CH-8 Identifying Market Segments and Targets – Marketing Management : Exam Guide

Chapter 8 1. Which of the following statements about market segmentation is true? A) It involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. B) It is a process of evaluating each segment's attractiveness and selecting one or more to enter. C) It is a process of creating an image or identity of the product in the minds of the target market. D) It is a process of identifying and profiling distinct groups of buyers who differ in their needs and wants. E) It is the quality of how marketers go to market with the goal of optimizing their spending to achieve good results. Answer: D Rationale: Market segmentation involves identifying and profiling distinct groups of buyers who differ in their needs and wants. This process allows marketers to tailor their marketing strategies and offerings to effectively reach and serve these specific segments of the market. 2. Establishing and communicating the distinctive benefit(s) of the company's market offering, for each target segment is called ________. A) market research B) market positioning C) marketing effectiveness D) market segmentation E) market dominance Answer: B Rationale: Market positioning involves defining the unique benefits of a company's product or service for each target segment and communicating those benefits to the customers. It is about creating a distinct image or identity for the product in the minds of the target market. 3. The process of selecting one or more market segments to enter is called ________. A) market targeting B) market dominance C) market positioning D) market segmentation E) market research Answer: A Rationale: Market targeting is the process of evaluating different market segments and selecting one or more segments to enter and focus on based on their attractiveness and fit with the company's objectives and resources. 4. A ________ consists of a group of customers who share a similar set of needs and wants. A) vertical marketing system B) market basket C) market share D) market segment E) market level Answer: D Rationale: A market segment is a group of customers who share similar needs and wants. Market segmentation involves identifying and categorizing these groups based on various factors such as demographics, psychographics, or behavior. 5. Hilton Hotels customizes rooms and lobbies according to location. Northeastern hotels are sleeker and more cosmopolitan. Southwestern hotels are more rustic. This is an example of ________ segmentation. A) demographic B) behavioral C) psychographic D) geographic E) cultural Answer: D Rationale: This is an example of geographic segmentation, where Hilton Hotels tailor their offerings based on the geographical location of their properties, recognizing that customer preferences and needs vary by region. 6. When Nike attempts to get close to its customers at the local level by sponsoring local school teams and providing shoes, equipment, and clothing to many of them, Nike is using which of the following marketing formats? A) differentiated marketing B) affiliate marketing C) guerrilla marketing D) affinity marketing E) grassroots marketing Answer: E Rationale: Nike's strategy of sponsoring local school teams and engaging with customers at the local level aligns with grassroots marketing, which involves building connections and brand loyalty at the community level through localized efforts. 7. Regardless of the type of segmentation scheme used, the key is adjusting the marketing program to recognize ________. A) the level of disposable income earned by the target group B) customer differences C) the cost-benefit relationship of narrowing the target market D) customer complaints E) saturated markets Answer: B Rationale: Regardless of the segmentation scheme employed, the key is recognizing and addressing customer differences to effectively target and serve distinct market segments. This ensures that marketing programs are tailored to meet the specific needs and preferences of different customer groups. 8. If a marketer decides to segment a market based on neighborhoods, the marketer will have chosen the ________ method of segmentation. A) demographic B) psychographic C) geographic D) cultural E) behavioral Answer: C Rationale: Segmenting a market based on neighborhoods involves geographic segmentation, where customers are grouped based on their physical location or proximity to certain areas. 9. If a marketing manager segments the market into culture-oriented, sports-oriented, or outdoor-oriented groups, he or she is segmenting on the basis of ________. A) loyalty status B) behavioral occasions C) user status D) psychographic lifestyle E) readiness stage Answer: D Rationale: This is an example of psychographic segmentation, which involves categorizing customers based on their attitudes, values, interests, and lifestyles. 10. Robert is the owner of an automobile manufacturing company. He calls for a board meeting and tells his directors that he wants to build a car that lets the users experience power and exhilaration. He tells them that the car must allow his users to soar from 0-60 mph in about 4 seconds. He also adds in that the price of the car must be affordable enough for anybody making a good salary. In accordance with the given scenario, Robert is trying to segment the market on the basis of ________. A) occupation B) family size C) benefits D) nationality E) user status Answer: C Rationale: Robert is segmenting the market based on benefits, specifically focusing on the desire for power and exhilaration in a car while ensuring affordability for those with a good salary. This approach targets customers based on the specific benefits they seek from the product. 11. If a marketing researcher uses such names (categories) as Blue Blood Estates, Winner's Circle, Hometown Retired, or Shotguns and Pickups, when doing segmentation research, the marketing researcher is using ________ clusters. A) PRIZM B) behavioral C) psychographic D) demographic E) VALS Answer: A Rationale: PRIZM (Potential Rating Index by Zip Market) is a popular segmentation system that categorizes consumers into distinct clusters based on demographic and lifestyle characteristics. The provided names suggest the use of PRIZM clusters, which are defined by factors such as income, education, lifestyle, and neighborhood characteristics. 12. Pampers divides its market demographically on the basis of ________ into prenatal, new baby, baby, toddler, and preschooler. A) life stage B) gender C) age D) income E) social class Answer: C Rationale: Pampers segments its market based on the age of the children, which corresponds to different life stages from prenatal to preschooler. 13. According to PRIZM, the ________ cluster is characterized as being in their late forties and fifties, college-educated, upper-middle-class homeowners that married late, and are still raising children in comfortable suburban subdivisions and pursuing kid-centered lifestyles. A) cosmopolitans B) beltway boomers C) young digerati D) winner's circle E) old milltowns Answer: B Rationale: The description provided matches the characteristics of the "beltway boomers" cluster as defined by PRIZM. 14. According to PRIZM, the ________ cluster is characterized by educated, midscale, and multiethnic, urbane couples in America's fast-growing cities. Concentrated in a handful of metros such as Las Vegas, Miami, and Albuquerque, these households feature older homeowners, empty nesters, and college graduates. A) beltway boomers B) old milltowns C) cosmopolitans D) young digerati E) winner's circle Answer: C Rationale: The description provided aligns with the characteristics of the "cosmopolitans" cluster as defined by PRIZM. 15. According to PRIZM, the ________ cluster is characterized as the nation's tech-savvy singles and couples, living in areas typically filled with trendy apartments and condos, fitness clubs and clothing boutiques, casual restaurants, and all types of bars—from juice to coffee to microbrew. A) beltway boomers B) old milltowns C) young digerati D) cosmopolitans E) winner's circle Answer: C Rationale: The description matches the characteristics of the "young digerati" cluster as defined by PRIZM. 16. According to PRIZM, the ________ cluster is characterized by retired singles and couples, living on downscaled incomes in pre-1960 homes and apartments, who enjoy gardening, sewing, socializing at veterans clubs, and eating out at casual restaurants. A) old milltowns B) young digerati C) winner's circle D) beltway boomers E) cosmopolitans Answer: A Rationale: The description provided corresponds to the characteristics of the "old milltowns" cluster as defined by PRIZM. 17. Those who favor localized marketing see national advertising as wasteful because ________. A) it gets too up close and personal with consumers B) it drives up manufacturing and marketing costs by reducing economies of scale C) it magnifies logistical problems D) it fails to address local needs E) it sends conflicting marketing messages Answer: D Rationale: Localized marketing proponents argue that national advertising is wasteful because it fails to address the specific needs and preferences of local markets, leading to inefficiencies and potentially ineffective messaging. 18. Newlyweds in the United States buy more in the first six months than an established household does in five years. Newlyweds are an example of a(n) ________ segment. A) life stage B) age C) behavior D) user status E) income Answer: A Rationale: Newlyweds represent a life stage segment, as their consumption patterns and needs are influenced by their stage in life, particularly their recent marriage. 19. Jose and Erika have just divorced. Which of the following demographic segmentation subsegment formats might be used by marketers to reach Jose or Erika? A) life stage B) benefits C) age segment D) personality type E) social class Answer: A Rationale: Divorce represents a significant life event, and marketers could target Jose and Erika using life stage segmentation, recognizing their changed circumstances and potential new needs. 