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Chapter 8—Segmenting and Targeting Markets TRUE/FALSE 1. Fisher-Price developed a line of toys for infants in China. Babies make up the market for these products. ANS: F Infants do not have an ability to buy and, therefore, cannot be called a market. Their parents would constitute a market. 2. Fisher-Price is identifying Asian markets that are interested in their line of talking toys. Fisher-Price is engaged in the process of market segmentation. ANS: T 3. Until the 1990s, few firms practiced market segmentation. ANS: F Until the 1960s, few firms practiced market segmentation. 4. A market segment is deemed to have substantiality if it contains a large number of potential customers. ANS: F Substantiality of a segment refers to a segment being large enough to warrant developing and maintaining a special marketing mix. This does not necessarily require large numbers of potential customers. 5. A segmentation plan must produce segments that are accessible—that is, the firm must be able to reach members of targeted segments with customized marketing mixes. ANS: T 6. Markets are always segmented by at least two variables. ANS: F Although it is less precise, single-variable segmentation is possible; it has the advantage of being simpler and easier to use than multiple-variable segmentation. 7. U.S. paint manufacturers traditionally use different formulas for developing paint to be used in the humid Southeast, the frigid Midwest, and the hot and dry Southwest. This is an example of how demographic segmentation is used. ANS: F Regional marketing is an example of using geographic segmentation variables. 8. A market segmentation study done by the University of Thessaly in Greece classified recreational skiers in terms of their gender, age, and income levels. The study used psychographic segmentation variables. ANS: F These are examples of demographic segmentation variables.

9. Abbeville Press published a book by Armin Brott and Jennifer Ash entitled The Expectant Father: Facts, Tips, and Advice for Dads-to-Be.. It is an advice book for men whose partners are expecting a baby. The market for this book is based on demographics. ANS: T 10. In the United States, women tend to be the key household decision-makers for many products, such as home furnishing purchases, vacations, and autos. ANS: T

11. In market segmentation, individual psychographic variables can be combined with other variables to provide more detailed descriptions of market segments. ANS: T

12. Geodemographic segmentation combines geographic, demographic, and lifestyle segmentations. ANS: T 13. Clorox describes individuals who buy lots of cleaning products as heavy users. This is an example of how companies use benefit segmentation. ANS: F Usage-rate segmentation usually describes product usage with categories like heavy and light. 14. The 80/20 principle implies that the majority of all demand is due to a minority of the customers. ANS: T 15. The business market consists of four broad segments: producers, resellers, government, and regions. ANS: F The four segments are producers, resellers, government, and institutions. 16. Company characteristics, such as geographic location, type of company, company size, and product use, can be important segmentation variables. ANS: T

17. While it is important to understand potential business customers’ buying processes, this is not a helpful segmentation basis. ANS: F Many business marketers find it helpful to segment customers and prospective customers on the basis of how they buy. 18. The first step in segmenting a market is to choose a basis or bases for segmenting the markets. ANS: F The first step is to select a market or product category for study.

19. One reason marketers use market segmentation as a tool is that once completed, the process need not be repeated. ANS: F Markets are dynamic, so it is important that companies proactively monitor their segmentation strategies over time. 20. Dakin Farms in Vermont uses mass marketing. Marketers would call the strategy an undifferentiated targeting strategy. ANS: T 21. Small firms often adopt a concentrated marketing strategy to compete effectively with larger firms. ANS: T

22. Procter & Gamble markets six different brands of laundry detergent, such as Tide, Era, Gain, and Dreft, each targeting a different market segment. This is an example of concentrated targeting. ANS: F This illustrates a multisegment targeting strategy. 23. Increasing share of customer means getting more customers. ANS: F Increasing share of customer means selling more products to each customer, not getting more customers. 24. Marketers are rediscovering that the “one-size-fits-all” approach to marketing is still relevant. ANS: F The one-size-fits-all marketing is no longer relevant. Consumers want to be treated as the individuals they are, with their own unique sets of needs and wants. 25. A product’s position refers to where it is located on store shelves. ANS: F Position is the place a product, brand, or group of products occupies in consumers’ minds relative to competing offerings. 26. Product differentiation is a positioning strategy. ANS: T 27. A product’s positioning could be based on product users. ANS: T

