Eastern Michigan University

MKT 510A

Chapter 7-Identifying Market Segments and Targets

true/false Questions

1)Traditionally, micromarketing of a consumer product results in the largest potential market for that product.  

2. Consumers who belong to the same market segment have identical needs and wants.

3. Target marketing requires marketers to take three major steps: 1) identify and profile distinct groups, 2) select one or more segments to enter, and 3) predict the consumer behavior of the segments.  

4. There are four levels at which a firm could micromarket—segments, niches, local areas, and individuals.  

5. The ultimate level of marketing segmentation is mass marketing.  

6. If everyone’s choice for their computer printer were an HP LaserJet 1200, there would be a heterogeneous preference segment in the computer printer market.  

7. Mass customization means a company has the ability to prepare individually designed products to meet customer requirements.  

8. The first step in segmenting a market is to create segment “story boards” to test the segment’s viability.  

9. Geoclustering is a technique for segmenting markets on the basis of multiple attributes.

10. One reason geoclustering is increasingly popular is the falling cost of data manipulation.

11. One of the reasons demographic variables are the most popular variables for segmenting the consumer market is because usage rates are often associated with demographic characteristics.  

12. Lifestyle is an example of a demographic segmentation variable.  

13. By and large, income is an excellent predictor of who will buy what products.  

14. Social Class is an example of a psychographic segmentation variable.  

15. Many marketers believe behavioral variables are the best starting point for constructing market segments.  

16. “Benefits sought” is an example of a behavioral segmentation variable.  

17. When Harley Davidson used the slogan “It’s time,” and offered test rides and bargain financing on its Sportsters products, it was using geographic segmentation.  

18. In business market segmentation, operating variables are the most important segmentation variable.  

19. Single-segment concentration, one of five patters of target market selection, means serving just one market segment with one product.  

20. Firms that offer tailored programs for several different market segments engage in differentiated marketing.  

Multiple Choice Questions

21. Traditionally, mass marketing of a consumer product results in                                     .

1. the largest potential market for that product
2. increased product prices due to the lack of differentiation and decreased competition
3. easier channel selections
4. fewer competitors because there are fewer markets
5. lower profit margins

22. All of the following are part of an attractive niche EXCEPT:

1. the niche has variety-seeking consumers.
2. consumers in the niche have distinct needs.
3. the niche is not likely to attract heavy competition.
4. the niche can specialize and therefore realize certain economies.
5. the niche has growth potential.

23. A southern chain of Chinese restaurants would find it advantageous to prepare a salt pork soup for Guangdong people, a spicy soup for Sichuan people and a heavy flavor for the northeasterners. If the chain engages in               marketing, it will improve the likelihood of its success.

1. local
2. niche
3. individual
4. homogeneous
5. demographic

24. The ultimate level of marketing segmentation is                                   marketing.

1. local
2. niche
3. individual
4. homogeneous
5. mass

25.   is the ability to prepare, on a mass basis, individually designed products to meet each customer’s requirements.

1. Niching
2. Specialization
3. Mass customization
4. Concentrated marketing
5. Clustered marketing

26. A consumer preference pattern in which all the dots are spread out and no pattern emerges is called  .

1. clustered preferences
2. homogeneous preferences
3. concentrated preferences

4. diffused preferences
5. honeycombed preferences

27. If everyone’s choice for their computer printer were an HP LaserJet 4100, there would be a           preference segment in the computer printer market.

1. homogeneous
2. heterogeneous
3. diffused
4. stratified
5. clustered

28. A marketer facing a market segment with natural market segments is dealing with a market with              preferences.

1. diversified
2. stratified
3. heterogeneous
4. diffused
5. clustered

29. If a food company segments a market on the basis of demographic and/or psychographic information, its basis for segmentation is                                                                                                         .

1. customer responses
2. preference segments
3. customer characteristics
4. customer behavior
5. market partitions

30. If you go to a national electronic appliance chain store in China, you will find more air conditioners but fewer heaters in southern China where it is hot. A chain store in northeastern China where it is cold, however, sells more heaters but fewer air conditioners. The Chinese chain store realizes that the people in each of these areas do not have the same needs and should therefore not be offered the same products. This is an example of .

1. benefits segmentation
2. geoclustering
3. demographic segmentation
4. behavioral segmentation
5. psychographic segmentation

31. When the parent company introduced Southern Belles magazine, it was described as “a new publication that covers female style and southern life.” From this statement, you should be able to describe the segmentation strategy used for the magazines as

                           .

1. benefits segmentation
2. geoclustering

3. demographic segmentation
4. behavioral segmentation
5. psychographic segmentation

32. The Lazy H Dude Ranch is open to people of all sizes, shapes, and belief systems. It’s a place people can go to unwind from the stress of daily life. Which of the following is an example of a psychographic variable the owner of the retreat could use in its marketing strategy?