20. ________ are products such as Kiehl's skin care and Kendall-Jackson wines that are priced between average middle-market and superpremium old luxury brands and are also based on emotions. A) Old Luxury brand extensions B) Accessible superpremium products C) Luxury items D) Hourglass products E) Masstige goods Answer: E Rationale: Masstige goods are products positioned between average middle-market and superpremium luxury brands, offering a balance of quality and affordability while also tapping into emotional appeal. Examples include Kiehl's skincare and Kendall-Jackson wines. 21. ________ are products such as the Mercedes Benz C-class and the American Express Blue card, that extend historically high-priced brands down-market while retaining their cachet. A) Hourglass products B) Mass market products C) Old Luxury brand extensions D) Masstige goods E) Accessible superpremium products Answer: C Rationale: Old Luxury brand extensions refer to products that were historically positioned as high-priced luxury items but are now extended down-market while still retaining their prestigious image and appeal. 22. Which of the following statements about Gen Yers is true? A) They are selective, confident, and impatient. B) They are more likely to associate retirement with "the beginning of the end". C) They are more pragmatic and individualistic. D) They were born between 1964 and 1978. E) They were the first generation to find surpassing their parents' standard of living a serious challenge. Answer: A Rationale: Generation Y, also known as Millennials, is characterized by being selective, confident, and impatient, which reflects their attitudes and behaviors as consumers. 23. Rock band Foo Fighters created a digital street team that sends targeted e-mail messages to members who receive exclusive news, previews, and opportunities to win prizes. The Foo Fighters are using ________ to reach Generation Y. A) student ambassadors B) unconventional sports C) cool events D) computer games E) online buzz Answer: E Rationale: By leveraging online buzz and digital communication channels, the Foo Fighters are engaging with Generation Y in a manner that resonates with their preferences and behaviors. 24. If a marketing manager employs such marketing techniques as online buzz, student ambassadors, cool events, and street teams to reach target markets, the manager is most likely appealing to the ________ market. A) Generation Z B) Generation X C) Generation Y D) Silent generation E) Baby boomers Answer: C Rationale: Generation Y, or Millennials, is known for their affinity for digital media, events, and unconventional marketing approaches. These techniques are particularly effective in reaching and engaging with this demographic. 25. As part of an antismoking crusade, the American Legacy Foundation hires teens as the "Truth Squad" to hand out T-shirts, bandanas, and dog tags at teen-targeted events. The American Legacy Foundation is using ________ to reach Generation Y. A) computer games B) street teams C) unconventional sports D) online buzz E) videos Answer: B Rationale: Utilizing street teams to distribute promotional materials at teen-targeted events is an effective way to reach Generation Y and engage them in anti-smoking efforts. 26. Which of the following statements about Gen Xers is true? A) Gen Xers are more optimistic and team-oriented. B) Gen Xers are selective, confident, and impatient. C) Gen Xers are highly socially conscious and concerned about environmental issues. D) Gen Xers feel self-sufficiency and the ability to handle any circumstance are key. E) Technology is a barrier for Gen Xers. Answer: D Rationale: Generation X is characterized by self-sufficiency and adaptability, with members valuing independence and the ability to handle various circumstances. 27. Which of the following statements accurately describes what demographers are calling the "boom-boom effect"? A) consumers are demanding more "bang for their buck" B) Baby boomers still rule the marketplace C) Generation Y and their concern about environmental issues will dominate the market in the future D) products that appeal to 21-year-olds also appeal to baby boomers E) companies must gain success quickly Answer: D Rationale: The "boom-boom effect" refers to the phenomenon where products or trends that appeal to young adults, particularly 21-year-olds, also have significant appeal to baby boomers, resulting in a broad market impact. 28. ________ is the science of using psychology and demographics to better understand consumers. A) Psychographics B) Interactionism C) Clustering D) Demographic transition E) Customerization Answer: A Rationale: Psychographics involves analyzing consumer behavior and preferences by combining psychological factors with demographic variables to gain deeper insights into consumer motivations and buying habits. 29. According to the VALS segmentation system, ________ are successful, sophisticated, active, "take-charge" people with high self-esteem. Their purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services. A) innovators B) thinkers C) achievers D) experiencers E) believers Answer: A Rationale: Innovators, according to VALS, represent successful, active individuals who are early adopters of new products and technologies and have a high level of self-esteem. 30. According to the VALS segmentation system, ________ are successful, goal-oriented people who focus on career and family. They favor premium products that demonstrate success to their peers. A) thinkers B) innovators C) achievers D) believers E) experiencers Answer: C Rationale: Achievers, as defined by VALS, are individuals who are motivated by career and family success, value traditional lifestyles, and seek premium products that reflect their achievements and status. 31. According to the VALS segmentation framework, consumers primarily motivated by ideals are guided by ________. A) knowledge B) social activity C) products that demonstrate success to their peers D) variety E) risk Answer: A Rationale: Consumers primarily motivated by ideals in the VALS framework are guided by their knowledge and principles. They prioritize understanding and making informed choices aligned with their values and beliefs. 32. Kim is a young professional who enjoys snowboarding and going to rock concerts with her friends. According to the VALS eight-part typology segmentation system, Kim is best described as a(n) ________. A) thinker B) achiever C) experiencer D) striver E) survivor Answer: C Rationale: Kim, as described, is likely an experiencer according to the VALS system. Experiencers are motivated by self-expression and seek variety, excitement, and new experiences, aligning well with Kim's adventurous lifestyle. 33. Mature and reflective people who seek durability, functionality, and value in products are most likely to be categorized as ________ in the VALS system. A) innovators B) thinkers C) achievers D) experiencers E) strivers Answer: B Rationale: People who seek durability, functionality, and value in products align with the characteristics of thinkers in the VALS system. Thinkers prioritize practicality and quality over trends and excitement. 34. A hardware store is interested in reaching people who are characterized by the VALS system as being practical, down-to-earth, and self-sufficient, who like to work with their hands, or the ________ category. A) believers B) strivers C) survivors D) experiencers E) makers Answer: E Rationale: The category described aligns with makers in the VALS system. Makers are practical individuals who value self-sufficiency, hands-on activities, and functionality in products. 35. According to the VALS segmentation system, ________ are considered to be elderly, passive people who are concerned about change and are loyal to their favorite brands. A) believers B) strivers C) makers D) survivors E) experiencers Answer: D Rationale: Survivors in the VALS system are characterized as conservative and brand loyal individuals who are resistant to change. They prefer familiar products and are often older in age. 36. According to the VALS segmentation system, ________ are considered to be trendy and fun-loving people who are resource-constrained. They favor stylish products that emulate the purchases of those with greater material wealth. A) strivers B) survivors C) experiencers D) makers E) believers Answer: A Rationale: Strivers in the VALS system are motivated by achieving social status and recognition despite limited resources. They are trend-conscious and seek products that reflect a higher social standing. 37. According to the VALS segmentation system, ________ are conservative, conventional, and traditional people with concrete beliefs. They prefer familiar, U.S.-made products and are loyal to established brands. A) survivors B) strivers C) believers D) makers E) innovators Answer: C Rationale: Believers in the VALS system are characterized by their traditional values, preference for familiar products, and loyalty to established brands. They tend to resist change and favor domestic goods. 38. Dennis requests his father to buy him a PlayStation® for his birthday. With respect to consumer decision roles, which role is Dennis currently playing? A) initiator B) influencer C) decider D) buyer E) gatekeeper Answer: A Rationale: Dennis, by requesting the PlayStation®, is acting as the initiator in the consumer decision-making process, as he is the one who triggers the decision-making process by expressing interest in the product. 39. The key to attracting potential users, or even possibly nonusers, is ________. A) understanding the reasons they are not using B) offering financial incentives for first-time use C) increasing the usage rate of existing users D) developing a new product that better meets their needs E) increasing advertising expenditures Answer: A Rationale: Understanding the reasons why potential users or nonusers are not using a product or service is crucial for developing strategies to attract them. Addressing their concerns or barriers effectively can lead to increased adoption. 