Armstrong Mai12 Tif 06

Marketing: An Introduction, 12e (Armstrong/Kotler)

Chapter 6 Customer-Driven Marketing Strategy: Creating Value for Target Customers

1) ________ is the process of evaluating the attractiveness of different market segments and selecting one or more segments to enter.

A) Differentiation

B) Mass marketing

C) Market targeting

D) Market segmentation

E) Positioning

Answer: C

Difficulty: Easy

Chapter LO: 1

Course LO: Describe the process of market segmentation, targeting, and positioning

2) Zista, a boutique that caters to the clothing needs of women, manufactures two different lines of fashion wear based on the purchasing power of its customers. One product line caters to the needs of affluent, middle-aged women, and the other line targets younger professionals and homemakers. Zista most likely segments the consumer market based on ________ variables.

A) geographic

B) psychographic

C) universal

D) demographic

E) behavioral

Answer: D

Difficulty: Difficult

Chapter LO: 1


AACSB: Analytic thinking

3) ________ consists of arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

A) Differentiation

B) Positioning

C) Market targeting

D) Market segmentation

E) Mass marketing

Answer: B

Difficulty: Easy

Chapter LO: 1


4) Which of the following is the right order of the steps that companies generally follow in designing a customer-driven marketing strategy?

A) market segmentation, differentiation, positioning, and market targeting

B) positioning, market segmentation, mass marketing, and market targeting

C) market segmentation, market targeting, differentiation, and positioning

D) market alignment, market segmentation, differentiation, and market positioning

E) market recognition, market preference, market targeting, and market insistence

Answer: C

Difficulty: Easy

Chapter LO: 1


5) Senz, an automobile manufacturer, produces low-end vehicles that are targeted toward lower-income consumer groups. Senz most likely segments the consumer market based on ________ variables.

A) demographic

B) psychographic

C) universal

D) geographic

E) behavioral

Answer: A

Difficulty: Moderate

Chapter LO: 2


6) Pacific Fisheries groups its customers by regions in the U.S., such as Midwest, Northeast, and Southwest. For each region, Pacific Fisheries tailors a different set of advertisements and promotions. Based on which of the following segmentation variables does the firm divide its market?

A) behavioral factors

B) personality characteristics

C) geographic location

D) benefits sought

E) demographics

Answer: C

Difficulty: Easy

Chapter LO: 2


7) Pediacertain Pet Supplies, a pet-food company, divides the pet market according to the pet owners' gender, occupation, income, and family life cycle. In this case, which of the following variables has the company used for market segmentation?

A) geographic

B) psychographic

C) benefit

D) demographic

E) occasion

Answer: D


Chapter LO: 2



8) Demographic variables are the most popular bases for segmenting customer groups because they ________.

A) create smaller segments

B) create more easily accessible segments

C) do not involve stereotypes

D) are easier to measure

E) involve fewer attributes to consider

Answer: D


Chapter LO: 2


9) Zindle, an American smartphone-manufacturing firm, targets children below the age of ten by providing free games and applications. The firm's marketing approach is reflective of a(n) ________ segmentation.

A) age and life-cycle

B) geographic

C) occasion

D) gender

E) income

Answer: A


Chapter LO: 2



10) ________ factors are the most popular bases for segmenting customer groups.

A) Geographic

B) Demographic

C) Behavioral

D) Lifestyle

E) Personality

Answer: B

Difficulty: Easy

Chapter LO: 2


11) ProFem Inc. caters its line of sports apparel exclusively to women. What type of segmentation does the company use?


B) gender

C) behavior

D) psychographic

E) geographic

Answer: B


Chapter LO: 2


12) Which type of market segmentation is generally used by marketers who sell products for the affluent segments of a population?

A) usage rate

B) occasion

C) income

D) benefits sought

E) gender

Answer: C


Chapter LO: 2


13) At one time, Miller Beer was known as the "champagne of bottled beer." It was targeted at an elite class of customers. Later, to increase sales, Miller was repositioned to attract members of the working, middle-class. What is this segmentation method called?