1. occupation
2. age
3. lifestyle
4. social class e .income

33. A segmentation study of people who would be interested in subscribing to a music and entertainment magazine discovered three distinct groups of potential subscribers: 1) those who wanted reviews of the latest music releases, 2) those who wanted to know behind the scenes gossip about the stars, and 3) those who sought to improve their own musicianship. This magazine discovered its market can be segmented using                                                                                                                                                          variables.

1. demographic
2. social class
3. lifestyle
4. generation
5. geographic

34. Because two-thirds of the sales of new motorcycle policies at Dairyland Insurance Company are to current policyholders, it should use a     segmentation strategy.

1. education-based
2. benefit
3. demographic
4. behavioral
5. psychographic

35. Which of the following is an example of a demographic segmentation variable?

1. Generation or social class.
2. Personality.

3. Attitude toward the product.
4. Lifestyle.
5. User status.

36. Perrigo Corporation makes One-Source Mature, a high potency, multivitamin for active men and women over 50. This is an example of                                                                                                                       segmentation.

1. gender
2. generation
3. age and life-cycle
4. user status
5. usage rate

37. For years Fuyuan’s toasted pigs have been mostly ordered on Tomb-sweeping Day in China. Fuyuan now is working hard to implement other segmentation strategies beyond the limited                                   strategy it used in the past.

1. user rate
2. lifestyle
3. family life-cycle
4. benefit
5. occasion

38. Research by Voicestream Wireless revealed that it serves two different kinds of consumers: chatterboxes who seemed to live on the phone and those that make lots of short calls. Based on this research, it should use a(n)  segmentation strategy.

1. age-based
2. usage rate
3. user status
4. loyalty status
5. occupation-based

39. Which of the following is an example of a behavioral segmentation variable?

1. Generation.
2. User status.
3. Personality.
4. Religion.
5. Social class.

40. Which of the following is an example of a behavioral segmentation variable?

1. Occupation.
2. Education level.
3. Readiness stage.
4. Lifestyle.
5. Family life cycle.

41. According to Bonoma and Shapiro, the most important segmentation variable for business markets is       .

1. demographic characteristics
2. operating variables
3. situational factors
4. purchasing approaches

5. personal characteristics

42. A company’s power structure and the nature of its existing relationships with suppliers are all related to which of the major business market segmentation variables?

1. Demographic.
2. Operating variables.
3. Purchasing attributes.
4. Situational factors.
5. Personal characteristics.

43. A company’s size and physical location are all related to which of the major business market segmentation variables?

1. Demographic.
2. Operating variables.
3. Purchasing attributes.
4. Situational factors.
5. Personal characteristics.

44. Which of the following is NOT necessary to make a market segment useful?

1. It is measurable.
2. It is satisfied.
3. It is substantial.
4. It is actionable.
5. It is accessible.

45. A marketer wants to market Braille books to sight-disabled readers This market segment is            even if it meets none of the other characteristics needed for a market segment to be useful.

1. immeasurable

2. substantial
3. accessible
4. differentiable
5. not quantifiable

46.     are business buyers who are starting their purchasing relationship, and want easy-to-comprehend instructions, hotlines for questions, lots of training, and knowledgeable sales reps.

1. First-time prospects
2. High-maintenance
3. Sophisticates
4. Fringe account companies
5. Novices

47. Which type of business buyer is most likely to want to deal with a company salesperson instead of a catalog or online purchasing environment?

1. First-time prospects.
2. Innovators.
3. Sophisticates.
4. Fringe account companies.
5. Novices.

48. A marketer who selected a segmentation strategy would find this segmentation strategy to possess the greatest amount of risk.

1. selective specialization
2. single-segment concentration
3. full market coverage
4. market specialization

5. product specialization

49. Research shows that sports cards appeal to 6- to 17-year-old boys, 24- to 54-year-old men, and professional collectors. Because these groups’ only exploitable similarity is their interest in sports cards, this would be an example of a(n)                                                                                                                             .

1. interrelated segment
2. market niche
3. supersegment
4. blocked market
5. inter-segment cooperative

50. A manufacturer of disposable, patterned, paper placemats that decided it was only going to sell to sit-down restaurants would have adopted a                                                                                                         segmentation strategy.

1. selective specialization
2. single-segment concentration
3. full market coverage
4. market specialization
5. product specialization

51. For years, Sears used the slogan, “Sears Has Everything.” Which of the following strategies does this slogan most likely support?

1. differentiated marketing.
2. Single-segment concentration.
3. Undifferentiated marketing.
4. Market specialization.
5. Product specialization.

52. The Gap caters to buyers seeking classic clothing at mid-range prices. It also owns other retailing chains including Banana Republic (catering to more affluent buyers) and Old Navy (which sells value-priced jeans, tee-shirts and khakis). The Gap is practicing

                            marketing.