40. The sale of turkeys in the United States is highest in mid-to late November, as people buy turkeys to serve at Thanksgiving. Grocery stores who specifically advertise turkeys at this time of year are segmenting on the basis of ________. A) benefits B) user status C) buyer-readiness stage D) demographics E) occasion Answer: E Rationale: Grocery stores targeting turkey sales during Thanksgiving are segmenting based on occasion, recognizing that consumer behavior and needs vary depending on specific events or occasions such as holidays. 41. Linda was buying all her groceries from Home Needs supermarket for the past 5 years. She recently came across The Convenience Store, another supermarket just a few miles away from her place and started buying her groceries from them. Linda can be best described as ________. A) a split loyal B) an antiloyal C) a shifting loyal D) a hard-core loyal E) a switcher Answer: C Rationale: Linda's behavior indicates that she has shifted her loyalty from one supermarket to another, indicating a shifting loyal status. 42. When Amy goes shopping for clothes, she goes into every store in the mall looking for the best deal. She is very price conscious. On the basis of loyalty status, Amy can be described as ________. A) a switcher B) a split loyal C) a shifting loyal D) a hard-core loyal E) an antiloyal Answer: A Rationale: Amy's behavior of seeking the best deal from various stores indicates that she does not exhibit strong loyalty to any particular brand or store, making her a switcher. 43. Mothers-to-be are potential users who will turn into heavy users of infant products and services. By targeting mothers-to-be as future heavy users, producers of these products and services are segmenting consumers on the basis of ________. A) attitude B) buyer-readiness stage C) loyalty status D) user status E) benefits Answer: D Rationale: Targeting mothers-to-be as potential heavy users of infant products and services is an example of segmenting consumers based on user status, specifically targeting potential users who will transition into heavy users. 44. If a buyer is loyal to two or three different brands of soap, this buyer's loyalty status can be described as being among the ________. A) switchers B) shifting loyals C) split loyals D) hard-core loyals E) antiloyals Answer: C Rationale: A buyer who is loyal to multiple brands of soap exhibits split loyalty, as their loyalty is divided among several brands. 45. Pete always buys Purina dog food for his dog because he believes that it is the best value for the nutritional content. Pete's loyalty status is best described as ________. A) split loyal B) shifting loyal C) consistent loyal D) hard-core loyal E) switcher Answer: D Rationale: Pete's consistent purchase of Purina dog food indicates strong loyalty to the brand, making him a hard-core loyal customer. 46. A company can learn a great deal by analyzing the degrees of brand loyalty. For example, ________ can show the firm which brands are most competitive with its own. A) hard-core loyals B) split loyals C) shifting loyals D) switchers E) antiloyals Answer: B Rationale: Analyzing split loyal customers can provide insights into which competing brands are capturing a portion of the firm's market share, highlighting competitive threats. 47. A company can learn a great deal by analyzing the degrees of brand loyalty. For example, ________ can help identify the products' strengths. A) switchers B) split loyals C) antiloyals D) shifting loyals E) hard-core loyals Answer: E Rationale: Hard-core loyal customers are often the most devoted to a brand, and their loyalty can provide insights into the strengths and appeal of the products or services offered. 48. If a marketer is seeking to segment a business market, which of the following variables is generally felt to be the most important? A) personal characteristics B) demographic variables C) situational factors D) operating variables E) purchasing approaches Answer: B Rationale: In business markets, demographic variables such as industry type, company size, and geographical location are often considered the most important for segmentation purposes. 49. In segmenting its markets, an aluminum company first looked at which end-use market to serve: automobile, residential, or beverage containers. This is an example of ________. A) macrosegmentation B) microsegmentation C) geographic segmentation D) global segmentation E) short-term segmentation Answer: A Rationale: Macrosegmentation involves broad segmentation of markets based on major categories or industries, such as end-use markets like automobile, residential, or beverage containers. 50. A marketer is interested in segmenting a business market on ________ if the marketer intends to segment the market based on industries and geographical areas to serve. A) demographic variables B) situational factors C) operating variables D) purchasing approaches E) personal characteristics Answer: A Rationale: Demographic variables such as industry type and geographical location are crucial for segmenting business markets based on industries and geographical areas to serve. 51. A marketer is interested in segmenting a business market based on urgency of delivery and the size of the order. Which of the following major segmentation variables would the marketer most likely use to assist with the task? A) purchasing approaches B) situational factors C) operating variables D) personal characteristics E) demographic variables Answer: B Rationale: Situational factors such as urgency of delivery and order size are relevant for segmenting the business market because they are context-dependent variables that influence purchasing decisions in specific situations. 52. A marketer is interested in segmenting a business market based on technology and customer capabilities. Which of the following major segmentation variables would the marketer most likely use to assist with the task? A) demographic variables B) purchasing approaches C) situational factors D) personal characteristics E) operating variables Answer: E Rationale: Operating variables such as technology and customer capabilities are crucial for segmenting the business market as they define how businesses operate and what capabilities they possess. 53. A marketer is interested in segmenting a business market on ________ if the marketer intends to eventually segment the market based on loyalty and attitudes toward risk. A) situational factors B) purchasing approaches C) personal characteristics D) operating variables E) demographic variables Answer: C Rationale: Personal characteristics such as loyalty and attitudes toward risk are relevant for segmenting the business market as they provide insights into individual preferences and behavior patterns of decision-makers within organizations. 54. A marketer interested in segmenting a business market based on ________ intends to eventually segment the market based on power structure and nature of existing relationship. A) situational factors B) purchasing approaches C) personal characteristics D) operating variables E) demographic variables Answer: B Rationale: Purchasing approaches, which include factors like power structure and nature of the existing relationship, are critical for segmenting the business market as they determine how purchasing decisions are made within organizations. 55. A company can be said to have used ________ if the company distinguished among customers buying on the basis of price, service, and quality. A) global segmentation B) microsegmentation C) short-term segmentation D) macrosegmentation E) geographic segmentation Answer: B Rationale: Microsegmentation involves distinguishing among customers based on specific attributes such as price, service, and quality, allowing for targeted marketing strategies tailored to the needs of each segment. 56. During which step of the segmentation process would the marketer group customers into segments based on similar needs and benefits sought by the customer in solving a particular consumption problem? A) Step 2—segment identification B) Step 3—segment attractiveness C) Step 6—segment "acid test" D) Step 1—needs-based segmentation E) Step 7—marketing-mix strategy Answer: D Rationale: Needs-based segmentation, which involves grouping customers into segments based on similar needs and benefits sought, occurs in the first step of the segmentation process. 57. If an organization's marketing department wished to create "segment storyboards" to test the attractiveness of each segment's positioning strategy, this action would most likely occur in the ________ step of the segmentation process. A) needs-based segmentation B) segment identification C) segment profitability D) segment "acid test" E) marketing-mix strategy Answer: D Rationale: Segment "acid test" involves evaluating the attractiveness of each segment's positioning strategy, making it the step where segment storyboards would be created to assess the viability of the strategies. 58. In the ________ step of the market segmentation process, the marketer evaluates the segment using criteria such as market growth and market access. A) need-based segmentation B) segment identification C) segment attractiveness D) segment profitability E) segment "acid test" Answer: C Rationale: Segment attractiveness is the step where the marketer evaluates segments based on criteria such as market growth and accessibility to determine their attractiveness for targeting. 59. In the ________ step of the market segmentation process, the marketer determines which demographics, lifestyles, and usage behaviors make each needs-based segment distinct and identifiable. A) segment "acid test" B) segment attractiveness C) segment profitability D) need-based segmentation E) segment identification Answer: E Rationale: Segment identification involves determining the characteristics that make each needs-based segment distinct and identifiable, including demographics, lifestyles, and usage behaviors. 