Chapter 1 Marketing A Focus on Customer Relationships and Value (DOC)

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					      Chapter 9 – Market Segmentation, Targeting and Positioning

       Market segmentation groups consumers on the basis of two major criteria. The members of groups
       must both:

       a.   represent a large share of the entire market, and have critical buying power.
       b.   have common needs, and respond similarly to market actions.
       c.   have different needs, and have potential for future growth.
       d.   have different needs, and respond similarly to market actions.
       e.   have potential for future growth, and have potential for increased profit or ROI.

       When Procter & Gamble introduced Crest toothpaste, the first fluoride toothpaste, it was intended
       for use by children and was therefore given a child-appealing bubblegum flavor. Some time later
       the same basic formula was given a fresh, minty flavor to appeal to adults. What is this marketing
       strategy called?

       a.   Product sampling
       b.   Product extrapolation
       c.   Product differentiation
       d.   Usage segmentation
       e.   Psychographic segmentation

       Some Timex wristwatches can be purchased for less than $10; some Rolex wristwatches carry a
       price tag of several thousand dollars. In general, consumers view Timex watches as being
       dependable, relatively accurate, and inexpensive. The Rolex brand tends to be perceived as an
       expensive status symbol. Timex watches can be purchased in drug stores, discount stores, and
       department stores in cities and towns both large and small. Rolex watches are distributed more
       selectively, and are often available only in fine jewelry stores or specialty shops. By using distinctly
       different pricing and distribution strategies, the marketers of Timex and Rolex watches have
       attempted to:
       a. compete in the same market.
       b. develop similar product positions within the market.
       c. develop distinctly different product positions within the market.
       d. build customer loyalty through direct competition.
       e. create cognitive dissonance in consumers who are considering the purchase of a wristwatch.
      An advantage of one product and multiple market segments over multiple products and multiple
      market segments is:

      a.   it is a much more effective means of meeting consumers’ individual needs.
      b.   it is much more profitable.
      c.   it provides economies of scale (cost savings) in manufacturing costs.
      d.   it is a more effective way of meeting organizational objectives.
      e.   all of the above.

      Reducing the number of options on products such as automobiles and simplifying product lines
      provide two benefits to consumers: ________________________ and higher quality because of the
      ability to debug fewer basic designs.

      a.   lower prices through higher volume production of fewer models
      b.   larger rebates at the point of sale
      c.   higher trade-in values for older model cars
      d.   the ability to be exposed to more informative advertising messages
      e.   more tax revenues for government

      At the Mall of America in Minnesota, The Custom Foot is a shoe store that measures a customer’s
      foot and sends the measurements directly to Italy where the shoes are manufactured specifically for
      the customer. The shoes are then sent directly from Italy to the shopper’s home. The shoes are very
      reasonably priced. This is an example of:

      a.   mass customization
      b.   synergy
      c.   target marketing
      d.   use of the 80/20 rule
      e.   repositioning

      In an attempt to develop more efficient and effective marketing strategies, Jack Anderson, the
      owner of The Camera Store conducted some marketing research. Jack developed a survey to
      identify specific camera features wanted by various groups of consumers. The results of the
      research showed that elderly camera buyers were seeking a basic, no-frills camera, while younger
      consumers wanted a camera that featured automatic focus, automatic film advance, and multiple
      lenses. Jack concluded that people of different ages had different needs when it came to purchasing
      a camera. Accordingly, Jack developed a marketing mix directed specifically at the elderly segment
      of the market and a different marketing mix for younger consumers. Jack was segmenting the
      market based on:
      a. usage rates.
      b. usage patterns.
      c. buyer situations.
      d. demographic characteristics.
      e. psychographic characteristics.
       When the Benihana Frozen Foods Corporation began to offer its “Famous Restaurant Classics” in
       single entree servings, which of the following segmentation variables were they using?

       a.   Regional
       b.   Family size
       c.   Race
       d.   Occupation
       e.   Income

       Suppose you are the marketing manager for business travel at American Airlines. This year,
       business travel between Minneapolis and Dallas has been off 10% from last year. To increase
       business traffic between these two cities, you decide to segment the business travel market based on
       usage rate. Which of the following marketing actions best link the resultant segments with their

       a.   Develop a cooperative marketing arrangement with Avis Car Rental by offering business
            travelers who fly on American Airlines a 20% discount on their Avis rental car.
       b.   Offer 25% price reductions for flights during off-peak hours (i.e. 6PM to 12AM).
       c.   Offer a frequency marketing program by giving a free-travel pass to anywhere in the U.S. after
            the completion of three round trips between Minneapolis and Dallas.
       d.   Offer first class upgrades from coach class for only $25.
       e.   Implement a fast check-in, pre-boarding pass service.