28. Consumers’ perceptions regarding a product’s position cannot be changed. ANS: F

Repositioning is changing consumers’ perceptions of a brand in relation to competing brands. MULTIPLE CHOICE 1. A _____ is a group of people or organizations that has wants and needs that can be satisfied by particular product categories, has the ability to purchase these products, and is willing to exchange resources for the products. a. firm b. buyer c. market d. consumer e. target ANS: C 2. The Belly Cast kit by Proud Body helps an expectant mom to make a cast of her pregnant body, decorate it, and keep it for a lifetime. The primary market segment for the Belly Cast kit is: a. all parents b. expectant moms c. recently married couples d. parents of toddlers e. collectors of unusual art ANS: B 3. A market is people or organizations that have: a. the ability, willingness, and power to buy. b. a medium of exchange and products they desire. c. needs and wants and an ability and willingness to buy. d. unmet needs or wants and products or services that satisfy those unmet needs or wants. e. communication, financial, and capital resources. ANS: C 4. A(n) _____ is a subgroup of individuals or organizations sharing one or more characteristics that cause them to have similar product needs. a. market universe b. market segment c. aggregated market d. segmentation base e. population sample ANS: B 5. A group of middle school students stop by a bicycle store. The store has just received a new shipment of high-end racing bicycles. The bicycles range in price from $1,200 to $3,000. All of the students want one of these new bikes, but none has the means to buy one. Is this group of consumers a potential market for the expensive bikes? a. Yes, they are a potential market since they are all about the same age. b. No, they do not have the ability to purchase at this time. c. No, to qualify as a market, they must need the product. d. Yes, they are a market because this product could satisfy their consumer wants and desires. e. Yes, they are a market because this group shares relatively similar product needs and purchasing characteristics.

ANS: B 6. Ford Motor Company produces passenger cars, commercial trucks and specialty vehicles, performance vehicles, and race cars. Ford uses a procedure called _____ to divide its large market. a. micromarketing b. positioning c. market segmentation d. cannibalization e. perceptual mapping ANS: C 7. _____ is the process of dividing a market into meaningful groups that are relatively similar and identifiable. a. Perceptual mapping b. Positioning c. Micromarketing d. Market sampling e. Market segmentation ANS: E 8. The purpose of market segmentation is to: a. reduce the market down to a size the firm can handle b. divide the market into equal size and profit regions for sales territories c. group a large number of markets together, enabling a company to serve them simultaneously d. develop a generalized definition of the market as a whole e. enable the marketer to tailor marketing mixes to meet the needs of one or more specific groups ANS: E 9. Home Cookin’ Catering would like to improve customer satisfaction and increase repeat business. When you ask the owners to describe a typical customer, they say it is impossible and explain that with corporate functions, family affairs, and fund-raisers, they do not have a typical customer. You suggest it is time for market segmentation because: a. it will enable them to build an accurate description of customer needs by group and to design a marketing mix to fit each segment b. the company needs to reduce the size of the market it serves c. the company needs to learn how to group these markets together into one market to serve all of them adequately d. it will help develop a generalized definition of the market as a whole and reveal the optimal marketing mix for this market e. this will position the company in the minds of its consumers as compared to its competitors ANS: A 10. Market segmentation can assist marketers to do all of the following EXCEPT: a. develop more precise definitions of customer needs and wants b. identify which variable base should be used for segmenting c. more accurately define marketing objectives d. improve resource allocation e. evaluate performance ANS: B