A) user status

B) usage rate

C) benefit

D) behavioral

E) psychographic

Answer: E


Chapter LO: 2



14) Dividing buyers into groups based on their knowledge, attitudes, uses, or responses to a product is called ________ segmentation.

A) behavioral

B) psychographic

C) age and life-cycle

D) user status

E) geographic

Answer: A

Difficulty: Easy

Chapter LO: 2


15) Firms that manufacture seasonal products target their consumers primarily through ________ segmentation.

A) psychographic

B) demographic

C) income

D) occasion

E) age and life-cycle

Answer: D


Chapter LO: 2


16) The marketing manager at Frizzles' Eateries targets customers who are working to lose weight but who still want to dine out. The restaurant chain offers a wide variety of low-fat, low-calorie meals that appeal to dieters. Frizzles' approach is best referred to as ________ segmentation.


B) user status

C) benefit

D) demographic

E) geographic

Answer: C


Chapter LO: 2


17) Markets can be segmented into groups of nonusers, ex-users, potential users, first-time users, and regular users of a product. This method of segmentation is called ________.

A) user status segmentation

B) usage rate segmentation

C) benefit segmentation

D) behavioral segmentation

E) loyalty status segmentation

Answer: A

Difficulty: Easy

Chapter LO: 2


18) Shampoo marketers segment buyers as light, medium, or heavy product users. This is an example of ________ segmentation.

A) user status

B) usage rate

C) benefits sought

D) occasion

E) psychographic

Answer: B


Chapter LO: 2



19) Gold Class Electricals, a consumer-electronics firm, targets market segments based on factors such as country, age, social class, usage rate, and benefits sought. The company divides its markets based on ________.

A) demographic variables

B) geographic regions

C) multiple segmentation bases

D) behavioral variables

E) psychographic segmentation bases

Answer: C


Chapter LO: 2


20) Rasco Corp. segments its foreign markets based on the income levels of a country's population. In this case, the firm segments its market based on ________.

A) political factors

B) legal factors

C) personality factors

D) economic factors

E) cultural factors

Answer: D


Chapter LO: 2



21) Producers of popular beverages often partner with global music channels to target consumers through a variety of promotional events and advertisements. This approach to marketing is referred to as ________ segmentation.

A) intermarket

B) income

C) age and life-cycle

D) occasions

E) gender

Answer: A


Chapter LO: 2



22) Market segments that can be effectively reached and served are said to be ________.

A) measurable

B) accessible

C) substantial

D) actionable

E) profitable

Answer: B


Chapter LO: 2


23) When the size, purchasing power, and profiles of a market segment can be determined, the market segment is said to be ________.

A) measurable

B) accessible

C) substantial

D) actionable

E) observable

Answer: A

Difficulty: Easy

Chapter LO: 2


24) When a market segment is large or profitable enough to serve, it is termed ________.

A) measurable

B) accessible

C) substantial

D) actionable

E) differentiable

Answer: C

Difficulty: Easy

Chapter LO: 2


25) When an effective program can be designed for attracting and serving a chosen segment, the segment is best described as ________.

A) accessible

B) measurable

C) reachable

D) actionable

E) differentiable

Answer: D


Chapter LO: 2


26) When market segments are conceptually distinguishable and respond distinctively to various marketing mix elements and programs, they are said to be ________.

A) accessible

B) measurable

C) reachable

D) differentiable

E) observable

Answer: D


Chapter LO: 2


27) A market segment is less attractive when ________.

A) there are few aggressive competitors in the segment

B) it is difficult for new entrants to enter the segment

C) it contains powerful suppliers who can control prices

D) substitute products are unavailable in the segment

E) buyers in the market segment have weak bargaining powers

Answer: C


Chapter LO: 3


28) Which of the following is an approach where firms target a whole market based on common consumer needs?

A) demographic segmentation

B) undifferentiated marketing

C) micromarketing

D) concentrated marketing

E) geographic segmentation

Answer: B

Difficulty: Easy

Chapter LO: 3


29) Marketing the same product to a huge customer base without any customization is referred to as ________.