60. A ________ consists of two parts: a naked solution and discretionary options. A) differentiated market offering B) flexible market offering C) rigid market offering D) vertical market offering E) horizontal market offering Answer: B Rationale: A flexible market offering comprises a core or naked solution along with discretionary options, providing customers with choices and customization opportunities tailored to their preferences. 61. According to the ________ criterion for useful market segments, a segment should be the largest possible homogenous group worth going after with a tailored marketing program. A) measurable B) substantial C) accessible D) differentiable E) actionable Answer: B Rationale: The substantial criterion of useful market segments emphasizes that segments should be large enough to be profitable and worthy of attention, ensuring that resources invested in targeting them yield significant returns. 62. Anderson and Mervin have urged marketers to present flexible market offerings to all members of a segment. A flexible market offering consists of two parts. Which part contains the product and service elements that all segment members value? A) naked solution B) discretionary solution C) maximum solution D) pseudo solution E) virtual solution Answer: A Rationale: The naked solution of a flexible market offering comprises the core product or service elements that all segment members value, ensuring that the offering addresses the essential needs of the target market. 63. If your assignment was to create a value proposition and product-price positioning strategy for each segment, based on the segment's unique customer needs and characteristics, you would be in which of the following steps of the segmentation process? A) needs-based segmentation B) segment identification C) segment attractiveness D) segment positioning E) segment "acid-test" Answer: D Rationale: Segment positioning involves developing value propositions and product-price positioning strategies tailored to the unique needs and characteristics of each identified segment, ensuring that the offering resonates with the target audience. 64. In evaluating different market segments, the firm must look at two factors: the segment's overall attractiveness and ________. A) the company's objectives and resources B) the effectiveness of the suppliers C) the flexibility of legal rules governing the business D) the socio-economic infrastructure E) the global nature of the product Answer: A Rationale: In addition to assessing the overall attractiveness of market segments, the firm must consider its own objectives and resources to determine which segments align with its capabilities and strategic goals. 65. To meet the ________ criterion of useful market segments, it must be possible to formulate effective programs for attracting and serving the segments. A) measurable B) substantial C) accessible D) differentiable E) actionable Answer: E Rationale: The actionable criterion of useful market segments emphasizes the importance of being able to develop and implement effective marketing programs tailored to the needs and characteristics of each segment, ensuring that resources are efficiently utilized. 66. If married and unmarried women respond similarly to a sale on perfume, these hypothetical segments fail the ________ criterion for useful market segments. A) measurable B) substantial C) accessible D) differentiable E) actionable Answer: D Rationale: The differentiable criterion of useful market segments requires segments to be distinct from each other in terms of their responses to marketing efforts, ensuring that targeted strategies resonate effectively with each segment. 67. Which of the following statements is true about the five forces identified by Michael Porter, that determine the intrinsic long-run attractiveness of a market or market segment? A) A segment is unattractive if the company's suppliers are unable to raise prices or reduce quantity supplied. B) A segment is unattractive if buyers possess strong or growing bargaining power. C) A segment is attractive when there are actual or potential substitutes for the product. D) A segment is attractive if it already contains numerous, strong, or aggressive competitors. E) The most attractive segment is one in which entry barriers are low and exit barriers are high. Answer: B Rationale: According to Porter's five forces framework, a market segment is unattractive if buyers have strong or growing bargaining power, as this can limit the profitability and competitiveness of firms operating within that segment. 68. In ________ marketing, the firm ignores segment differences and goes after the whole market with one offer. A) niche B) mass C) guerrilla D) segmented E) differentiated Answer: B Rationale: Mass marketing involves targeting the entire market with a standardized product or service offer, disregarding segment differences and aiming to appeal to the broadest possible audience. 69. If a marketing manager observes that his or her market shows no natural segments and consumers seem to have roughly the same preferences, the marketing manager will most likely be faced with a ________ preferences pattern. A) homogeneous B) heterogeneous C) diffused D) clustered E) scattered Answer: A Rationale: A homogeneous preferences pattern indicates that consumers within the market exhibit similar preferences and behaviors, suggesting that there are no distinct segments within the market. 70. In ________ marketing, the firm operates in several market segments and designs different products for each segment. A) individual B) undifferentiated C) differentiated D) concentrated E) niche Answer: C Rationale: Differentiated marketing involves targeting multiple market segments and designing separate products or marketing mixes tailored to the unique needs and preferences of each segment, allowing the firm to capture a broader market share. 71. General Motors, a leading American multinational automaker, sells cars for every purpose, purse, and personality. This is an example of ________ marketing. A) undifferentiated B) differentiated C) concentrated D) niche E) micro Answer: B Rationale: General Motors' approach of offering cars tailored to different purposes, budgets, and personalities indicates a differentiated marketing strategy, where the company targets multiple segments with distinct product offerings. 72. Coca Cola's original marketing strategy that offered a single drink Coca Cola Classic in a single-sized bottle with the advertising theme "Coke is it," is an example of ________ marketing. A) concentrated B) niche C) differentiated D) micro E) undifferentiated Answer: E Rationale: Coca Cola's initial strategy of offering a single product to the entire market without differentiation aligns with undifferentiated marketing, where the company targets the broad market with a standardized offering. 73. Marketers usually identify niches by ________. A) dividing a segment into subsegments B) conducting VALS tests C) allowing consumers to gravitate toward product brands D) examining the demographics section of the handbook of marketing E) producing products that can be used in a variety of ways Answer: A Rationale: Identifying niches often involves dividing larger market segments into smaller, more homogeneous subsegments based on specific needs, preferences, or characteristics, allowing marketers to target these specialized groups effectively. 74. ________ combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product service offering of their choice. A) Consumptionism B) Viral marketing C) Virtual marketing D) Regionalization E) Customerization Answer: E Rationale: Customerization involves integrating mass customization techniques with customized marketing strategies, empowering consumers to personalize their product or service offerings according to their individual preferences and needs. 75. Volkswagen concentrates on the small-car market and Porsche on the sports car market. These would be examples of what is called ________. A) single-segment concentration B) selective specialization C) product specialization D) market specialization E) full market coverage Answer: A Rationale: Volkswagen and Porsche focusing on specific segments of the automobile market exemplify single-segment concentration, where each company targets a single market segment with specialized products or services. 76. All of the following are benefits of following the ________ approach to target market selection: a strong knowledge of the segment's needs, a strong market presence, operating economies through specializing in production, distribution, and promotion. A) single-segment concentration B) selective specialization C) product specialization D) market specialization E) full market coverage Answer: A Rationale: Single-segment concentration allows firms to develop deep insights into the needs of a specific segment, establish a strong market presence, and achieve operational efficiencies by specializing resources to cater to the specialized segment's requirements. 77. When a symphony orchestra targets people who have broad cultural interests, rather than only those who regularly attend concerts, the orchestra is targeting ________. A) market mavens B) strategic segments C) supersegments D) occasion segments E) psychodemographic segments Answer: C Rationale: Supersegments refer to groups of consumers who share broad interests or characteristics beyond those directly related to the product or service being offered. In this scenario, the symphony orchestra is targeting individuals with broad cultural interests, indicating a supersegment approach. 78. Which of the following best represents the chief advantage of pursuing a selective specialization multisegment strategy? A) It makes the company almost bulletproof to competitors' actions. B) It diversifies the firm's risk. C) It creates synergy between markets. D) It is a low-cost strategy. E) It treats all buyers the same and, therefore, lowers promotion costs. Answer: B Rationale: Pursuing a selective specialization multisegment strategy allows a company to diversify its risk by targeting multiple segments, reducing dependence on any single market segment and providing a buffer against fluctuations in demand or market conditions. 