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Chapter 8Market Segmentation, Targeting, and Positioning

MULTIPLE CHOICE
1. How might business products be identified?
a. as goods and services purchased for use either directly or indirectly in the

production of other goods and services for resale


b. as goods and services of any kind bought for use in the home, but sold later as used

items
c. as goods and services, such as legal services, that can be bought by businesses or

individuals but do not enter into the production of finished goods


d. as goods and services sold in a finished state for use in the home or the business

office
ANS: A
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DIF: 1
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NOT: AACSB Analytic | TB&E Model Product

2. What are goods and services purchased by the ultimate user for personal use called?
a. personal products
b. purchased products
c. consumer products
d. commercial products
ANS: C
OBJ: 8-1

PTS: 1
BLM: Remember

DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Product

3. Kyle plans to buy new tires for a converted bus his family uses for camping trips. The tires are

the same type used on General Motors commercial trucks and can be purchased from
Industrial Tire Company. How are the tires that Kyle will buy for this bus classified?
a. as business products
b. as service products
c. as commercial products
d. as consumer products
ANS: D
PTS: 1
DIF: 1
OBJ: 8-1
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Product

REF: 234

4. What is the lumber a carpenter purchases to finish a clients basement known as?
a. a raw material
b. a business product
c. a consumer good
d. a home-improvement product
ANS: B
PTS: 1
DIF: 2
OBJ: 8-1
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Product

Copyright 2013 Nelson Education Ltd.

REF: 234

8-1

Chapter 8 Market Segmentation, Targeting, and Positioning

Generally speaking, what are rubber and raw cotton examples of?
business products
consumer products
fabricated materials
nonpersonal products
5.

a.
b.
c.
d.

ANS: A
OBJ: 8-1

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DIF: 2
REF: 234
NOT: AACSB Analytic | TB&E Model Product

6. When one product becomes part of another product that is destined for resale, what is the first

product considered?
a consumer product
a business product
a commercial market product
an industrial market product

a.
b.
c.
d.

ANS: B
OBJ: 8-1

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DIF: 2
REF: 234
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7. Concerning market segmentation, which of the following statements is NOT correct?


a. Only for-profit organizations practice market segmentation.
b. Firms that practice market segmentation dont necessarily change their products to

meet the needs of different market segments.


c. There are too many variables to attract all customers using the same marketing mix.
d. Market segmentation attempts to divide the total market into smaller groups.
ANS: A
OBJ: 8-2

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BLM: Remember

DIF: 1
REF: 235
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8. Which of the following basic requirements must market segmentation meet to be effective?
a. The firm must avoid focusing on non-variables, such as profitability and volume.
b. The market segment must reflect the populations changing attitudes and lifestyles.
c. The company must expand beyond its marketing capabilities to capture growing

markets.
d. The market segment must have measurable purchasing power and size.
ANS: D
OBJ: 8-1

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BLM: Remember

DIF: 2
REF: 235
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9. What is the basis for determining whether pencils are consumer products or business

products?
the purpose for which the pencils are purchased
the number of pencils that are purchased
where the pencils are purchased from
the total price paid for the number of pencils

a.
b.
c.
d.

ANS: A
PTS: 1
DIF: 1
OBJ: 8-1
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Product

Copyright 2013 Nelson Education Ltd.

REF: 234-235

8-2

Chapter 8 Market Segmentation, Targeting, and Positioning


10. Which of the following market segments could a marketing organization MOST effectively

promote to and serve based on the segments size and profit potential?
the staff of foreign embassies from European countries
baby boomers
captains and crews of sea-going vessels
collectors of classic MG sports cars

a.
b.
c.
d.

ANS: B
PTS: 1
DIF: 2
OBJ: 8-1
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Product

REF: 235

11. Which of the following is NOT a common basis for segmenting consumer markets?
a. geographic
b. psychographic
c. competitive
d. demographic
ANS: C
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PTS: 1
BLM: Remember

DIF: 1
REF: 236
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12. What is a commonly used basis for segmenting consumer markets?


a. geographic segmentation based on locations
b. career segmentation based on industry affiliation
c. national segmentation based on citizenship
d. institutional segmentation based on membership
ANS: A
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 1
REF: 236
NOT: AACSB Analytic | TB&E Model Strategy

13. In addition to population and geography, a researcher might combine other indicators to

segment markets geographically. Of the indicators listed, what would marketers be LEAST
likely to use?
a. income and job growth
b. migration patterns
c. average size of the households
d. product-usage patterns
ANS: C
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DIF: 2
REF: 237 | 252 | 253
NOT: AACSB Analytic | TB&E Model Strategy

14. What is one of the two largest metropolitan areas in the world?
a. Montreal
b. Tokyo
c. New York
d. London
ANS: B
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PTS: 1
BLM: Remember

DIF: 2
REF: 237
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Copyright 2013 Nelson Education Ltd.

8-3

Chapter 8 Market Segmentation, Targeting, and Positioning

Based on the MOST recent census data, where does 68 percent of the Canadian
population live?
a. in Toronto, Ontario
b. between Montreal, Quebec, and Windsor, Ontario
c. in 33 metropolitan areas across the country
d. in Calgary, Alberta
15.

ANS: C
OBJ: 8-2

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DIF: 1
REF: 237
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16. How would a geographic area surrounding an urban core with a population of at least 100 000

be classified?
as a census metropolitan area (CMA)
as a primary metropolitan region (PMR)
as a metropolitan statistical area (MSA)
as a census agglomeration (CA)

a.
b.
c.
d.

ANS: C
PTS: 1
DIF: 2
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BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 238

17. An automobile manufacturer generates approximately one-half of its sales in two provinces in

Canada. What do these provinces constitute for the company?


its primary consumer market
its core region
its secondary market
its sales region

a.
b.
c.
d.

ANS: B
PTS: 1
DIF: 2
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BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 238

18. What do pizza delivery companies use to succeed in delivering thousands of pizzas to

Canadian homes on Super Bowl Sunday?


advertising shown during the game
statistical databases and written reports from area managers
motor scooters rather than automobiles as delivery vehicles
a geographic information system that can display location-specific data

a.
b.
c.
d.

ANS: D
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 1
REF: 238
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Copyright 2013 Nelson Education Ltd.

8-4

Chapter 8 Market Segmentation, Targeting, and Positioning


19.

Which of the following is a characteristic of a Geographic Information Systems

(GIS)?
a. It is very expensive to use because of the high cost of leasing the technology from

the military.
b. It is complicated to use because the data is produced using logarithmic displays that

most small computer systems cannot handle.


c. It has very sophisticated digital readouts that require three-dimensional colour

coding to read.
d. It assembles, stores, and displays data by location.
ANS: D
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 2
REF: 238-239
NOT: AACSB Technology | TB&E Model Strategy

20. What is the MOST common method of market segmentation?


a. product-related segmentation
b. demographic segmentation
c. economic segmentation
d. psychographic segmentation
ANS: B
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 1
REF: 239
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21. What is another name for socioeconomic market segmentation?


a. product-related segmentation
b. demographic segmentation
c. psychographic segmentation
d. geographic segmentation
ANS: B
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 1
REF: 239
NOT: AACSB Analytic | TB&E Model Strategy

22. Which of the following statements is NOT true regarding socioeconomic market

segmentation?
a. It is easy in foreign markets where income and life-cycle stage are not measured.
b. It is the most common type of market segmentation.
c. It is defined by variables that include age, gender, income, occupation, and

education.
d. It is most often compiled through data taken from Statistics Canada.
ANS: A
PTS: 1
DIF: 2
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BLM: Higher Order
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Copyright 2013 Nelson Education Ltd.