A) mass marketing

B) differentiated marketing

C) niche marketing

D) local marketing

E) individual marketing

Answer: A


Chapter LO: 3


30) Port Orleans Shipping markets different services to the tourism, defense, and trade segments. The firm designs separate offers for each segment based on their needs. This approach is called ________ marketing.

A) concentrated

B) differentiated

C) individual

D) mass

E) local

Answer: B


Chapter LO: 3



31) By offering product and marketing variations to segments and developing a stronger position within several segments, companies hope to create more total sales through segmented marketing than ________ marketing across all segments.

A) undifferentiated

B) differentiated

C) niche

D) local

E) individual

Answer: A


Chapter LO: 3


AACSB: Reflective thinking

32) BritWay Ventures, a leading producer of soft drinks, is considering a differentiated marketing strategy. It is most likely important that the company weighs increased sales against ________ before selecting this strategy.

A) decreased production

B) increased demand

C) increased costs

D) decreased prices

E) increased profits

Answer: C

Difficulty: Easy

Chapter LO: 3



33) Compared with undifferentiated marketing, differentiated marketing is more likely to lead to ________.

A) reduced sales in each market segment

B) weaker product position in each market segment

C) higher costs of doing business

D) redundancy in product design across market segments

E) smaller market share in the industry

Answer: C


Chapter LO: 3



34) A successful niche marketing strategy relies on a firm's ________.

A) availability of services

B) product positioning

C) superior products

D) knowledge of customer needs

E) affordable pricing

Answer: D


Chapter LO: 3


35) Unlike other car rental agencies that are based in airports to serve travelers, Wheelz-On-Rent has a network of neighborhood offices. The firm strives to serve people who need car rentals for reasons other than vacation, such as when their own cars are being repaired. Wheelz-On-Rent caters to a small share of the large car rental market. From this description, it can be concluded that Wheelz-On-Rent most likely practices ________.

A) undifferentiated marketing

B) multi-segmented marketing

C) individual marketing

D) local marketing

E) concentrated marketing

Answer: E


Chapter LO: 3



36) The practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations is referred to as ________.

A) niche marketing

B) micromarketing

C) segmented marketing

D) global marketing

E) undifferentiated marketing

Answer: B


Chapter LO: 3


37) ________ marketing tailors brands and promotions to the needs and wants of specific cities, neighborhoods, and even stores.

A) Differentiated

B) Mass

C) Niche

D) Local

E) Individual

Answer: D

Difficulty: Easy

Chapter LO: 3


38) Which of the following is true about local marketing?

A) It does not cater to individual stores.

B) It does not support evolving technologies.

C) It increases manufacturing costs.

D) It increases economies of scale.

E) It reduces logistical issues.

Answer: C


Chapter LO: 3


39) Marketers tailoring brands and promotions to the needs and wants of specific customer groups practice ________.

A) niche marketing

B) multi-segmented marketing

C) local marketing

D) mass marketing

E) individual marketing

Answer: C


Chapter LO: 3


40) When a company interacts one-on-one with large numbers of customers to create customer-unique value by designing products and services tailor-made to individual needs, it is engaging in ________.

A) concentrated marketing

B) mass marketing

C) mass customization

D) differentiated marketing

E) local marketing

Answer: C


Chapter LO: 3


41) Which of the following is true of product positioning?

A) A product's position is defined by the number of competitors in a market.

B) Product positioning has little influence on the design of marketing mixes.

C) Consumers generally reevaluate products every time they make a buying decision.

D) To simplify the buying process, consumers are likely to position products in their minds.

E) Consumers cannot position products without the help of marketers.

Answer: D


Chapter LO: 4


42) Through ________, brands can be differentiated on features, performance, or style and design.

A) people differentiation

B) channel differentiation

C) price differentiation

D) services differentiation

E) product differentiation

Answer: E

Difficulty: Easy

Chapter LO: 4


43) Companies are likely to gain ________ through speedy, convenient, or careful delivery of products.