79. The chief disadvantage to a firm that decides to follow a product specialization strategy in selecting target markets is that ________. A) no synergy exists B) logistics can become a nightmare C) the product may be supplanted by an entirely new technology D) competitors can easily copy any new product introductions E) e-commerce becomes difficult for the company Answer: C Rationale: The primary disadvantage of pursuing a product specialization strategy is the risk of technological obsolescence, where advancements or shifts in technology could render the specialized product obsolete, potentially leading to market decline or loss of competitiveness. 80. With ________ as a target market strategy, the firm concentrates on serving many needs of a particular customer group. A) single-segment concentration B) selective specialization C) product specialization D) market specialization E) full market coverage Answer: D Rationale: Market specialization involves focusing on meeting various needs of a specific customer group, allowing the firm to tailor its offerings to address the diverse requirements of that particular segment, thereby enhancing customer satisfaction and loyalty. 81. Effective target marketing requires that marketers use market segmentation, market targeting, and market positioning to achieve success in the marketplace. Answer: True Rationale: Market segmentation allows marketers to divide the heterogeneous market into smaller, more manageable segments with similar needs and characteristics. Market targeting involves selecting one or more of these segments as the focus of marketing efforts based on attractiveness and compatibility with the company's objectives. Finally, market positioning involves creating a distinct image and identity for the product or brand in the minds of the target customers within the chosen segments. Together, these three elements form the foundation of effective target marketing. 82. A market segment consists of a group of consumers who share a similar set of needs and wants. Answer: True Rationale: Market segmentation involves dividing a broad target market into smaller groups of consumers who share similar needs, wants, or characteristics. These segments are created based on factors such as demographics, psychographics, behavior, or geographic location. By identifying and targeting specific segments, marketers can tailor their products, services, and marketing strategies to better meet the needs of these groups, ultimately increasing the effectiveness of their efforts. 83. Customer cloning is the practice of identifying the key characteristics of a market segment and then identifying multiple geographic areas where the majority of the population possesses those characteristics. Answer: False Rationale: Customer cloning typically refers to the process of identifying and replicating the traits and behaviors of a company's most profitable or loyal customers. It involves analyzing data to understand what makes these customers valuable and then targeting similar individuals or groups with marketing efforts. It does not specifically involve geographic considerations, as described in the statement. 84. Illustrations of personality segmentation would include culture-oriented, sports-centered, or outdoor-oriented subsegments. Answer: False Rationale: Personality segmentation focuses on dividing the market based on consumers' personality traits, values, attitudes, and lifestyles. Culture-oriented, sports-centered, or outdoor-oriented subsegments are more likely examples of psychographic segmentation, which considers consumers' interests, activities, and opinions rather than their personality traits. 85. Local marketing reflects a growing trend called macromarketing. Answer: False Rationale: Macromarketing refers to the study of the effect of marketing systems on the economy and society as a whole. Local marketing, on the other hand, focuses on tailoring marketing activities to meet the needs and preferences of customers in specific geographic areas. While both concepts are related to marketing, they address different aspects of the discipline. 86. A local service company has decided to segment its market based on occupation; therefore, it has chosen a form of demographic segmentation for its approach. Answer: True Rationale: Demographic segmentation involves dividing the market based on demographic variables such as age, gender, income, occupation, education, and family status. By segmenting the market according to occupation, the company is using a demographic variable to differentiate its target audience. This approach allows the company to tailor its marketing strategies to better meet the needs and preferences of customers within specific occupational groups. 87. Beltway Boomers are the nation's tech-savvy singles and couples living in fashionable neighborhoods on the urban fringe. Answer: False Rationale: This statement appears to describe a specific demographic or psychographic segment, but the term "Beltway Boomers" is not commonly used to refer to this group. Additionally, the description does not accurately reflect the characteristics typically associated with baby boomers, who are generally considered to be individuals born between 1946 and 1964 and are now reaching retirement age. 88. Demographic variables are popular because they are often associated with consumer needs and wants and they are easy to measure. Answer: True Rationale: Demographic variables such as age, gender, income, education, occupation, and family status are commonly used in market segmentation because they are relatively easy to obtain, quantify, and understand. Furthermore, these variables are often correlated with consumer needs, wants, and purchasing behavior, making them valuable for targeting specific market segments effectively. 89. Life stage defines a person's age. Answer: False Rationale: Life stage refers to the various phases that individuals progress through as they age, such as infancy, childhood, adolescence, adulthood, and old age. While age is certainly a factor in determining life stage, life stage encompasses more than just age alone. It also takes into account factors such as marital status, parenthood, career stage, and other life transitions that influence an individual's needs, behaviors, and preferences. 90. Income always predicts the best customers for a given product. Answer: False Rationale: While income can be a significant factor in determining purchasing power and willingness to spend on certain products or services, it is not always the best predictor of who the best customers will be. Other factors such as lifestyle, values, preferences, and product usage patterns also play crucial roles in determining consumer behavior and identifying the most valuable customers for a given product or service. Therefore, relying solely on income to predict customer behavior may overlook important nuances in consumer motivations and needs. 91. Members of the same generational cohort share the same major cultural, political, and economic experiences and have similar outlooks and values. Answer: True Rationale: Generational cohorts are groups of people who were born around the same time and have experienced similar societal events and influences during their formative years. These shared experiences often lead to the development of similar outlooks, values, and attitudes among members of the same cohort. While there can be variations within a cohort, the overarching cultural, political, and economic experiences tend to shape the collective identity and worldview of that generation. 92. Baby boomers are consumers who have been "wired" almost from birth—playing computer games, navigating the Web, downloading music, connecting with friends via instant messaging and mobile phones. Answer: False Rationale: This statement inaccurately describes baby boomers, who were born between 1946 and 1964. Baby boomers did not grow up with the same level of digital technology as later generations, such as Generation X or Millennials. While some baby boomers may have adopted technology later in life, they did not experience the same level of digital immersion from a young age as described in the statement. 93. Members of Generation Y are generally open to overt branding practices and a "hard sell," making product placements in computer and video games a popular way to reach this cohort. Answer: False Rationale: Generation Y, also known as Millennials, is generally characterized as being more skeptical of traditional advertising and marketing tactics. They often prefer authenticity, transparency, and personalized experiences over overt branding and hard sells. While product placements in media may be used to reach Millennials, they are typically more receptive to subtle, non-intrusive marketing approaches that align with their values and interests. 94. Unlike the more optimistic, team-oriented Gen Xers, Gen Yers are more pragmatic and individualistic. Answer: False Rationale: This statement mischaracterizes both Generation X and Generation Y. Generation X, born roughly between the early 1960s and early 1980s, is often described as being more individualistic and pragmatic due to growing up during times of economic and social change. On the other hand, Generation Y, or Millennials, born roughly between the early 1980s and mid-1990s, is often portrayed as more optimistic and team-oriented, valuing collaboration and social causes. Therefore, the statement inaccurately attributes characteristics to each generation. 