REF: 239

8-5

Chapter 8 Market Segmentation, Targeting, and Positioning

What does the cohort effect describe?


why members of the same psychographic group decide to vote the same way
how Generation X uses its financial power to influence product trends
the predictability of demographic characteristics in analyzing purchase habits, as
well as product-usage rates, and brand preference
the tendency of members of a generation to be influenced and bound together by
events occurring during the key formative years
23.

a.
b.
c.
d.

ANS: D
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 1
REF: 242
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24. Ford Motor Company surveyed 10 000 customers to analyze their needs and preferences in

automobiles. At the end of the survey, respondents were asked to provide demographic
information, including age. Responses concerning preferences were strikingly similar for each
group within a specific five-year age range. What effect is this a result of?
a. the income effect
b. the life-cycle effect
c. the cohort effect
d. the global-generation effect
ANS: C
PTS: 1
DIF: 2
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BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 242-243

25. Which of the following age groups would marketers of life insurance MOST likely target?
a. teenagers
b. between 25 and 35 years old
c. baby boomers
d. over 60 years old
ANS: B
PTS: 1
DIF: 3
OBJ: 8-2
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 239

26. In terms of numbers, which age group is the largest?


a. baby boomers
b. Generation X
c. 9/11 Generation
d. World War II Generation
ANS: A
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PTS: 1
BLM: Remember

DIF: 2
REF: 241
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Copyright 2013 Nelson Education Ltd.

8-6

Chapter 8 Market Segmentation, Targeting, and Positioning

What greatly attributes to the Canadian population growth and change in


Canadas racial and ethnic make-up?
a. North American Free Trade Agreement
b. immigration among some minority groups
c. shifts in population to urban areas
d. increasing birth rate for the entire population
27.

ANS: B
OBJ: 8-2

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DIF: 2
REF: 244
NOT: AACSB Diversity | TB&E Model Strategy

28. Compared with other ethnic groups, Chinese Canadians represent the ________ ethnic group

in Canada, and are a more ________ segment.


smallest; homogenous
smallest; heterogeneous
largest; homogenous
largest; heterogeneous

a.
b.
c.
d.

ANS: D
OBJ: 8-2

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DIF: 3

REF: 244

29. How can Chinese Canadian consumers be described?


a. as trusting in family, hardworking, and thrifty
b. as having a preference for North American food products and groceries
c. as being part of a homogenous segment
d. as more likely to obtain information about products and services from national

media sources
ANS: A
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DIF: 2

REF: 245

30. What does the family life cycle refer to?


a. a way to apply psychographic segmentation
b. the process of family formation and dissolution
c. insights into relationships among age, occupation, income, and housing
d. the 11 stages of personal growth from infancy to retirement
ANS: B
OBJ: 8-2

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DIF: 1
REF: 245
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31. Which of the following is NOT a life-cycle stage?


a. unmarried
b. first-child families
c. remarried
d. empty nesters
ANS: C
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PTS: 1
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DIF: 1
REF: 246
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Copyright 2013 Nelson Education Ltd.

8-7

Chapter 8 Market Segmentation, Targeting, and Positioning

What has been an observed change in family life cycle behaviour noted by
researchers in the past decade?
a. the tendency of unmarried people becoming customers for new homes and
expensive furnishings
b. the tendency of newly married people cooking at home almost every meal instead
of dining out
c. the tendency of boomerang children returning home, sometimes with their own
families
d. the tendency of parents with a second or subsequent child buying new sets of cribs,
changing tables, and so forth for each child
32.

ANS: C
OBJ: 8-2

PTS: 1
BLM: Remember

DIF: 2
REF: 247
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33. According to Engels laws, what happens as family income increases?


a. the percentage spent on recreation and education increases
b. the percentage spent for clothing and household operations increases
c. the percentage spent for food and household operations decreases
d. the percentage spent on housing and food decreases
ANS: A
OBJ: 8-2

PTS: 1
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DIF: 2
REF: 248
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34. Five years ago, Joshua spent 28 percent of his $45 000 yearly income on his bachelor

apartment. Today, Joshua is earning $60 000 annually. According to Engels laws, what
percentage of income will he spend on his new apartment?
a. less than 19 percent
b. about 28 percent
c. about 52 percent
d. more than 71 percent
ANS: B
PTS: 1
DIF: 2
OBJ: 8-2
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 248

35. What is a characteristic of using demographic segmentation abroad?


a. challenging, because many countries do not take regular censuses
b. standardized, with most countries using the same global guidelines
c. simplified, due to the wealth of income data available in certain countries, such as

Italy and Japan


d. sometimes worthless, because the integrity of the data is called into question
ANS: A
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BLM: Remember

DIF: 3
REF: 249
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Copyright 2013 Nelson Education Ltd.

8-8

Chapter 8 Market Segmentation, Targeting, and Positioning

What is psychographic segmentation based on?


the quantitative side of the consumer demographic analysis
the quantitative side of the consumer geographic analysis
the individuals residential patterns and life cycle preferences
the groups psychological characteristics, values, and lifestyles
36.

a.
b.
c.
d.

ANS: D
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PTS: 1
BLM: Remember

DIF: 1
REF: 249
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37. What type of segmentation divides a population into groups with similar psychological

characteristics, values, and lifestyles?


demographic
polymorphic
psychographic
parallelgraphic

a.
b.
c.
d.

ANS: C
OBJ: 8-2

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DIF: 1
REF: 249
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38. VALS defines eight personality types that impact purchasing decisions. Which of the

following set of traits is NOT part of the VALS matrix?


Achievers and Strivers
Experiencers and Survivors
Thinkers and Believers
Makers and Definers

a.
b.
c.
d.

ANS: D
OBJ: 8-2

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DIF: 2
REF: 250
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39. What is the largest segment that values professional and material goals more than other

groups?
a. strivers
b. devouts
c. altruists
d. fun seekers
ANS: A
OBJ: 8-2

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DIF: 1
REF: 251
NOT: AACSB Analytic | TB&E Model Strategy

40. A marketer of a new brand of outdoor furniture wants to know more about the personalities

and lifestyles of the intended consumer market in order to help match its product offerings
with this segments needs. What would be wise to use as a means of achieving this goal?
a. demographic segmentation
b. geographic segmentation
c. psychographic segmentation
d. geographic information systems
ANS: C
PTS: 1
DIF: 1
OBJ: 8-2
BLM: Higher Order
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

REF: 249-50

8-9

Chapter 8 Market Segmentation, Targeting, and Positioning


41. Why is segmentation by benefits used?
a. to determine the marketers effectiveness in satisfying the consumer
b. to measure brand loyalty
c. to evaluate post-consumption
d. to focus on the attributes that people seek in a product
ANS: D
OBJ: 8-3

PTS: 1
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DIF: 2
REF: 252
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42. What is the product-related segment of the consumer market that is based on the attributes

people seek when they buy a product?


the price-shopper segment
the lifestyle segment
the expenditure pattern segment
the benefits-sought segment

a.
b.
c.
d.