11. All of the following are criteria for successful market segmentation EXCEPT: a. substantiality b. identifiability and measurability c. accountability d. accessibility e. responsiveness ANS: C 12. To be useful, a segmentation scheme must produce segments that meet four basic criteria. The criteria are: a. segmentability, targetability, reliability and validity, and homogeneity b. tangibility, inseparability, nonperishability, and uniqueness c. substantiality, identifiability and measurability, accessibility, and responsiveness d. reliability, flexibility, tangibility, and unbiased e. complexity, compatability, relative advantage, trialability, and observability ANS: C 13. A manufacturer of lenses used in microscopes, binoculars, and telescopes has segmented its market into scientific equipment manufacturers, sporting equipment manufacturers, and retailers who sell replacement lenses. In order for this segmentation scheme to be successful, all of the following criteria must be met EXCEPT: a. substantiality b. accessibility c. identifiability and measurability d. complexity e. responsiveness ANS: D 14. According to the criterion of _____, a selected segment must be large enough to warrant developing and maintaining a special marketing mix. Serving the specific needs of this segment must be commercially viable, even if the number of potential customers is small. a. causality b. accountability c. responsiveness d. accessibility e. substantiality ANS: E Substantiality means segments must be large enough to warrant a separate marketing mix. 15. The marketing researcher for Bubastis Cat Treats has noticed a growing number of cat owners purchasing organic treats for their pets. The researcher thinks there is a market for organic cat treats, but she’s not sure if the segment is substantial. In this case, substantiality means the segment: a. has enough special stores, magazines, and other outlets that it will be possible to direct advertisements at this group b. is large enough to permit a profitable market effort toward its members c. exhibits a response rate to marketing variables different from the rates of other segments d. is too large and needs to be reduced to a more easily identifiable and measurable size e. will be difficult to develop a product to match this group of buyers ANS: B

16. The marketing manager of Gevalia gourmet coffees wants to target the gay male consumer because he thinks this segment of consumers appreciates and consumes gourmet coffee. Even though gay lifestyles are becoming more accepted socially, the manager is finding it difficult to determine the market potential for this segment because many gay consumers are not willing to admit their lifestyle publicly. Which criterion of a useful segment does this illustrate? a. Substantiality b. Identifiability and measurability c. Complexity d. Responsiveness e. Validity ANS: B 17. Which criterion of useable market segments means the firm must be able to reach members of targeted segments with customized marketing mixes? a. Substantiality b. Identifiability and measurability c. Accessibility d. Responsiveness e. Reliability ANS: C 18. Many children on the autism spectrum like to chew on clothing, paper, or anything that they can find. Kid Companions manufactures nontoxic, plastic chewable jewelry for kids to wear. The product is a great way to keep kids from chewing on their clothes, while letting them work through their chewing tendencies. However, the company is unsure how to reach parents and therapists with information about their product. This illustrates a segmentation problem with: a. substantiality. b. identifiability and measurability. c. responsiveness. d. accessibility. e. accountability. ANS: D 19. The requirement for a market segment to be responsive means: a. over half of the consumers in the identified segment will be actively interested in the product b. all the segments identified by a marketer should respond to the marketing mix c. all the segments identified by a marketer should not respond to the marketing mix d. the segments identified by a marketer should not differ in the level of their responsiveness to the marketing mix e. the segment identified by a marketer should differ in how it responds to the marketing mix when compared to another segment confronted with the same mix ANS: E 20. Altria Group, Inc.’s Phillip Morris failed at an attempt to target Americans looking for a potentially safer cigarette. This market exhibits a lack of: a. substantiality. b. identifiability and measurability. c. responsiveness. d. reliability. e. accessibility.