A) price differentiation

B) product differentiation

C) channel differentiation

D) services differentiation

E) people differentiation

Answer: D

Difficulty: Easy

Chapter LO: 4


44) Which of the following types of differentiation is used to gain competitive advantage through the way a firm designs its distribution coverage, expertise, and performance?

A) services differentiation

B) channel differentiation

C) people differentiation

D) product differentiation

E) price differentiation

Answer: B

Difficulty: Easy

Chapter LO: 4


45) Argonaut Food Stores, a retail giant, hires better-skilled employees than its competitors by employing strategic recruitment practices. It also conducts highly specialized training programs for its employees. In this case, Argonaut has focused on gaining a strong competitive advantage through ________ differentiation.

A) image

B) people

C) services

D) product

E) channel

Answer: B


Chapter LO: 4



46) Customers recognize the products of Breads & Butters, a coffee shop, by identifying the "twisted bread" logo that helped the firm revolutionize its products. In this case, the firm has differentiated itself through its ________.

A) image

B) people

C) services

D) channels

E) positioning

Answer: A


Chapter LO: 4



47) When firms use symbols, colors, or characters to convey their personalities, they are using ________ differentiation.

A) image

B) people

C) usage-rate

D) user-status

E) channel

Answer: A

Difficulty: Easy

Chapter LO: 4


48) Which of the following is true of perceptual positioning maps?

A) They are used by marketers to divide a market into smaller groups with distinct characteristics.

B) They are used by marketers to identify supplier and retailer perceptions of a product.

C) They are used to analyze consumer perceptions of a brand versus competing products.

D) They are used to divide buyers into groups based on their perceived income and age.

E) They are used to plot the geographic segments that a company needs to target.

Answer: C

Difficulty: Easy

Chapter LO: 4



49) Estel, a kitchen-cabinet manufacturer, positions its cabinets as furniture with superior craftsmanship and durability. This is an example of ________ differentiation.

A) product

B) services

C) image

D) people

E) channels

Answer: A


Chapter LO: 4



50) A brand difference is said to be preemptive if ________.

A) competitors cannot easily copy the difference

B) buyers can afford to pay for the difference

C) the difference can be introduced profitably

D) the difference is communicable

E) the difference is beneficial to customers

Answer: A


Chapter LO: 4



51) Rad, a manufacturer of luxury watches, charges a higher price for its products than its competitors. Despite the high prices, the brand is popular among customers for its quality and service in comparison to cheaper alternatives available in the market. In this case, Rad offers a(n) ________ value proposition.

A) more-for-more

B) more-for-the-same

C) more-for-less

D) all-or-nothing

E) same-for-less

Answer: A


Chapter LO: 4



52) Using a(n) ________ positioning strategy, companies can attack the more-for-more strategy of another firm by offering a brand of comparable quality at a lower price.

A) more-for-the-same

B) more-for-less

C) the-same-for-less

D) less-for-much-less

E) less-for-more

Answer: A


Chapter LO: 4



53) Which positioning strategy offers value for consumers by providing the same brands as competitors at a lower price?

A) more for the same

B) more for less

C) the same for less

D) less for much less

E) more for more

Answer: C


Chapter LO: 4


54) The less-for-much-less positioning involves meeting consumers' requirements for ________.

A) moderate quality at a higher price

B) lower quality for a lower price

C) lower quality at a higher price

D) higher quality at a discounted rate

E) higher quality at the lowest possible price

Answer: B


Chapter LO: 4


55) Stores offering low-quality alternatives to luxury products at low prices most likely follow a ________ positioning strategy.

A) more-for-the-same

B) more-for-less

C) same-for-less

D) less-for-much-less

E) more-for-more

Answer: D


Chapter LO: 4


56) Which of the following strategies is most likely to be followed by firms that position themselves as caterers of the best products at economical prices?

A) more for the same

B) more for less

C) same for less

D) more for more

E) less for much less

Answer: B


Chapter LO: 4


57) Household Storez, a local retail store, claims to offer better products at lower prices than other retail stores. In this case, the firm's positioning reflects a ________ value proposition.