ANS: D
OBJ: 8-3

PTS: 1
BLM: Remember

DIF: 2
REF: 252
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43. When can product-usage segmentation be an important tool for marketers?


a. as they attempt to eliminate competition
b. as they attempt to identify heavy users
c. as they attempt to reduce costs from 80 percent to 20 percent
d. as they attempt to increase profitability
ANS: B
OBJ: 8-3

PTS: 1
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DIF: 2
REF: 252
NOT: AACSB Analytic | TB&E Model Strategy

44. Which of the following describes the 80/20 principle?


a. Market segmentation succeeds about 80 percent of the time and fails 20 percent.
b. Roughly 80 percent of total product sales come from 20 percent of customers.
c. Roughly 80 percent of the market segment is tapped and 20 percent has not yet

been reached.
d. Roughly 80 percent of the market can be segmented and 20 percent cannot.
ANS: B
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PTS: 1
BLM: Remember

DIF: 1
REF: 252
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45. What is the product-related segmentation of consumers that is based on the strength of their

attachment and allegiance to their preferred products?


values and lifestyles segmentation
business-to-business segmentation
psychographic segmentation
brand loyalty segmentation

a.
b.
c.
d.

ANS: D
OBJ: 8-3

PTS: 1
BLM: Remember

DIF: 2
REF: 252
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Copyright 2013 Nelson Education Ltd.

8-10

Chapter 8 Market Segmentation, Targeting, and Positioning

What should a firm do before beginning the market segmentation process?


identify bases for segmenting markets
forecast total market potential
forecast market share
select target market segments
46.

a.
b.
c.
d.

ANS: A
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PTS: 1
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DIF: 2
REF: 253
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47. While researching the idea of opening his own health club, Tomas learned that 90 percent of

health club members are between the ages of 18 and 49. They prefer to exercise with people
of their own gender, are more likely to buy foreign-brand cars, and are urban dwellers. How
can Tomas use this assembled information?
a. in observational analysis
b. in identifying dimensions for segmenting markets
c. in forecasting total market potential
d. in developing a market segment profile
ANS: D
PTS: 1
DIF: 3
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BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 253

48. What is the purpose of conducting market segmentation and market opportunity analysis in

the second stage of the market segmentation process?


to identify the specific members of each segment and contact each of them directly
to determine the level of resources that must be committed to each segment
to produce a forecast of market potential within each segment
to design a marketing strategy and tactics to reinforce the firms image

a.
b.
c.
d.

ANS: C
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PTS: 1
BLM: Remember

DIF: 2
REF: 253
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49. What factor sets the upper limit on demand generated by a particular market segment?
a. market potential for the segment under analysis
b. market share held by the firm
c. geographic dispersion of potential customers
d. lifestyle characteristics of area population
ANS: A
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PTS: 1
BLM: Remember

DIF: 2
REF: 253
NOT: AACSB Analytic | TB&E Model Strategy

50. In the process of market segmentation, what is the next step once market potential has been

estimated?
forecast probable market share
determine potential sales
develop a marketing mix
seek strategies to meet the outcomes

a.
b.
c.
d.

ANS: A
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PTS: 1
BLM: Remember

DIF: 2
REF: 253
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Copyright 2013 Nelson Education Ltd.

8-11

Chapter 8 Market Segmentation, Targeting, and Positioning


51. In the market segmentation process, what can be expected from demand forecasts and cost

projections used to determine the profit and return on investment?


certain demographics
each market segment being considered
the overall population
the general marketing mix

a.
b.
c.
d.

ANS: B
OBJ: 8-4

PTS: 1
BLM: Remember

DIF: 3
REF: 253
NOT: AACSB Analytic | TB&E Model Strategy

52. Regina is an independent strategy consultant. She has guided her clients company through the

market segmentation process and has posed the question: Does the potential for achieving
company goals justify committing resources to develop each or any of these segments? What
stage of the market segmentation process is the company at?
a. estimating cost-benefit for each segment
b. developing a relevant profile for each segment
c. forecasting market potential
d. selecting specific market segments
ANS: D
PTS: 1
DIF: 3
OBJ: 8-4
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 253

53. What would be the best choice of product to market using an undifferentiated marketing

strategy?
luxury automobiles
snack foods
table salt
imported wine

a.
b.
c.
d.

ANS: C
PTS: 1
DIF: 1
OBJ: 8-4
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 254

54. From which point of view is an undifferentiated marketing strategy efficient?


a. It serves the consumer better because the products offered are designed to meet the

needs of a specific group of people.


b. It maintains control of short production runs.
c. It captures high profits in small segments of the market.
d. It supports mass production and promotion.
ANS: D
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PTS: 1
BLM: Remember

DIF: 2
REF: 254
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Copyright 2013 Nelson Education Ltd.

8-12

Chapter 8 Market Segmentation, Targeting, and Positioning

What is the strategy that is sometimes referred to as mass marketing?


concentrated marketing
macromarketing
undifferentiated marketing
differentiated marketing
55.

a.
b.
c.
d.

ANS: C
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PTS: 1
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DIF: 1
REF: 254
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56. The Gap markets apparel to children, teens, and adults through different storefronts, including

The Gap, Gap Kids, and Baby Gap. What is this practice called?
undifferentiated marketing
differentiated marketing
mass marketing
micromarketing

a.
b.
c.
d.

ANS: B
PTS: 1
DIF: 2
OBJ: 8-4
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 254

57. As compared with undifferentiated marketing, what might the firm that practises differentiated

marketing generally expect?


fewer sales by segment
lower total production costs
greater total promotional costs
lower inventory costs

a.
b.
c.
d.

ANS: C
OBJ: 8-4

PTS: 1
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DIF: 2
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy

58. What can sometimes drive a company from undifferentiated to differentiated marketing?
a. competitive pressures
b. efficient production
c. homogeneous products
d. lower promotional costs
ANS: A
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PTS: 1
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DIF: 3
REF: 254
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59. What is a firm practising when it chooses to target potential customers by postal code, specific

occupation, or even lifestyle?


a. megamarketing
b. hypermarketing
c. micromarketing
d. concentrated marketing
ANS: C
OBJ: 8-4

PTS: 1
BLM: Remember

DIF: 1
REF: 255
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Copyright 2013 Nelson Education Ltd.

8-13

Chapter 8 Market Segmentation, Targeting, and Positioning

What marketing strategy does Burts Bees skin-care products, manufactured


with all natural ingredients, use?
a. undifferentiated marketing
b. differentiated marketing
c. micromarketing
d. concentrated marketing
60.