ANS: C 21. A research firm has conducted marketing research on the market for metal roofing for homes. The research firm has determined there are thousands of homeowners who want the durability provided by metal roofs. These homeowners are generally married and between 25 and 54 years of age. They tend to live in suburban neighborhoods, and most subscribe to lifestyle magazines. If you were interpreting these results, you might suggest that the research firm: a. conduct additional research because it has no idea about the measurability of its segments. b. examine the research report again to see if it can determine segment accessibility. c. conduct a follow-up analysis to determine if the segments it might choose would respond differently than other segments to its marketing strategy. d. not segment the concrete siding market because the only market for siding is contractors who build the homes. e. segment the concrete siding market based on the information provided and concentrate its efforts on suburban homeowners between ages 25 and 54 years who read lifestyle magazines. ANS: C 22. If a market segment is especially motivated by coupons in newspapers, which segmentation success criterion is most influential in the success of this program? a. Responsiveness b. Identifiability and measurability c. Substantiality d. Accessibility e. Functionality ANS: A 23. A health club has a new fitness program for expectant mothers. After flyers were placed at the offices of area obstetricians, classes filled up within two days. Which segmentation success criterion was most influential in the success of this promotion? a. Substantiality b. Identifiability c. Measurability d. Causality e. Responsiveness ANS: E 24. _____ are characteristics of individuals, groups, or organizations that marketers use to divide a total market into segments. a. Differentiation guides b. Segmentation bases c. Perceptual maps d. Responsiveness quotients e. Accessibility quotients ANS: B 25. Military Spouses is the only publication in the world that targets readers who are “married to the military.” Its content reflects the unique set of challenges, hardships, and rewards to those whose spouses are in the military. The marital status that has been used to distinguish the market for this magazine is an example of a(n):

a. b. c. d. e.

market base. selector base. identifier. segmentation base. discriminator base.

ANS: D 26. Scott owns Buffalo Mountain Coffee in Deer Park, Ohio.. He understands the need to segment his market, and available marketing research indicates there is much demand in the community for unique coffee drinks. However, he has few resources and cannot engage in intensive consumer research to precisely identify a segment. Which of the following strategies would you suggest he employ? a. Develop an undifferentiated strategy, because it is not a large community and he could create a single marketing mix that would serve the entire community b. Employ a macrosegmentation strategy, because the data needed for such a strategy are both easy to get and fit his needs exactly c. Use a single-variable strategy, because it offers an inexpensive alternative that would not require much experience to employ d. Use a multiple-variable segmentation strategy, because it is easier to use than singlevariable segmentation e. Conduct a VALS investigation of his buying market ANS: C Less precise, single-variable segmentation has the advantage of being simpler and easier to use than multiple-variable segmentation. 27. _____ is the segmenting of markets based on the region of the country or the world, market size, market density (number of people within a certain unit of land), or climate. a. Community segmentation b. Geographic segmentation c. Geodemographic segmentation d. PRIZM segmentation e. Demonstrated regionalization ANS: B 28. Consumers in Louisiana love hot sauce, and Tabasco and Crystal brands are particularly popular there. Consumers in Michigan do not like hot food, so they purchase very little hot sauce. A national chain of grocery stores would likely use _____ segmentation when stocking condiment merchandise. a. geographic b. economic c. demographic d. benefit e. geodemographic ANS: A 29. A manufacturer of blankets knows heavy 100 percent wool blankets sell better in the New England area where the winters are harsh and that lighter-weight blankets sell better in the Southeast market where mild winters require fewer and lighter covers for the bed. Segmenting the market according to climate is an example of _____ segmentation. a. psychographic b. lifestyle c. perceptual d. demographic

e. geographic ANS: E 30. The Coca-Cola Company has over 450 brands in over 195 countries. According to their Web site, their products range from Samurai, an energy drink available in Asia to Vita, an African juice drink. It uses _____ segmentation in this marketing strategy. a. geographic b. economic c. demographic d. usage-rate e. multipositioning ANS: A 31. Almost all cell phones sold in the United States are black or gray. Almost all cell phones sold in Europe are colorful, and very few black phones are sold. A cell phone manufacturer knowing this information could use _____ segmentation when selling its phones internationally. a. geographic b. economic c. demographic d. benefit e. multipositioning ANS: A 32. All of the following statements are reasons why consumer goods companies take a regional approach to marketing rather than a national approach EXCEPT: a. Many firms need to find new ways to generate sales because of sluggish and intensely competitive markets. b. A regional approach gives marketing managers control over the competitive environment. c. Computerized checkout stations with scanners enable retailers to assess accurately which brands sell the best in each region. d. Many packaged-goods manufacturers are introducing new regional brands intended to appeal to local preferences. e. A more regional approach allows consumer goods companies to react more quickly to competition. ANS: B 33. Marketers use _____ to segment markets because this information ...