A) more-for-the same

B) more-for-less

C) same-for-less

D) more-for-more

E) same-for-more

Answer: B


Chapter LO: 4


58) Which of the following includes the target segment of a product, the category to which the product belongs, and the product's point of difference from other members in the category?

A) mission statement

B) vision statement

C) profit statement

D) positioning statement

E) inventory statement

Answer: D

Difficulty: Easy

Chapter LO: 4


59) Zeal is a popular automobile brand, and its positioning statement reads as follows: "For upscale American families who require large vehicles, Zeal is the automobile of choice." Which of the following mandatory elements is missing from the positioning statement?

A) point of difference

B) target audience

C) brand name

D) product category

E) need

Answer: A


Chapter LO: 4



60) Company and brand positioning should be summed up in a ________.

A) mission statement

B) vision statement

C) profit statement

D) positioning statement

E) corporate statement

Answer: D


Chapter LO: 4


61) Companies today are moving away from target marketing and toward mass marketing.

Answer: FALSE

Difficulty: Easy

Chapter LO: 1


62) While designing a customer-driven marketing strategy, marketers are likely to divide the market into smaller segments.

Answer: TRUE

Difficulty: Easy

Chapter LO: 1


63) Josie's, a gift store with a presence in multiple nations, divides its markets into units of nations, regions, and cities. This is an example of geographic segmentation.

Answer: TRUE


Chapter LO: 2


64) Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation.

Answer: TRUE

Difficulty: Easy

Chapter LO: 2


65) Demographic factors are the most popular bases for segmenting customer groups.

Answer: TRUE

Difficulty: Easy

Chapter LO: 2


66) Demographic variables are generally more difficult to measure than most other types of variables.

Answer: FALSE

Difficulty: Easy

Chapter LO: 2


67) Companies that use income segmentation always target the affluent.

Answer: FALSE


Chapter LO: 2


68) LaGrange, a floral boutique, segments its customers into three groups: those who frequently use their services, those who have never used their services, and potential users. This is an example of usage-rate segmentation.

Answer: FALSE


Chapter LO: 2


69) Marketers typically limit their market segmentation analysis to a single variable in order to simplify the process.

Answer: FALSE


Chapter LO: 2


70) Clusters of marketable groups of customers with similar likes, dislikes, lifestyles, and purchase behaviors can be identified by multivariable segmentation systems that merge and analyze geographic, demographic, lifestyle, and behavioral data.

Answer: TRUE


Chapter LO: 2


71) Business and consumer marketers use many of the same variables to segment their markets.

Answer: TRUE

Difficulty: Easy

Chapter LO: 2


72) Light users are often a small percentage of a company's market but account for a high percentage of total consumption.

Answer: FALSE


Chapter LO: 2


73) New communications technologies are likely to eliminate the need for markets to be geographically segmented as clusters of countries.

Answer: TRUE


Chapter LO: 2


74) For market segments to be beneficial for companies, they must be measurable.

Answer: TRUE

Difficulty: Easy

Chapter LO: 2


75) The largest, fastest-growing market segments are generally the most attractive ones for smaller companies.

Answer: FALSE

Difficulty: Easy

Chapter LO: 3


76) A segment is more attractive if it already contains many strong and aggressive competitors.

Answer: FALSE

Difficulty: Easy

Chapter LO: 3


77) A market segment with powerful suppliers controlling the prices is more attractive than a segment with less powerful suppliers.

Answer: FALSE

Difficulty: Easy

Chapter LO: 3


78) Even if a segment has the right size and growth and is structurally attractive, a company must consider its own objectives and resources before targeting that segment.

Answer: TRUE


Chapter LO: 3


79) Using a differentiated marketing strategy, a company is likely to design a product and a marketing program that will appeal to the largest number of buyers.

Answer: FALSE


Chapter LO: 3


80) Companies with limited financial and personnel resources should most likely avoid concentrated or niche marketing until their earnings improve.

Answer: FALSE


Chapter LO: 3


81) Niche marketing offers smaller companies an opportunity to compete by focusing their limited resources on serving niches that may be unimportant to or overlooked by larger companies.