ANS: D
PTS: 1
DIF: 2
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BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 254

61. Which of the following LEAST describes concentrated marketing?


a. It is very effective for large corporate competitors that have marketplace clout.
b. Firms that wish to focus on multiple segments utilize it.
c. It is an effective strategy for specialty or unique products.
d. It is more impacted by shifts in consumer buying habits and other external factors.
ANS: A
PTS: 1
DIF: 2
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BLM: Higher Order
NOT: AACSB Analytic | TB&E Model Strategy

REF: 254-255

62. What strategy is a company using when they choose to focus its efforts on satisfying only one

market segment for profit?


a. niche marketing
b. elimination marketing
c. undifferentiated marketing
d. designer marketing
ANS: A
PTS: 1
DIF: 2
OBJ: 8-4
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 254

63. Why are micromarketing techniques used?


a. primarily to sell services or other intangibles
b. to maximize revenue potential of large firms that have abundant financial resources

only by mass marketers


c. for the sale of industrial goods by vendors only
d. to target very specific groups or individuals
ANS: D
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DIF: 1
REF: 255
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Copyright 2013 Nelson Education Ltd.

8-14

Chapter 8 Market Segmentation, Targeting, and Positioning

What interactive medium might help micromarketers boost the effectiveness of


their strategy by tracking specific demographics and communicating directly to individuals
who are MOST likely to buy that product?
a. customized direct-mail packages
b. the Internet
c. personalized telemarketing messages
d. fax marketing
64.

ANS: B
OBJ: 8-4

PTS: 1
BLM: Remember

DIF: 2
REF: 255
NOT: AACSB Analytic | TB&E Model Strategy

65. Which of the following is one of the basic determinants of a market-specific segmentation

strategy?
product demand
competitors strategies
environmental constraints
organizational efficiencies

a.
b.
c.
d.

ANS: B
OBJ: 8-4

PTS: 1
BLM: Remember

DIF: 1
REF: 255
NOT: AACSB Analytic | TB&E Model Strategy

66. What is the basis for a positioning strategy that uses the slogan Crest is a cavity fighter?
a. product price/quality
b. product class
c. product attributes
d. product users
ANS: C
PTS: 1
DIF: 2
OBJ: 8-5
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 256

67. What positioning strategy would use the slogan You dont pay more, you get more?
a. price/quality
b. attributes
c. users
d. competitors
ANS: A
PTS: 1
DIF: 2
OBJ: 8-5
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 256

68. What are marketers who apply a positioning strategy wanting to do?
a. make their product look as much like the market leader as possible
b. emphasize a products unique advantages
c. make sure they clearly outline the products possible applications
d. talk to specific, known users of the product
ANS: B
OBJ: 8-5

PTS: 1
BLM: Remember

DIF: 3
REF: 255-256
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-15

Chapter 8 Market Segmentation, Targeting, and Positioning

What does a positioning map demonstrate?


which companies utilize undifferentiated marketing strategies
what will remain constant through the entire product life cycle
how consumers view a product relative to competitive products
how to introduce a new product to the marketplace
69.

a.
b.
c.
d.

ANS: C
OBJ: 8-5

PTS: 1
BLM: Remember

DIF: 1
REF: 256
NOT: AACSB Analytic | TB&E Model Strategy

70. Home Depot introduced a new line of riding lawn mowers. However, the company believed

the residence location of the population in certain areas did not merit carrying the mowers in
that population. Which of the following BEST describes why the company MOST likely made
this decision?
a. it decided to use concentrated marketing
b. it determined the market was saturated.
c. it decided to re-position the product
d. it determined re-segmentation was necessary.
ANS: B
PTS: 1
DIF: 3
OBJ: 8-2
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 236-237

71. A company is advertising a new cordless shaver during the Grey Cup and NHL telecasts,

enabling the cordless shaver to become a big success. What was the MOST likely market
segmentation strategy used?
a. Lifestyle
b. Usage rates
c. Gender
d. Household type
ANS: C
PTS: 1
DIF: 3
OBJ: 8-2
BLM: Higher Order
NOT: AACSB Reflective Thinking | TB&E Model Strategy

REF: 238-252

TRUE/FALSE
1. A market comprises any person or entity that has the willingness, authority, and purchasing

power to buy a product.


ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Customer

2. By identifying, evaluating, and selecting a target market to pursue, marketers are able to

develop more efficient and effective marketing strategies.


ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-16

Chapter 8 Market Segmentation, Targeting, and Positioning

The target market for a product is the specific segment of consumers most
likely to purchase that particular product.
3.

ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Strategy

4. Consumer products are items purchased by consumers or businesses to be used in their homes,

offices, or factories.
ANS: F
OBJ: 8-1

PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Product

5. Business products are defined as contributing directly to the production of other goods.
ANS: F
OBJ: 8-1

PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Product

6. Goods and services generally purchased by manufacturers are classified as business products.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Strategy

7. A hotel purchases towels for use in its rooms. These towels are considered business products.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 2
REF: 234
NOT: AACSB Reflective Thinking | TB&E Model Strategy

8. Items can be classified as business products not because of what they are but because of how

they will be used, such as shovels and rakes purchased by a lawn care service.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 2
REF: 234
NOT: AACSB Reflective Thinking | TB&E Model Product

9. Since rubber purchased by Goodyear is utilized to manufacture tires that are ultimately used

by consumers on the automobiles they purchase, rubber is a consumer product for Goodyear.
ANS: F
OBJ: 8-1

PTS: 1
DIF: 2
REF: 234
NOT: AACSB Reflective Thinking | TB&E Model Strategy

10. When a product or service purchased by a business does NOT contribute directly to the

production of other goods, such as legal services, it is defined as a consumer product.


ANS: F
OBJ: 8-1

PTS: 1
DIF: 2
REF: 234
NOT: AACSB Reflective Thinking | TB&E Model Strategy

11. The question that determines whether a product will be a consumer or business product is

Who will ultimately consume this product?


ANS: F
OBJ: 8-1

PTS: 1
DIF: 2
REF: 234
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-17

Chapter 8 Market Segmentation, Targeting, and Positioning


12. A firm that uses market segmentation assumes that different types of customers with different

needs, preferences, and purchasing power can be served by a single marketing mix.
ANS: F
OBJ: 8-1

PTS: 1
DIF: 1
REF: 235
NOT: AACSB Analytic | TB&E Model Strategy

13. The division of the total market into smaller, relatively homogeneous groups is called market

selectivity.
ANS: F
OBJ: 8-5

PTS: 1
DIF: 1
REF: 235
NOT: AACSB Analytic | TB&E Model Strategy

14. United Way would NOT benefit from implementing market segmentation techniques because

such techniques are inappropriate for not-for-profits.