95. Baby boomers are also less likely to associate retirement with "the beginning of the end" and see it instead as a new chapter in their lives with new activities, interests, careers, or even relationships. Answer: True Rationale: Baby boomers, as a generational cohort, have been known to redefine retirement and view it as an opportunity for personal growth, exploration, and new experiences. Many baby boomers choose to remain active in their post-retirement years, pursuing hobbies, travel, volunteer work, or even second careers. This perspective contrasts with earlier generations' views of retirement solely as a period of decline or withdrawal from active life. 96. The norms, language nuances, buying habits, and business practices of multicultural markets need to be factored into the initial formulation of a marketing strategy, rather than added as an afterthought. Answer: True Rationale: Multicultural marketing involves recognizing and addressing the diverse needs, preferences, and behaviors of various cultural and ethnic groups within a market. To effectively engage multicultural audiences, it is essential for marketers to integrate considerations of cultural norms, language nuances, buying habits, and business practices into the initial formulation of their marketing strategies. By doing so, marketers demonstrate cultural sensitivity and relevance, fostering stronger connections with diverse consumer segments. 97. Psychographics is the science of using psychology and demographics to better understand consumers. Answer: True Rationale: Psychographics involves the study of consumers' attitudes, beliefs, values, interests, lifestyles, and personality traits to gain deeper insights into their motivations and behavior. By combining psychological factors with demographic data such as age, gender, income, and education, marketers can develop more nuanced and targeted marketing strategies that resonate with specific consumer segments. 98. People in the same demographic group generally exhibit similar psychographic profiles. Answer: False Rationale: While demographic factors can provide some insight into consumers' characteristics and preferences, they do not fully determine psychographic profiles. Psychographics delve into individuals' attitudes, values, and lifestyles, which can vary widely within demographic groups. For example, individuals of the same age and income level may have different interests, beliefs, and behaviors based on factors such as cultural background, life experiences, and personal values. 99. The main dimensions of the VALS segmentation framework are consumer motivation and consumer resources. Answer: True Rationale: VALS (Values and Lifestyles) is a widely used psychographic segmentation tool that classifies consumers into distinct groups based on their primary motivations and available resources. The framework identifies eight segments, each characterized by unique combinations of motivations (such as ideals, achievement, or self-expression) and resources (such as income, education, or social status). By understanding these dimensions, marketers can tailor their strategies to effectively target specific VALS segments. 100. In the VALS segmentation system, thinkers are characterized as being successful, sophisticated, active, "take-charge" people with high self-esteem. Answer: False Rationale: The description provided corresponds more closely to the Achievers segment within the VALS framework. Thinkers, on the other hand, are characterized by a more deliberate, reflective approach to life. They are motivated by a desire for knowledge, self-expression, and intellectual stimulation. Thinkers value order, responsibility, and self-control, and they tend to be pragmatic in their decision-making. Therefore, the statement misrepresents the attributes associated with the Thinkers segment within the VALS segmentation system. 101. Everyone who buys a given product wants the same benefits from it. Answer: False Rationale: Consumer needs, preferences, and motivations vary widely even within the same product category. Different individuals may purchase the same product for various reasons, seeking different benefits or fulfilling different needs. For example, some consumers may buy a smartphone for its camera quality, while others may prioritize battery life or gaming performance. Recognizing and addressing these diverse needs is essential for effective marketing. 102. Believers favor stylish products that emulate the purchases of those with greater material wealth. Answer: False Rationale: This statement misrepresents the characteristics associated with the Believers segment within the VALS framework. Believers are typically traditional, conservative individuals who value predictability, conformity, and established norms. They are not necessarily focused on emulating the purchases of those with greater material wealth. Instead, they may prioritize products and brands that align with their conservative values and lifestyle choices. 103. Heavy users of a particular product are often a small percentage of the market but account for a high percentage of total consumption. Answer: True Rationale: Heavy users, also known as "heavy buyers" or "frequent buyers," represent a small percentage of the overall market but contribute disproportionately to total consumption or sales volume. These consumers tend to purchase the product more frequently or in larger quantities compared to the average consumer. Despite their relatively small numbers, heavy users are crucial for many businesses as they can drive a significant portion of revenue and profits. 104. With respect to loyalty status, if a consumer is loyal to two or three brands, he or she is called shifting loyal. Answer: False Rationale: In loyalty status terminology, a consumer who is loyal to two or three brands is typically referred to as a "variety seeker" rather than a "shifting loyal." Variety seekers enjoy trying different brands within a product category and may switch between brands based on factors such as price promotions, availability, or personal preferences. "Shifting loyal" generally refers to a consumer who switches between brands depending on various factors but does not necessarily maintain loyalty to any specific brand. 105. Hard-core loyals can show the firm which brands are most competitive with its own. Answer: False Rationale: Hard-core loyal customers are those who consistently and exclusively purchase a particular brand within a product category. While they contribute to a brand's sales and stability, they may not provide direct insights into the competitiveness of other brands. Instead, it is more likely that switchers or non-loyal customers would offer valuable information about the competitive landscape, as they actively consider and choose among different brands based on their preferences and experiences. 106. Door-to-door workers in a political campaign use attitude to determine how much time to spend with each voter. Answer: True Rationale: Door-to-door workers in a political campaign often assess the attitudes and receptiveness of voters to tailor their engagement strategies accordingly. By gauging the voter's level of interest, support, or opposition, campaign workers can allocate their time and resources more effectively. For example, they may spend more time engaging with undecided voters or supporters of the candidate while briefly addressing concerns or objections raised by opponents. 107. Purchasing approaches segmentation variables in the business marketplace include technology, user and nonuser status, and general purchasing policies. Answer: False Rationale: Purchasing approaches segmentation variables typically focus on how customers make purchasing decisions rather than specific characteristics of the business marketplace. These variables may include factors such as purchasing criteria, decision-making processes, buying cycles, and preferences for procurement methods. Technology, user status, and purchasing policies are more likely to be considered as part of other segmentation approaches, such as demographic or behavioral segmentation. 108. Situational factor segmentation variables in the business marketplace include urgency, specific application, and size of order. Answer: True Rationale: Situational factors play a significant role in business-to-business (B2B) marketing segmentation, as they reflect the context or circumstances surrounding a purchase decision. Variables such as urgency, specific application or use case, and size of the order can influence how businesses evaluate and prioritize their purchasing needs. By considering these situational factors, marketers can tailor their strategies to address the unique requirements and preferences of different customer segments. 109. The last step in the seven-step marketing segmentation process would be to develop a marketing-mix strategy reflective of segment positioning strategies. Answer: True Rationale: In the marketing segmentation process, developing a marketing-mix strategy reflective of segment positioning strategies typically occurs toward the end. After identifying and profiling different market segments, selecting target segments, and positioning the brand or product within those segments, marketers proceed to develop marketing strategies tailored to each segment's needs, preferences, and characteristics. This involves determining the appropriate mix of product, price, promotion, and distribution strategies to effectively reach and serve the chosen target segments. 110. To be useful, market segments must be measurable. Answer: True Rationale: Measurability is a key criterion for evaluating the effectiveness and usefulness of market segments. Market segments should be identifiable, accessible, substantial, and actionable, but they must also be measurable. Measurability allows marketers to quantify the size, profitability, growth potential, and other relevant characteristics of each segment. By measuring these factors, marketers can assess the attractiveness of different segments and allocate resources effectively to target the most promising opportunities. 111. With respect to market offerings, if a marketer emphasizes a naked solution, he or she is emphasizing the product and service elements that all segment members value. Answer: True Rationale: A naked solution emphasizes the core product or service elements that are universally valued by all segment members. It focuses on delivering the essential benefits or features that address the common needs or desires shared across the entire target market. By emphasizing these elements, marketers can appeal to a broad audience without the need for extensive customization or specialization. 