       Steve and Helen Anne own a bakery. They want to increase sales of their baked goods and have
       decided to direct their marketing efforts towards the relatively small number of consumers who are
       responsible for the majority of the baked goods sold. How are Steve and Helen Ann segmenting the

       a.   They aren’t segmenting the market.
       b.   They are segmenting the market based on the 80/20 rule.
       c.   They are segmenting the market based on family size.
       d.   They are segmenting the market according to consumer interest.
       e.   They are segmenting the market according to consumer needs.

       The marketing manager of a firm manufacturing ball bearings selects a target market of all the
       companies with yearly sales over $100 million in the top ten Metropolitan Statistical Areas (MSAs)
       in the U.S. Which variables did the manager use to segment his market?

       a.   NAIC code and annual sales volume
       b.   NAIC code and location
       c.   Size and revenue
       d.   Annual sales volume and location
       e.   Region and profit potential
       The makers of a well-known toothpaste market their product throughout the United States. Those
       who buy the toothpaste in Minnesota get a minty-flavored, somewhat sweet tasting product.
       However, the same brand of toothpaste that is sold to consumers in Oklahoma features a rather
       spicy, mouth-tingling flavor. The toothpaste company discovered that customers in different parts
       of the country preferred distinctly different tastes in their toothpaste. This is an example of market
       segmentation based on:

       a.   family size.
       b.   lifestyle.
       c.   usage rate.
       d.   consumption pattern.
       e.   region.

       Product items or lines are often grouped by marketers because:

       a.   competitors relate to them better for “benchmarking” purposes.
       b.   customers relate to them better since that is how they view their purchase.
       c.   it is easier to estimate the industry sales for fewer market-product combinations.
       d.   it is more profitable to select a few large market segment and their associated product
            groupings because the manufacturing and marketing costs are reduced.
       e.   None of the above are reasons.

       Five general criteria are often used to pick market segments. They include the size of the market,
       expected growth of the market, competitive position of the firm with respect to the market, and
       compatibility of the organization’s objectives and resources. What is the fifth criterion?

       a.   Cost of reaching the segment
       b.   Time required to create awareness
       c.   Need to conform to government regulations
       d.   How long target market members have been customers
       e.   Amount of publicity likely to result

       Best Foods is considering expanding beyond the market segments now served by its Hellmann’s
       mayonnaise sold regionally. One criterion management wants to use to evaluate potential new
       geographic market segments is whether new equipment must be bought to serve each new segment.
       This is an example of which criterion used to pick new target market segments?

       a.   Best Food’s competitive position in the segment
       b.   Best Food’s forming its products to be sold into groups
       c.   Expected growth of the market segment
       d.   Size of the market segment
       e.   Compatibility with Best Food’s objectives and resources
       A company might select a “shotgun approach” to advertising if it wants to:

       a.   select a more focused target market of smaller segments.
       b.   reach a wide number of different segments.
       c.   destroy a competitor’s credibility.
       d.   force a competitor to take a defensive action.
       e.   none of the above are reasons.

       What does the term “product positioning” refer to?

       a.   A careful analysis of cross tabulations.
       b.   Shelf locations in major chain, grocery, and department stores.
       c.   Geographic segmentation, often within major metropolitan areas.
       d.   The place an offering occupies in consumers’ minds on important attributes.
       e.   An old and outdated concept no longer worthy of consideration in marketing planning.

       Two major types of product positioning are:

       a.   competitive and distinctive.
       b.   head-to-head and parallel market.
       c.   competitive and differentiation.
       d.   head-to-head and differentiation.
       e.   differentiation and parallel market.

       Assume a perceptual map shows that people perceive two periodicals on two dimensions -- news
       only versus general interest and light versus serious. People magazine is perceived as light and
       general interest. If the publishers of People wanted to introduce a second magazine, which position
       would minimize cannibalization?

       a.   Light and general interest
       b.   Serious and general interest
       c.   Light and news only
       d.   Serious and news only
       e.   Light and serious
       General Motors strategy that involved increasing the price of Buick models to make them seem to
       consumers to be a more family/conservative car as compared to Oldsmobile as a more stylish one is
       an example of what type of marketing strategy?

       a.   Segmentation
       b.   Differentiation
       c.   Repositioning
       d.   Probability
       e.   Inference

       (Q) What are the steps needed to segment and target a market?

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