ANS: F
OBJ: 8-1

PTS: 1
DIF: 1
REF: 235
NOT: AACSB Reflective Thinking | TB&E Model Strategy

15. Even though there is a make, model, and colour of car for virtually every taste and budget,

automobile manufacturers must still adjust their messages for different market segments.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 2
REF: 235
NOT: AACSB Analytic | TB&E Model Strategy

16. PlaySports manufactures apparel for youth sports teams. The attire can be customized with the

team logo and the childs name. This customization costs the manufacturer very little,
enabling it to sell uniforms for less than $30. PlaySports is successful because it has matched
its market segment with its capabilities.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 2
REF: 235-236
NOT: AACSB Reflective Thinking | TB&E Model Strategy

17. The market segmentation process must consider the size and purchasing power of market

segments.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 235-236
NOT: AACSB Analytic | TB&E Model Strategy

18. Compared to women, men have greater influence and purchasing power when it comes to

product categories like electronics and home improvements.


ANS: F
OBJ: 8-1

PTS: 1
DIF: 2
REF: 235
NOT: AACSB Analytic | TB&E Model Strategy

19. Targeting a large number of small, niche markets can be an expensive, complex, and

inefficient marketing strategy.


ANS: T
OBJ: 8-1

PTS: 1
DIF: 2
REF: 236
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-18

Chapter 8 Market Segmentation, Targeting, and Positioning


20. The number and size of the market segments chosen by a firm must match, not exceed, its

marketing capabilities.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 235-36
NOT: AACSB Analytic | TB&E Model Strategy

21. Market segmentation attempts to isolate traits that distinguish a certain group from the overall

market, as well as seeking to pinpoint factors affecting their buying behaviour.


ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 236
NOT: AACSB Analytic | TB&E Model Strategy

22. Singles, families, and retirees could be considered market segments for a company promoting

travel packages.
ANS: T
OBJ: 8-1

PTS: 1
DIF: 1
REF: 236
NOT: AACSB Reflective Thinking | TB&E Model Customer

23. Currently, the two largest cities in the world are Shanghai, China, and Bombay, India.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 237
NOT: AACSB Analytic | TB&E Model Strategy

24. A marketing segmentation strategy aimed at women is unlikely to work because women are

too diverse a group.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 239
NOT: AACSB Analytic | TB&E Model Strategy

25. The geographic segmentation is useful because consumers in a specific geographic location

will make the same buying decisions.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 236-237
NOT: AACSB Analytic | TB&E Model Strategy

26. The Canadian population is distributed uniformly across the country.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 237
NOT: AACSB Analytic | TB&E Model Strategy

27. Montreal is the largest city in Canada in terms of population due to the large number of

immigrants who have settled there.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 236
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-19

Chapter 8 Market Segmentation, Targeting, and Positioning

A census metropolitan area (CMA) is considered to be the largest government


classification of urban data in Canada.
28.

ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 238
NOT: AACSB Analytic | TB&E Model Strategy

29. To be considered a census agglomeration (CA) the geographical area must have a population

greater than 100 000.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 238
NOT: AACSB Analytic | TB&E Model Strategy

30. Residence location within an area is an important geographic segmentation variable.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 238
NOT: AACSB Analytic | TB&E Model Strategy

31. Firms define core regions as the locations where they obtain between 40 and 80 percent of

their sales.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 238
NOT: AACSB Analytic | TB&E Model Strategy

32. Geographic information systems (GIS) simplify the job of analyzing marketing information

by placing data in a spatial format. The result is a map overlaid with digital data about
consumers in a given area.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 238-239
NOT: AACSB Technology | TB&E Model Strategy

33. Application of the geographic information systems may prove to be a sound investment for

companies because it allows them to better plan the logistics of delivery, transportation, and
warehousing, ensuring that valuable capital is not tied up in inefficiently placed assets.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 238-239
NOT: AACSB Technology | TB&E Model Strategy

34. Demographic segmentation is also sometimes called psychographic segmentation.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 239
NOT: AACSB Analytic | TB&E Model Strategy

35. Demographic segmentation was, at one time, the most common type of market segmentation

method. However, technological advances have made it less common today than other forms
of market segmentation.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 239
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-20

Chapter 8 Market Segmentation, Targeting, and Positioning


36.
ANS: T
OBJ: 8-2

One of the main sources for demographic data in Canada is Statistics Canada.
PTS: 1
DIF: 1
REF: 239
NOT: AACSB Analytic | TB&E Model Strategy

37. Sociologists attribute differences in needs and wants between age groups to the cohort effect.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 242
NOT: AACSB Analytic | TB&E Model Strategy

38. Marketers have labelled people who were in the 1722-year-old age bracket at the time of the

September 11, 2001 terrorist attacks the 9/11 Generation.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 243
NOT: AACSB Analytic | TB&E Model Strategy

39. Population age distribution and projected changes in age groups are important to marketers

because consumer needs and wants differ notably among age groups.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 240
NOT: AACSB Analytic | TB&E Model Strategy

40. Marketers are increasingly shying away from children and teen market segments because of

pressures calling for social responsibility on the part of advertisers.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 240
NOT: AACSB Analytic | TB&E Model Strategy

41. Children can have a significant impact on household food purchases, while tweens can

influence the purchase of cell phones and automobiles.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 240
NOT: AACSB Analytic | TB&E Model Strategy

42. Generation X is family oriented, educated, and less likely to define themselves by their careers

alone than previous generations.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 241
NOT: AACSB Analytic | TB&E Model Strategy

43. With a 30-year span, baby boomers are too large a population with too many varying life

stages to be useful to marketers.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 241
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-21

Chapter 8 Market Segmentation, Targeting, and Positioning

Baby boomers are decreasing in popularity as a market segment due to their


declining disposable income.
44.

ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 241
NOT: AACSB Analytic | TB&E Model Strategy

45. Senior citizens today are a homogeneous group with common needs and characteristics.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 242
NOT: AACSB Analytic | TB&E Model Strategy

46. In Canada, the three largest groups, which account for 75 percent of those indicating an ethnic

category are Chinese, South Asians, and Blacks.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 244
NOT: AACSB Analytic | TB&E Model Strategy

47. According to Jacques Bouchard, compared to the rest of Canada, Quebecers have a higher

tolerance and crave the simple life.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 244
NOT: AACSB Analytic | TB&E Model Strategy

48. Most Chinese Canadians come from the same areas of the world and share similar shopping

habits.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 244
NOT: AACSB Analytic | TB&E Model Strategy

49. Chinese Canadian consumers have been described as value and brand conscious.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 245
NOT: AACSB Analytic | TB&E Model Strategy

50. The Southeast Asian group is the largest ethnic group in Canada.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 244
NOT: AACSB Analytic | TB&E Model Strategy

51. A marketer segmenting by family life cycle will focus on age as the major determinant of

consumer purchases.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 245
NOT: AACSB Analytic | TB&E Model Strategy

52. One family-life-cycle trend noted by researchers in the past decade is an increase in

boomerang children.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 247
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-22

Chapter 8 Market Segmentation, Targeting, and Positioning


53. Compared to a century ago, the average woman gives birth to fewer children and waits until

she is older to have them.