1. differentiated
2. single-segment concentration
3. undifferentiated
4. market specialization
5. product generalization

53. Firms that offer tailored programs for several different market segments engage in

                            marketing.

1. differentiated
2. single-segment concentration
3. undifferentiated
4. market specialization
5. product specialization

54. In terms of its affect on the marketing process, undifferentiated marketing

                           .

1. increases administrative and production costs
2. keeps down advertising and R&D costs
3. increases the firm’s cost for product modification
4. creates more total sales than differentiated marketing
5. puts the company at risk of being supplanted by an entirely new technology

55. When companies encounter blocked markets, the best approach to those markets is to

                           .

1. use a segment-by-segment invasion plan
2. use a megamarketing approach
3. forget the blocked market and approach easier to enter markets
4. study intersegment cooperation and use it to enter the blocked markets
5. find an exploitable similarity and create a megamarket

56.   is strategic coordination of economic, psychological, political, and public-relations skills to gain the cooperation of a number of parties in order to enter and/or operate in a given market.

1. Segment-by-segment invasion planning
2. Market niching
3. Megamarketing
4. Intersegment cooperation
5. Turbomarketing Essay Questions

57. Markets can be segmented at four levels. In a short essay, describe each level and explain the benefits associated with segmenting the market at each of the four levels.

58. Suppose potato chip buyers are asked how much they value price, taste, crunchiness, and nutritional content as product attributes. In a short essay, describe the three different preference patterns that should emerge from this research?

59. In a short essay, discuss niche marketing and explain the phrase “guerrillas against gorillas” as it relates to marketing to niche segments. Give an actual or made-up example of a niche market and the firms that compete there.

60. As multinational companies look for ways to improve their efficiency, one solution is the purchase of executive jet planes. It is quite often necessary for management to fly to other operations around the world. Having a corporate jet removes time constraints from these trips. In a short essay, discuss which major segmentation variables for business markets a manufacturer of corporate jets can use.

61. A Chinese manufacturer of small and inexpensive motorcycles (125cc to 250cc engines, probable retail prices $1,200 to $2,100) decides to enter the U.S. market, as they see very little competition in that power range. You are asked to help them decide how to segment the U.S. marketplace for small motorbikes. Using the Major Segmentation Variables for Consumer Markets, discuss three or four possible segments that might be targeted by the Chinese concern. Include a brief explanation for why this segment might be a good one to consider.

Mini-Cases Mini-Case 7-1

A group of investors are starting a for-profit college to be called Haven University. They have identified a small segment of society that is displeased with the high cost of college and is willing to forego all social and sporting extracurricular activities in order to get an inexpensive, quality education in four years. The university investors will advertise nationally. Its target audience is individuals between 22 and 30 years of age who have either not started earning a college degree or who did not finish one they began in the last ten years. The investors want to attract students who are currently working at a job with which they are dissatisfied. Haven will only offer three degree programs, which cannot be modified to individual student needs. Research has shown that these are degrees that this market segment repeatedly seeks. Students can earn their degrees over the Internet and only have to attend a one-week seminar on campus twice a year.

62. Refer to Mini-Case 7-1. The investors have identified their market through the use of

                            segmentation variables.

1. behavioral, geographic, and demographic
2. psychographic and behavioral
3. geographic and demographic
4. psychographic, behavioral, and geographic
5. demographic, psychographic, and behavioral

63. Refer to Mini-Case 7-1. The investors discovered there was a segment of the population who was being passed over for promotions because they lacked a college degree. These people had always assumed getting a degree was impossible because they did not have the time to attend classes. What kind of segmentation variable would be used to identify this segment?

1. Usage.
2. Personality.
3. Values.
4. Benefit.
5. Lifestyle.

Mini-Case 7-2

A large international pharmaceutical firm decides to enter the Philippines with a new oral birth control product. The Filipino population varies greatly in terms of levels of age, education, rural versus urban population, income, ethnicity, sexual activity rates, awareness about the availability and uses of birth control, religious orientation, access to health care, and other variables that might influence consumption patterns for birth control.

64. Refer to Mini-Case 7-2. If the firm marketed their product in the form of white pills in a plain bottle and sold it to rural government clinics, which subsidized it to the consumers, the target segment most prominently includes which variables?

1. Religion, age, sexual activity, and city size.
2. Income, access to health care, and city size.
3. Race, income, and education.
4. Age, awareness (readiness), and religious orientation.
5. Nationality, loyalty status, and stage of the family life cycle.

65. Refer to Mini-Case 7-2. If the firm decides to sell pastel colored pills at higher than the competitors’ prices, and sell through pharmacies in the capital, Manila, the target segment most prominently includes which variables?

1. Religion, age, sexual activity, and city size.
2. Income, access to healthcare, and city size.
3. Race, income, and education.
4. Age, awareness (readiness), and religious orientation.
5. Nationality, loyalty status, and stage of the family life cycle.