112. The most attractive segment is one in which entry barriers are low and exit barriers are high. Answer: False Rationale: The most attractive segment is typically one with high entry barriers and low exit barriers. High entry barriers deter new competitors from entering the segment, reducing competitive pressures and preserving profitability for existing firms. Low exit barriers, on the other hand, make it easier for firms to leave the segment if it becomes unprofitable or unfavorable, allowing them to reallocate resources to more promising opportunities. 113. A segment is attractive when there are actual or potential substitutes for the product. Answer: False Rationale: A segment is generally considered attractive when there are few actual or potential substitutes for the product, as this reduces the threat of competition and helps maintain higher levels of demand and profitability. When substitutes are readily available, it can increase price competition and diminish the attractiveness of the segment for firms operating within it. 114. A segment is unattractive if the company's suppliers are able to raise prices or reduce quantity supplied. Answer: True Rationale: If a company's suppliers have significant power to raise prices or reduce the quantity supplied, it can negatively impact the company's profitability and competitiveness within a segment. Unfavorable supplier conditions can lead to higher production costs, reduced profit margins, or supply shortages, making the segment less attractive for the company to operate in. 115. An undifferentiated marketing approach to full market coverage designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers. Answer: True Rationale: An undifferentiated marketing approach, also known as mass marketing, involves designing a single marketing program that targets the entire market with a standardized product offering. This approach assumes that all consumers have similar needs and preferences, and that a single marketing strategy can effectively reach and persuade the broadest number of buyers. It often relies on creating a product with a superior image or value proposition that appeals to a wide range of consumers. 116. An attractive niche consists of customers having a distinct set of needs. Answer: True Rationale: An attractive niche market typically consists of a subgroup of customers who have specific and distinct needs or preferences that are not fully met by mainstream products or competitors. By focusing on serving this niche with tailored products or services, companies can differentiate themselves and establish a competitive advantage. Niche markets are often characterized by higher levels of customer loyalty and lower levels of competition compared to broader market segments. 117. The ultimate level of segmentation leads to "segments of one," "customized marketing," or "one-to-one marketing." Answer: True Rationale: "Segments of one," "customized marketing," or "one-to-one marketing" refers to the most granular level of segmentation, where marketing efforts are tailored to the individual preferences, needs, and behaviors of each customer. This level of customization allows companies to deliver highly personalized experiences, products, and messages to individual customers, maximizing relevance and effectiveness. 118. Companies following a market specialization strategy offer one product to as many markets as possible. Answer: False Rationale: Companies following a market specialization strategy focus on serving a particular market segment or niche with specialized products or services. Rather than offering one product to many markets, they offer specialized products or services tailored to the specific needs and preferences of a targeted customer segment. This allows them to differentiate themselves from competitors and build strong relationships with their chosen market. 119. A company is customerized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. Answer: True Rationale: Customerization refers to the ability of a company to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. This level of customization goes beyond traditional mass customization approaches by providing personalized experiences and solutions tailored to the unique needs, preferences, and behaviors of each customer. Customerization aims to enhance customer satisfaction, loyalty, and engagement by delivering highly relevant and meaningful interactions. 120. All attempts to target marketing to children, minorities, or other special segments are discriminatory and unethical. Answer: False Rationale: Targeting specific demographic or psychographic segments, such as children, minorities, or other special groups, is not inherently discriminatory or unethical. Ethical marketing involves understanding and respecting the needs, preferences, and sensitivities of diverse consumer segments while avoiding practices that exploit or harm vulnerable groups. When done responsibly and transparently, targeted marketing can help companies better serve the unique needs of different customer segments while promoting inclusivity and diversity in their marketing efforts. 121. There are several major segmentation variables that might be used by a marketer to address a consumer market. If the marketer were to use social class, psychographic lifestyle, and readiness stage to segment its market, identify possible segmentation subcategories under each of the three. Answer: First, social class would yield the subcategories of lower lowers, upper lowers, working class, middle class, upper middles, lower uppers, and upper uppers. Second, psychographic lifestyles would yield culture-oriented, sports-oriented, and outdoor-oriented. Lastly, readiness stage would yield unaware, aware, informed, interested, desirous, and intending to buy. Other sub-categories might be possible. 122. PRIZM was developed by Claritas Inc. What was the purpose of PRIZM? Answer: PRIZM stands for Potential Rating Index by Zip Markets. It is a method for geoclustering that classifies over half a million U.S. residential neighborhoods into 14 distinct groups and 66 distinct lifestyle segments called PRIZM Clusters. The groupings take into consideration 39 factors in five broad categories: (1) education and affluence, (2) family life cycle, (3) urbanization, (4) race and ethnicity, and (5) mobility. The neighborhoods are broken down by zip code, zip+4, or census tract and block group. The clusters have descriptive titles such as Blue Blood Estates, Winner's Circle, Hometown Retired, Shotguns and Pickups, and Back Country Folks. The inhabitants in a cluster tend to lead similar lives, drive similar cars, have similar jobs, and read similar magazines. 123. Identify and describe the three main types of New Luxury products. Answer: The three main types of New Luxury products are: (1) Accessible superpremium products-They carry a significant premium over middle-market brands, yet consumers can readily trade up to them because they are relatively low-ticket items in affordable categories. (2) Old Luxury brand extensions-They extend historically high-priced brands down-market while retaining their cachet. (3) Masstige goods-They are priced between average middle-market brands and superpremium Old Luxury brands. They are "always based on emotions, and consumers have a much stronger emotional engagement with them than with other goods." 124. Briefly describe the characteristics of the Millennials. Answer: Born between 1979 and 1994, Millennials, also called Gen Y, number 78 million with annual spending power estimated at $187 billion. Also known as the Echo Boomers, these consumers have been "wired" almost from birth— playing computer games, navigating the Web, downloading music, connecting with friends via instant messaging and mobile phones. They have a sense of entitlement and abundance from growing up during the economic boom and being pampered by their boomer parents. Yet they are highly socially conscious and concerned about environmental issues. They are selective, confident, and impatient. 125. Generation Y members are often turned off by overt branding practices and "hard sell." List and provide examples for the different approaches tried by the marketers to reach and persuade them. Answer: The different approaches tried by the markets to reach and persuade Generation Y members include: 1. Online buzz—Rock band Foo Fighters created a digital street team that sends targeted e-mail blasts to members who "get the latest news, exclusive audio/video sneak previews, tons of chances to win great Foo Fighters prizes, and become part of the Foo Fighters Family." 2. Student ambassadors—Red Bull enlisted college students as Red Bull Student Brand Managers to distribute samples, research drinking trends, design on-campus marketing initiatives, and write stories for student newspapers. 3. Unconventional sports—Chick-fil-A sponsored the National Amateur Dodgeball Association, "a recreational pursuit for nontraditional sport enthusiasts." 4. Cool events—Hurley, which defined itself as an authentic "Microphone for Youth" brand rooted in surf, skate, art, music, and beach cultures, became the title sponsor of the U.S. Open of Surfing. Other sponsors included Casio, Converse, Corona, Paul Mitchell, and Southwest Airlines. 5. Computer games—Product placement is not restricted to movies or TV: Mountain Dew, Oakley, and Harley-Davidson all made deals to put logos on Tony Hawk's Pro Skater 3 from Activision. 6. Videos—Burton ensures its snowboards and riders are clearly visible in any videos that are shot. 7. Street teams—As part of an antismoking crusade, the American Legacy Foundation hires teens as the "Truth Squad" to hand out T-shirts, bandanas, and dog tags at teen-targeted events. 