ANS: T
OBJ: 8-2

PTS: 1

DIF: 2

REF: 246

54. Some industries that might benefit from the empty-nester life cycle are the travel, restaurant,

and automotive industries, along with vacation real estate and institutions of higher education.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 246-247
NOT: AACSB Reflective Thinking | TB&E Model Strategy

55. The average household size in Canada has shrunk to a new low of five people.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 247
NOT: AACSB Analytic | TB&E Model Strategy

56. The trend of couples living common-law is the strongest in Quebec.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 1
REF: 247
NOT: AACSB Analytic | TB&E Model Strategy

57. The fact that food industry manufacturers are downsizing products and offering more single-

serve foods is due to the increase in the number of same-sex couples.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 247
NOT: AACSB Analytic | TB&E Model Strategy

58. According to Ernst Engels laws, the percentage of income spent on food rises with increased

income.
ANS: F
OBJ: 8-2

PTS: 1
DIF: 2
REF: 248
NOT: AACSB Analytic | TB&E Model Strategy

59. One of Engels laws says the percentage spent on housing, household operations, and clothing

remains constant. In recent years, however, this has been challenged. In fact, the percentage of
income spent on these items has increased over the years.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 248
NOT: AACSB Analytic | TB&E Model Strategy

60. One of the difficulties of demographic segmentation in international markets is that many

countries do not have a scheduled collection of census data.


ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 249
NOT: AACSB Analytic | TB&E Model Strategy

61. A common method of developing psychographic profiles of a population is to conduct a large-

scale survey that asks consumers to agree or disagree with several hundred AIO (Activities,
Interests, and Opinions) statements.

Copyright 2013 Nelson Education Ltd.

8-23

ANS: T
OBJ: 8-2

Chapter 8 Market Segmentation, Targeting, and Positioning


PTS: 1
DIF: 2
REF: 249
NOT: AACSB Analytic | TB&E Model Strategy

62. The VALS theory measures two variablesan individuals resources and self-motivation

and plots them on a grid of eight defining personalities. The assumption is that each of the
eight personalities will exhibit a certain type of buying behaviour.
ANS: T
OBJ: 8-2

PTS: 1
DIF: 2
REF: 250
NOT: AACSB Analytic | TB&E Model Strategy

63. Psychographic profiles do NOT cross national boundaries.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 251
NOT: AACSB Analytic | TB&E Model Strategy

64. A marketer that is interested in finding out the lifestyle profile of the consumers in its target

market would find demographic segmentation tools the most useful.


ANS: F
OBJ: 8-2

PTS: 1
DIF: 1
REF: 251
NOT: AACSB Analytic | TB&E Model Strategy

65. The management-driven method of identifying market segments asks customers which

attributes of a product are important to them and clusters responses to identify potential
segments.
ANS: F
OBJ: 8-4

PTS: 1
DIF: 1
REF: 253
NOT: AACSB Analytic | TB&E Model Strategy

66. Product-related segmentation focuses on such attributes as product availability and common

use.
ANS: F
OBJ: 8-3

PTS: 1
DIF: 1
REF: 252
NOT: AACSB Analytic | TB&E Model Strategy

67. The 80/20 principle holds that a small percentage of loyal customers generate the bulk of

sales.
ANS: T
OBJ: 8-3

PTS: 1
DIF: 1
REF: 252
NOT: AACSB Analytic | TB&E Model Strategy

68. According to the 80/20 principle, nonusers and light users are NOT consumer prospects worth

pursuing.
ANS: F
OBJ: 8-3

PTS: 1
DIF: 1
REF: 252
NOT: AACSB Analytic | TB&E Model Strategy

69. A marketer that develops a profile of the typical customer that includes information about

lifestyle patterns and product-use habits is in the stage of the market segmentation process in
which market potential is forecasted.
ANS: F

PTS: 1

DIF: 1

Copyright 2013 Nelson Education Ltd.

REF: 252
8-24

OBJ: 8-3

Chapter 8 Market Segmentation, Targeting, and Positioning


NOT: AACSB Analytic | TB&E Model Strategy

70. After a company develops a profile for its market segment and a forecast of market potential,

the next step is to estimate market share.


ANS: T
OBJ: 8-4

PTS: 1
DIF: 1
REF: 253
NOT: AACSB Analytic | TB&E Model Strategy

71. The information, analysis, and forecasts accumulated through the entire market segmentation

decision process allow management to assess the potential for achieving company goals and
to justify committing resources to develop one or more segments.
ANS: T
OBJ: 8-4

PTS: 1
DIF: 3
REF: 253
NOT: AACSB Reflective Thinking | TB&E Model Strategy

72. Having chosen a market segment to target, the firm must design strategy and tactics to

reinforce its image, yet keep within its unique organizational capabilities.
ANS: T
OBJ: 8-4

PTS: 1
DIF: 1
REF: 253
NOT: AACSB Analytic | TB&E Model Strategy

73. The success of the market segmentation process depends heavily on a companys ability to use

forecasting methods.
ANS: T
OBJ: 8-4

PTS: 1
DIF: 2
REF: 253
NOT: AACSB Analytic | TB&E Model Strategy

74. Historically, Nivea skin care products were marketed and sold exclusively to women. A new

product line called Nivea for Men has been recently introduced and is targeted to men and is
considered differentiated marketing.
ANS: T
OBJ: 8-4

PTS: 1
DIF: 1
REF: 254
NOT: AACSB Reflective Thinking | TB&E Model Strategy

75. The most expensive way to market is undifferentiated marketing because a company is

spending a large amount of promotional dollars to reach a vast audience, the majority of
whom might not be interested in purchasing the product.
ANS: F
OBJ: 8-4

PTS: 1
DIF: 2
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-25

Chapter 8 Market Segmentation, Targeting, and Positioning

One product class that has been successful with undifferentiated marketing
strategies has been magazines.
76.

ANS: F
OBJ: 8-4

PTS: 1
DIF: 2
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy

77. Up & Away Flying Corporation recently began manufacturing small aircraft for private use.

The planes are made one at a time in a small, four-person factory. As a result of its small size
and lack of financial resources, concentrated marketing might be the ideal marketing strategy
in order to compete with larger firms in the industry.
ANS: T
OBJ: 8-4

PTS: 1
DIF: 2
REF: 254
NOT: AACSB Reflective Thinking | TB&E Model Strategy

78. Another name for concentrated marketing is niche marketing.


ANS: T
OBJ: 8-4

PTS: 1
DIF: 1
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy

79. Concentrated marketing disperses the firms marketing effort among several segments and an

upturn in demand in one segment can negatively affect sales in another.


ANS: F
OBJ: 8-4

PTS: 1
DIF: 2
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy

80. Gourmet products are more likely to be successful when a concentrated marketing strategy is

employed.
ANS: T
OBJ: 8-4

PTS: 1
DIF: 1
REF: 254-255
NOT: AACSB Reflective Thinking | TB&E Model Strategy

81. By implementing micromarketing, a small company with limited resources can chip away at a

large market share of a competitor practising undifferentiated marketing.


ANS: T
OBJ: 8-4

PTS: 1
DIF: 3
REF: 255
NOT: AACSB Reflective Thinking | TB&E Model Strategy

82. When a consumer product such as toilet paper is sold in bulk quantities to businesses, the

paper products company is involved in micromarketing.


