Chapter 8—Segmenting and Targeting Markets

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

A market is defined as having four imperative characteristics: people or organizations, needs and wants, ability to buy, and willingness to buy.

PTS: 1 REF: 121 OBJ: 08-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Knowledge

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

This is the definition of a market segment.

PTS: 1 REF: 121 OBJ: 08-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Knowledge

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

This is the definition of market segmentation.

PTS: 1 REF: 122 OBJ: 08-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

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

The purpose of segmentation is to group similar consumers and to serve their needs with a specialized marketing mix.

PTS: 1 REF: 122 OBJ: 08-1 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Comprehension

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

The four criteria are substantiality, identifiability and measurability, accessibility, and responsiveness.

PTS: 1 REF: 122 OBJ: 08-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Analysis

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

Useful segments should be substantial, identifiable and measurable, accessible, and responsive to different marketing mixes.

PTS: 1 REF: 122 OBJ: 08-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Analysis

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

The target segment should respond differently to the marketing mix compared to other segments.

PTS: 1 REF: 122-123 OBJ: 08-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Comprehension

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

Responsiveness is in force when a target segment responds differently (hopefully more positively) to the marketing mix than other segments.

PTS: 1 REF: 122-123 OBJ: 08-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Comprehension

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

Responsiveness is in force when a target segment responds differently (hopefully more positively) to the marketing mix than other segments.

PTS: 1 REF: 122-123 OBJ: 08-3 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Application

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

This is the definition of segmentation bases.

PTS: 1 REF: 123 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Knowledge

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

This is the definition of geographic segmentation.

PTS: 1 REF: 123 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

PTS: 1 REF: 123-124 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Application

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

Geographic segmentation includes segmenting markets by region of the country or world.

PTS: 1 REF: 123-124 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy | CB&E Model International Perspective

MSC: BLOOMS Application

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

The competitive environment is one of the noncontrollable factors in a company’s environment.

PTS: 1 REF: 124 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Distribution | CB&E Model Strategy MSC: BLOOMS Analysis

33. Marketers use _____ to segment markets because this information is widely available, and factors such as age or gender are often related to consumer purchasing and consumption behavior.

a. / benefits
b. / psychographics
c. / demographics
d. / usage rates
e. / sociocultural attributes

ANS: C

Common bases of demographic segmentation are age, gender, income, ethnic background, and family life cycle.

PTS: 1 REF: 124 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Comprehension

34. Income, ethnic background, gender, and age are all examples of _____ segmentation bases.

a. / geodemographic
b. / organizational
c. / demographic
d. / socioeconomic
e. / psychographic

ANS: C

These are demographic characteristics of consumers.

PTS: 1 REF: 124 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

44. In Miami, several radio stations broadcast in Spanish and play Latin music for the Hispanic people living in South Florida. The radio stations are using _____ segmentation.

a. / usage rate
b. / ethnic
c. / socioeconomic
d. / geographic
e. / gender

ANS: B

In this case, ethnicity would be the demographic variable.

PTS: 1 REF: 126 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Application

46. A series of stages determined by a combination of age, marital status, and the presence or absence of children is known as the:

a. / generation gap
b. / family life cycle
c. / maturation process
d. / segmentation cycle
e. / psychographic process

ANS: B

This describes the family life cycle.

PTS: 1 REF: 126-127 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Knowledge

49. Which of the following businesses would be most likely to use family life cycle segmentation?

a. / Those that produce and market computer software and hardware
b. / The snack industry
c. / Fast-food restaurants
d. / Business-to-business marketers
e. / Wedding planners, couples-only resorts, and day care centers

ANS: E

People in different stages of the family life cycle would be most likely getting married, going on a couples-only trip, or needing the services of a day care center.

PTS: 1 REF: 126-127 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Evaluation

50. _____ segmentation is based on personality, motives, and lifestyles.

a. / Psychographic
b. / Demographic
c. / Benefit
d. / Family life cycle
e. / Character

ANS: A

Personality, motives, and lifestyles are bases of psychographic segmentation.

PTS: 1 REF: 127 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

51. All of the following are bases for psychographic segmentation EXCEPT:

a. / benefits
b. / personality
c. / motives
d. / lifestyles
e. / geodemographics

ANS: A

Benefit segmentation is a different segmentation strategy that groups customers on the basis of their needs and wants.

PTS: 1 REF: 127 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Analysis

57. _____ divides individuals into groups according to the way they spend their time, the importance of items in their surroundings, their beliefs, and socioeconomic characteristics.

a. / Life cycle segmentation
b. / Temporal segmentation
c. / Lifestyle segmentation
d. / Microsegmentation
e. / Macrosegmentation

ANS: C

This describes the essence of lifestyle segmentation.

PTS: 1 REF: 127 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

58. _____ is a method that clusters potential customers into neighborhood lifestyle categories and is a combination of geographic, demographic, and lifestyle segmentations.

a. / Geodemographic segmentation
b. / Microsegmentation
c. / Sociocultural clustering
d. / Acculturation
e. / Lifestyle segmentation

ANS: A

This is the definition of geodemographic segmentation.

PTS: 1 REF: 127 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

62. _____ is the process of grouping customers into market segments according to the benefits sought from the product.

a. / Benefit segmentation
b. / Value-added segmentation
c. / Lifestyle segmentation
d. / Macrosegmentation
e. / Psychographic segmentation

ANS: A

This is the definition of benefit segmentation.

PTS: 1 REF: 129 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

69. Which type of segmentation divides a market by the amount of product bought or consumed?

a. / Benefit segmentation
b. / Characteristic segmentation
c. / Usage-rate segmentation
d. / Demographic segmentation
e. / Psychographic segmentation

ANS: C

This is the definition of usage-rate segmentation.

PTS: 1 REF: 129 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Knowledge

70. Most airline frequent flyer programs reward the most frequent flyers with business class upgrades and flight lounge privileges. Airlines are using these rewards as a means of implementing _____ segmentation.

a. / lifestyle
b. / motive
c. / usage-rate
d. / demographic
e. / personality

ANS: C

Usage-rate segmentation divides a market by consumption so that firms can target their heavy users.

PTS: 1 REF: 129 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Application

74. What does the 80/20 principle propose?

a. / Roughly 80 percent of the profit comes from 20 percent of the sales.
b. / Roughly 80 percent of a firm’s customers are repeat business.
c. / Roughly 50 percent of a firm’s customers purchase 80 percent of the sales volume of the product.
d. / Roughly 20 percent of a firm’s customers purchase 80 percent of the sales volume of the product.
e. / Sales are equally divided among heavy, medium, and light users, but they all need slightly different products.

ANS: D

The 80/20 principle proposes that a minority of a firm’s customers purchase a majority of the volume of the product.

PTS: 1 REF: 129 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Knowledge

75. The _____ proposes that a minority of a firm’s customers purchase a majority of the volume of the product.

a. / majority fallacy
b. / equity fallacy
c. / 80/20 principle
d. / cannibalization rule
e. / optimizer principle

ANS: C

This is the definition of the 80/20 principle.

PTS: 1 REF: 129 OBJ: 08-4 TOP: AACSB Reflective Thinking

KEY: CB&E Model Customer MSC: BLOOMS Knowledge

77. Business marketers focus on all of the following market segments EXCEPT:

a. / institutions
b. / producers
c. / households
d. / resellers
e. / government

ANS: C

The business market consists of four broad segments: producers, resellers, government, and institutions. Households are part of the consumer market.

PTS: 1 REF: 129 OBJ: 08-5 TOP: AACSB Reflective Thinking

KEY: CB&E Model Strategy MSC: BLOOMS Analysis