answer: False 181. The size of the market potential places limits on the size of the company sales potential. A. True B. False Answer: True 182. During the evaluation of relevant market segments, competitive assessment is used primarily to determine the possibility of additional competitors entering particular segments. A. True B. False Answer: False 183. The sum of firms' marketing efforts equals industry marketing efforts. A. True B. False Answer: True 184. When evaluating relevant market segments, cost estimates are important to determine if an organization entering a particular segment can operate at costs equal to or below those of competitors. A. True B. False Answer: True 185. It is likely that during the fifth Step of the target market selection process, marketers will decide not to enter and compete in any market segments. A. True B. False Answer: True 186. When a firm's management is making the final selection of specific target markets to enter, it should consider whether the organization has the financial resources, managerial skills, expertise, and facilities needed to effectively compete in the selected segments. A. True B. False Answer: True 187. Consideration of the firm's overall objectives usually does not influence the final selection of a target market segment. A. True B. False Answer: False 188. At times, after doing segmentation analysis, marketers in an organization decide not to enter any segments. A. True B. False Answer: True 189. A company sales forecast is the amount of a product that a firm actually expects to sell during a specific time period. A. True B. False Answer: True 190. Sales forecasts are always long-range in nature. A. True B. False Answer: False 191. The executive judgment method of sales forecasting is very accurate in predicting future sales. A. True B. False Answer: False 192. In developing a company sales forecast, the forecasting methods are limited to surveys and correlation methods. A. True B. False Answer: False 193. The types of surveys used to forecast sales are customer, executive, and competitor surveys. A. True B. False Answer: False 194. Surveys are sometimes used to forecast sales. A. True B. False Answer: True 195. In a customer survey, a marketer would question customers about the types and quantities of products they intend to buy during a specific time period. A. True B. False Answer: True 196. Customer surveys as a means of forecasting sales are not appropriate for a firm that has relatively few customers. A. True B. False Answer: False 197. One limitation of the sales force survey technique is that salespeople often believe that their sales goals are determined by their sales estimates. A. True B. False Answer: True 198. Trend analysis is a sales forecasting technique based on historical sales data. A. True B. False Answer: True 199. A marketer can use regression analysis techniques to predict the sales of new products. A. True B. False Answer: False 200. Through market tests, a forecaster gains data regarding consumers' intended purchases. A. True B. False Answer: False 201. A firm ordinarily uses the same sales forecasting method for determining short-range and long-range sales forecasts. A. True B. False Answer: False Test Bank for Foundations of Marketing William M. Pride, O. C. Ferrell 9781285429779, 9781439039441