ANS: F
OBJ: 8-4

PTS: 1
DIF: 1
REF: 255
NOT: AACSB Reflective Thinking | TB&E Model Strategy

83. Micromarketers run the risk that they may spend too much time, effort, and money to reach a

market that is too small and specialized to be profitable.


ANS: T
OBJ: 8-4

PTS: 1
DIF: 1
REF: 255
NOT: AACSB Analytic | TB&E Model Strategy

84. Applying a micromarketing strategy will allow companies to reach larger and more lucrative

markets.
Copyright 2013 Nelson Education Ltd.

8-26

Chapter 8 Market Segmentation, Targeting, and Positioning


ANS: F
OBJ: 8-4

PTS: 1
DIF: 1
REF: 255
NOT: AACSB Analytic | TB&E Model Strategy

85. When Chevy advertises that its Suburban truck is Like a Rock, Chevy is positioning the

Suburban according to a product class strategy.


ANS: F
OBJ: 8-5

PTS: 1
DIF: 3
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

86. When analyzing the toothpaste market, there are products that control tartar, fight cavities,

freshen breath, and whiten teeth. It is correct to say the toothpaste market is utilizing product
positioning.
ANS: T
OBJ: 8-5

PTS: 1
DIF: 2
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

87. Aviss slogan, We try harder, represents an attempt by the company to position itself with

respect to one of its competitors.


ANS: T
OBJ: 8-5

PTS: 1
DIF: 2
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

88. Firms such as Lexus and Gucci try to position their products in terms of product class.
ANS: T
OBJ: 8-5

PTS: 1
DIF: 2
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

89. A positioning map provides a valuable tool to help position products by graphically

illustrating consumers perceptions of competing products within an industry.


ANS: T
OBJ: 8-5

PTS: 1
DIF: 1
REF: 256
NOT: AACSB Analytic | TB&E Model Strategy

90. Marketers can create a competitive positioning map from information solicited from

competitors or from public databases that track consumer attitudes, opinions, and interests.
ANS: F
OBJ: 8-5

PTS: 1
DIF: 2
REF: 256
NOT: AACSB Analytic | TB&E Model Strategy

91. BMW wanted to move beyond its yuppie image in order to attract buyers from the affluent car

market, 75 percent of whom were not considering a BMW purchase. The new advertising
campaign emphasizes that BMW is a company of ideas and its cars are built for the
creative class. This repositioning moves BMW from an attributes position strategy to an
applications position strategy.
ANS: F
OBJ: 8-5

PTS: 1
DIF: 3
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

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Chapter 8 Market Segmentation, Targeting, and Positioning


92. Kims Egg Rolls were long promoted as a Chinese dinner item. However, when the product

was evaluated by consumers, research showed they were seen as snacks, not mealtime items.
The company decided to change its packaging and advertising to advocate the idea of egg
rolls as an afternoon or midnight treat. This is an example of repositioning a product.
ANS: T
OBJ: 8-5

PTS: 1
DIF: 2
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

ESSAY
1. Discuss the differences between the business and consumer product markets.
ANS:

Consumer products are purchased by the ultimate consumer for personal or household use.
Business products are purchased for use either directly or indirectly in the production of
other goods or services for resale. Sometimes the same product may fall into any of these
classifications, depending on its intended use or who purchases it.
PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Product

OBJ: 8-1

2. Give examples of how each product listed can be classified as either a consumer and/or

business product.
a. shampoo
b. steel bars for concrete reinforcement
c. lawn mower
d. computer
e. automobile
ANS:

Shampoo is normally a consumer product unless it is purchased by a hair salon for use in
servicing customers. Steel bars would normally be considered a business product unless a
consumer purchases them from Home Depot to use in a do-it-yourself project. A lawn mower
could be purchased by a homeowner (a consumer product) but could also be purchased by a
lawn care company (used in the production of a service). Both computers and automobiles can
be consumer purchases or business products purchased by an organization for sales
operations.
PTS: 1
DIF: 3
REF: 234-235
NOT: AACSB Reflective Thinking | TB&E Model Product

Copyright 2013 Nelson Education Ltd.

OBJ: 8-1

8-28

Chapter 8 Market Segmentation, Targeting, and Positioning

Discuss the concept of market segmentation and how it relates to consumers


and businesses.
3.

ANS:

Market segmentation is the division of the total market into smaller, relatively homogeneous
groups. A target market is the specific segment of customers most likely to purchase a
particular product. Consumer products are those purchased by ultimate consumers for
personal use. Business products are goods and services purchased for use either directly or
indirectly in the production of other goods and services for resale. All businesses, taken
together, make up the business market. Both the business market and the consumer market can
be further segmented into a large number of market segments, any one of which might be a
target market for a particular product.
PTS: 1
DIF: 3
REF: 235 236
NOT: AACSB Analytic | TB&E Model Strategy

OBJ: 8-1

4. What are the basic requirements or criteria for effective market segmentation?
ANS:

a.
b.
c.
d.

Market segments must present measurable purchasing power and size.


It must be possible and feasible to effectively promote to and serve a market segment.
Identified market segments must be large enough to be potentially profitable.
The number and size of chosen segments must match the firms marketing capabilities.

PTS: 1
DIF: 2
REF: 235-236
NOT: AACSB Analytic | TB&E Model Strategy

OBJ: 8-1

5. Explain why the cohort effect is important to marketers.


ANS:

The cohort effect is the tendency of members of a generation to be influenced and bound
together by significant events occurring during their key formative years, roughly 17 to 22
years old. These events help to define core values of the age group that eventually shape
consumer preferences and behaviour. These shared experiences tend to form the generations
long-term beliefs and values.
PTS: 1
DIF: 2
REF: 24
NOT: AACSB Reflective Thinking | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

OBJ: 8-2

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Chapter 8 Market Segmentation, Targeting, and Positioning

What does age segmentation tell a researcher about marketing opportunities?


List the major age segments, and describe the buying characteristics of each segment.
6.

ANS:

Marketers segment by age because it is an easy distinction to make. Even though products can
be marketed toward more than one group, the products marketed to each age are usually
distinctive. The first group of note is the cohort effector individuals who were 1722 years
of age during the same time in history. Their long-term beliefs and values were shaped by the
historical events of that time and may be reflected in their purchasing decisions. Cohort
groups include baby boomers and Generation X. Other age segments include seniors, children,
tweens, and teens. Children, tweens, and teens influence purchases of food, candy, video
games, electronics, and music. Automobile purchases can be directly (opinions) or indirectly
(car seats) impacted by children, tweens, and teens. Generation Xers are family oriented and
savvy with electronics, which reflects in their purchases. Baby boomers are straddling so
many different life cycle segments they are hard to categorize, except they are still into health,
fitness, and quality of life. Older boomers and seniors hold most of the countrys financial
assets.
PTS: 1
DIF: 3
REF: 240-242
NOT: AACSB Analytic | TB&E Model Strategy

OBJ: 8-2

7. Why would a marketer be interested in understanding a persons family life cycle stage? Give

an example.
ANS:

The underlying theme of family life cycle segmentation is that life cycle stage is the primary
determinant of many consumer purchases. An example would be baby products. Unlike
previous generations, today it is not uncommon for couples in their late 30s or early 40s to
have young children. If segmenting by age, marketers might consider this age group to be too
old to be interested in baby products, but they would target this group if segmenting by family
life cycle.
PTS: 1
DIF: 3
REF: 245-246
NOT: AACSB Reflective Thinking | TB&E Model Strategy

OBJ: 8-2

8. Explain Engles three laws. Why are they of interest to marketers?


ANS:

According to Engles three laws, as income rises


a. a smaller percentage of expenditures goes for food.
b. the percentage spent on housing and clothing remains about the same.
c. the percentage spent on other items, such as recreation and education, increases.
Engles laws provide the marketing manager with useful rules about the types of consumer
demand that evolve with increased income. These laws can also help marketers evaluate the
potential of a target market at all income levels.
PTS: 1
DIF: 2
REF: 247-249
NOT: AACSB Reflective Thinking | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

OBJ: 8-2

8-30

Chapter 8 Market Segmentation, Targeting, and Positioning


9. Identify the six psychographic consumer segments worldwide, as defined in the VALs

framework. In what countries are these groups typically found?


ANS:

Striversvalue professional and material goods; one-third of the Asian population are
strivers.
Devoutsvalue duty and tradition; typically found in Africa, the Middle East, and developing
Asia.
Altruistsemphasize asocial issues; most common in Latin America and Russia
Intimatesvalue family and personal relationships; most common in North America and
Europe
Fun seekersfocus on personal enjoyment; most common in developed Asia
Creativesseeks education, technology, and knowledge; most common in western Europe
and Latin America
PTS: 1
DIF: 3
REF: 251
NOT: AACSB Analytic | TB&E Model Strategy

OBJ: 8-2

10. Identify the steps in the market segmentation process.


ANS:

a.
The first stage identifies the market segmentation process to be used: management
driven or market driven.
b.
The second stage requires development of a relevant customer profile for each segment.
c.
The third stage calls for development of a forecast of market potential.
d.
The fourth stage forecasts probable market share.
e.
The fifth stage results in the selection of specific market segments for development.
PTS: 1
DIF: 2
REF: 253-254
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

OBJ: 8-4

8-31

Chapter 8 Market Segmentation, Targeting, and Positioning


11.

Identify and describe four strategies for reaching target markets.

ANS:

a.
Undifferentiated marketing, also known as mass marketing, is undertaken by firms that
produce only one product or product line, and market it to all customers with a single
marketing mix. It was a much more common practice in the past than today.
b.
Differentiated marketing is a strategy aimed at satisfying a large part of the total market,
but instead of marketing one product with a single marketing program, the organization
markets a number of products designed to appeal to individual parts of the total market. Most
firms practise differentiated marketing.
c.
Concentrated marketing is also known as niche marketing. Rather than attempting to
market its product offerings to several market segments, a firm chooses to focus its entire
efforts on profitably satisfying only one market segment. This strategy is particularly
appealing to small firms that lack the financial resources of their competitors.
d.
Micromarketing is more narrowly focused than concentrated marketing; it involves
targeting potential customers at a very basic level, such as postal code, specific occupation, or
individual lifestyle.
PTS: 1
DIF: 3
REF: 254-255
NOT: AACSB Analytic | TB&E Model Strategy

OBJ: 8-4

12. List and provide an example of each of the six positioning strategies.
ANS:

A product may be positioned on the basis of its


a. attributesAim toothpaste controls tartar
b. price/qualitySpur gasoline is good gas, reasonably priced
c. competitorsAvis is number two, so we try harder
d. applicationsDrano opens clogged drains
e. product usersMiller High Life is for the blue-collar, heavy beer drinker
f. product classHoney Nut Cheerios are a breakfast food
PTS: 1
DIF: 3
REF: 256
NOT: AACSB Reflective Thinking | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

OBJ: 8-5

8-32

Chapter 8 Market Segmentation, Targeting, and Positioning


13.

What is a positioning map? How does the map assist a firm with repositioning

decisions?
ANS:

A positioning map provides a graphical illustration of consumers perceptions of competing


products within an industry. Usually such a map presents two different characteristics, such as
price and perceived quality, and shows how consumers view a product and its major
competitors based on these traits.
Repositioning means changing the position a product holds in the minds of prospective buyers
relative to the positions of competing products. Sometimes changes in the competitive
environment force repositioning, even for successful products. The positioning map helps
marketers see the products current position and may help them decide where to best
reposition it.
PTS: 1
DIF: 2
REF: 256
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

OBJ: 8-5

8-33

Chapter 8 Market Segmentation, Targeting, and Positioning


MATCHING

Match each item to the statement or sentence listed below.


target market
market segmentation
cohort effect
census metropolitan area (CMA)
differentiated marketing
concentrated marketing
micromarketing
positioning map
VALS
AIO statement
core region
consumer product
demographic segmentation
80/20 principle
psychographic segmentation
geographic information system (GIS)

a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
m.
n.
o.
p.

1. A geographic area that generates 40 percent to 80 percent of a companys sales is called a(n)
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.

_____.
A product that is purchased for use by an individual is called a(n) _____.
The division of a market into smaller, relatively homogeneous groups is called _____.
is a psychographic segmentation system based on two key concepts: resources and selfmotivation.
defines consumer groups according to variables such as gender, age, income, occupation, and
stage in the family life cycle.
A(n) _____ creates a graphical illustration of consumers perceptions of competing products.
is a geographic area surrounding an urban core with a population of at least 100 000 or more.
With _____, a company focuses its efforts on profitably satisfying a single market segment.
focuses on producing several products and using different marketing mixes designed to satisfy
smaller segments.
A computer system that can tie location data to market data is called a(n) _____.
A(n) _____ is a specific segment of consumers or businesses that are most likely to purchase a
companys product.
describes an activity, interest, or opinion that allows researchers to develop lifestyle profiles.
The _____ occurs when a generation of individuals are impacted by current events during the
formative years of 17 to 22.
is the targeting of a market based on a single variable level such as postal code, occupation,
medical condition, or past purchase.
The idea that a small number of loyal consumers will generate the majority of a firms revenue
is called the _____.
Dividing a population into similar values, beliefs, and lifestyles is called _____.

Copyright 2013 Nelson Education Ltd.

8-34

2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.

OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:
ANS:
OBJ:

1.
8-2
L
8-1
B
8-1
I
8-2
M
8-2
H
8-5
D
8-2
F
8-4
E
8-4
P
8-2
A
8-1
J
8-2
C
8-2
G
8-4
N
8-3
O
8-2

Chapter 8 Market Segmentation, Targeting, and Positioning


ANS: K
PTS: 1
DIF: 1
REF: 238
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 235
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 250
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 239
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 256
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 238
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 254
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 239
NOT: AACSB Technology | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 234
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 249
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 242
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 255
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 252
NOT: AACSB Analytic | TB&E Model Strategy
PTS: 1
DIF: 1
REF: 249
NOT: AACSB Analytic | TB&E Model Strategy

Copyright 2013 Nelson Education Ltd.

8-35