126. Identify the four market segment groups based on brand loyalty status and list what a company can learn from analyzing the degrees of brand loyalty. Answer: Marketers usually envision four groups based on brand loyalty status: (1) hard-core loyals, (2) split loyals, (3) shifting loyals, and (4) switchers. Hard-core loyals can help identify the products' strengths. Split loyals can show the firm which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and attempt to correct them. 127. Briefly describe the steps in the segmentation process. Answer: The seven steps in the segmentation process include: 1. Needs-Based Segmentation-Group customers into segments based on similar needs and benefits sought by customers in solving a particular consumption problem. 2. Segment Identification-For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable. 3. Segment Attractiveness-Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment. 4. Segment Profitability-Determine segment profitability. 5. Segment Positioning-For each segment, create a "value proposition" and product-price positioning strategy based on that segment's unique customer needs and characteristics. 6. Segment "Acid Test"-Create "segment storyboard" to test the attractiveness of each segment's positioning strategy. 7. Marketing-Mix Strategy-Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, and place. 128. Briefly describe single-segment concentration with an example. Answer: With single-segment concentration, the firm markets to only one particular segment. Porsche concentrates on the sports car market and Volkswagen on the small-car market—its foray into the large-car market with the Phaeton was a failure in the United States. Through concentrated marketing, the firm gains deep knowledge of the segment's needs and achieves a strong market presence. It also enjoys operating economies by specializing its production, distribution, and promotion. If it captures segment leadership, the firm can earn a high return on its investment. 129. Briefly describe product specialization and market specialization. Answer: With product specialization, the firm sells a certain product to several different market segments. A microscope manufacturer, for instance, sells to university, government, and commercial laboratories, making different instruments for each and building a strong reputation in the specific product area. The downside risk is that the product may be supplanted by an entirely new technology. With market specialization, the firm concentrates on serving many needs of a particular customer group, such as by selling an assortment of products only to university laboratories. The firm gains a strong reputation among this customer group and becomes a channel for additional products its members can use. The downside risk is that the customer group may suffer budget cuts or shrink in size. 130. List the three premises on which Anderson's long tail theory is based and the two aspects of internet shopping that supports these premises. Answer: Anderson's long tail theory is based on three premises: (1) Lower costs of distribution make it economically easier to sell products without precise predictions of demand; (2) The more products available for sale, the greater the likelihood of tapping into latent demand for niche tastes unreachable through traditional retail channels; and (3) If enough niche tastes are aggregated, a big new market can result. Anderson identifies two aspects of Internet shopping that support these premises. First, the increased inventory and variety afforded online permit greater choice. Second, the search costs for relevant new products are lowered due to the wealth of information online, the filtering of product recommendations based on user preferences that vendors can provide, and the word-of-mouth network of Internet users. 131. Local marketing reflects a growing trend called grassroots marketing. What are the characteristics of grassroots marketing? Answer: In grassroots marketing, marketing activities concentrate on getting as close and personally relevant to individual customers as possible. 132. What is customer cloning and how is it used? Answer: Customer cloning is a way of identifying new prospects by assuming that the best prospects live where most of a company's existing customers come from. 133. Not everyone is in favor of local marketing. Identify two arguments made against local marketing. Answer: Those against local marketing argue that it drives up manufacturing and marketing costs by reducing economies of scale and magnifying logistical problems. A brand's overall image might be diluted if the product and message are different in different localities. 134. Identify ways in which shopping behaviors differ between men and women. Answer: Women tend to be more communal minded and men tend to be more self-expressive and goal directed. Women tend to take in more of the data in their immediate environment, whereas men focus on the part of the environment that helps them achieve a goal. When shopping, men often need to be invited to touch a product, whereas women are likely to pick it up without prompting. Men like to read product information, whereas women may relate to a product on a more personal level. 135. Increasingly, companies are finding that their markets are "hourglass shaped." What does this mean for consumers and for marketers? Answer: Middle-market U.S. consumers are migrating toward both discount and premium products. Companies that miss out on this new market risk being "trapped in the middle" and seeing their market share steadily decline. 136. Although we can make distinctions between them, different generational cohorts also influence each other. Give an example of this. Answer: Many members of Generation Y are living with their boomer parents, because of which parents are being influenced by what demographers are calling a "boom-boom" effect. 137. Characterize psychographic segmentation. Answer: In psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values. 138. The VALS segmentation system has evolved into an eight-part typology. List the categories of the eight-part typology. Answer: The eight parts of the VALS segmentation system include the following: (1) innovators, (2) thinkers, (3) achievers, (4) experiencers, (5) believers, (6) strivers, (7) makers, and (8) survivors. 139. Professor Albert advises his students to purchase the book "Microbiology by Pelczar," to acquaint themselves with the fundamentals of microbiology. What role does he play in the buying decision of his students? Answer: Professor Albert plays the role of an influencer in the buying decision of his students. An influencer is a person who explicitly or implicitly has some influence on the final buying decision of others. 140. List the four groups of consumers based on loyalty status. Answer: The four groups of consumers based on loyalty status are: 1. hard-core loyals, 2. split loyals, 3. shifting loyals, and 4. switchers. 141. Consumer attitudes are an interesting way to segment a market. What are the five different consumer attitudes about a product that can be found in the market? Answer: The five attitude groups are: (1) enthusiastic, (2) positive, (3) indifferent, (4) negative, and (5) hostile. 142. A flexible market offering consists of two parts. Identify and describe these two parts. Answer: A flexible market offering consists of two parts: a naked solution containing the product and service elements that all segment members value, and discretionary options that some segment members value. 143. To be useful, market segments must rate favorably on five key criteria. What are those criteria? Answer: To be useful, market segments must be: (1) measurable, (2) substantial, (3) accessible, (4) differentiable, and (5) actionable. 144. List the five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment. Answer: The five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment are industry competitors, potential entrants, substitutes, buyers, and suppliers. 145. List the threats posed by the five forces identified by Michael Porter that determine the intrinsic long-run attractiveness of a market or market segment. Answer: The threats posed by the five forces are: 1. Threat of intense segment rivalry 2. Threat of new entrants 3. Threat of substitute products 4. Threat of buyers' growing bargaining power 5. Threat of suppliers' growing bargaining power 146. Give an example of how a company might target products to children in an ethical way. Answer: The public is concerned when marketers take unfair advantage of vulnerable groups, such as children. However, not all attempts to target children draw criticism. Socially responsible marketing calls for targeting that serves not only the company's interests, but also the interests of those targeted. For example, Colgate Junior toothpaste has special features designed to get children to brush longer and more often. 147. Explain the concept of mass marketing. Answer: In mass marketing, the firm ignores segment differences and goes after the whole market with one offer. It designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers via mass distribution and mass communications. 148. Explain the concept of differentiated marketing. Answer: In differentiated marketing, the firm sells different products to all the different segments of the market. 149. Assume that you have decided to use a niche strategy to advance your marketing goals. Characterize an attractive niche. Answer: An attractive niche is distinguished as follows: (1) The customers in the niche have a distinct set of needs; (2) they will pay a premium to the firm that best satisfies their needs; (3) the niche is not likely to attract other competitors; (4) the niche gains certain economies through specialization; and (5) the niche is fairly small but has size, profit, and growth potential. 150. A new trend in marketing is toward customerization. Describe what customerization is and how marketers are using it. Answer: Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product or service offering of their choice. A company is customerized when it is able to respond to individual customers by customizing its products, services, and messages on a one-to-one basis. Test Bank for Marketing Management Philip T Kotler, Kevin Lane Keller 9780132102926, 9780273753360, 9781292092621, 9780133856460, 9789332587403, 9780136009986