Answer: TRUE


Chapter LO: 3


82) When a company chooses a target marketing strategy for a product, its choices are most likely influenced by the product's life-cycle stage.

Answer: TRUE


Chapter LO: 3


83) A company or brand image should convey a product's distinctive benefits and positioning.

Answer: TRUE

Difficulty: Easy

Chapter LO: 4



84) A more-for-more market offering not only offers higher quality but also gives prestige to a buyer.

Answer: TRUE

Difficulty: Easy

Chapter LO: 4


85) Cian, an automobile manufacturer, offers a new car model with features comparable to that of another popular brand. However, the Cian model is priced lower than its competitor and includes a longer warranty. Cian is most likely following a more-for-the-same strategy.

Answer: FALSE


Chapter LO: 4



86) Explain the four major steps in designing a customer-driven marketing strategy.

Answer: The four major steps in designing a customer-driven marketing strategy are market segmentation, market targeting, differentiation, and market positioning.

Market segmentation: Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors, that might require separate marketing strategies or mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments.

Market targeting: Evaluating each market segment's attractiveness and selecting one or more of the market segments to enter.

Differentiation: Actually differentiating the firm's market offering to create a superior customer value.

Market positioning: Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of consumers.


Chapter LO: 1



87) Explain the four major segmentation variables for consumer markets.

Answer: For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral. Geographic segmentation divides the market into different geographic units, such as nations, regions, states, countries, cities, or neighborhoods. Many companies are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and neighborhoods. Demographic segmentation divides the market into groups based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. These are the most popular factors because they are easy to measure, and consumer needs, wants, and usage rates often vary closely with demographic variables. Psychographic segmentation, on the other hand, divides buyers into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic characteristics. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product. Many marketers believe that behavior variables are the best starting point for building market segments.


Chapter LO: 2



88) Describe age and life-cycle segmentation with examples. What are the precautions that marketers should take when using age and life-cycle segmentation?

Answer: Consumer needs and wants change with age. Some companies use age and life-cycle segmentation, offering different products or using different marketing approaches for different age and life-cycle groups. For example, Kraft promotes JELL-O to children as a fun snack. For adults, it is a tasty, guilt-free indulgence. Other companies focus on the specific age of life-stage groups. Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation. For example, although consumers in all age segments love Disney cruises, most Disney Cruise Lines destinations and shipboard activities are designed with parents and their children in mind. Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation. Although some 80-year-olds fit the doddering stereotypes, others ski and play tennis. Similarly, whereas some 40-year-old couples are sending their children off to college, others are just beginning new families. Thus, age is often a poor predictor of a person's life cycle, health, work or family status, needs, and buying power. Companies marketing to mature consumers usually employ positive images and appeals.


Chapter LO: 2



89) Explain with examples how marketers segment markets based on occasions, benefits sought, and user status.

Answer: Occasions: Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item. Occasion segmentation can help firms build up product usage. For example, most consumers drink orange juice in the morning, but orange growers have promoted drinking orange juice as a cool, healthful refresher at other times of the day.

Benefits sought: A powerful form of segmentation is grouping buyers according to the different benefits that they seek from a product. Benefit segmentation requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit. For example, people buying bikes are looking for any of numerous benefits, from competitive racing and sports performance to recreation, fitness, touring, transportation, and just plain fun. To meet varying benefit preferences, Trek makes bikes in three major benefit groups: road bikes, mountain bikes, and town bikes.

User status: Markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users. Included in the potential user group are consumers facing life-stage changessuch as new parents and newlywedswho can be turned into heavy users. For example, to get new parents off to the right start, P&G makes certain its Pampers Swaddlers are the diaper provided for newborns at most U.S. hospitals.


Chapter LO: 2



90) Describe how marketers use multiple-segmenting bases to their advantage.

Answer: Marketers rarely limit their segmentation analysis to only one or a few variables. Instead, they use multiple segmentation bases in an effort to identify smaller, better-defined target groups of consumers. Such segmentation provides a powerful tool for marketers of all kinds. It can help companies identify and better understand key customer segments, reach them more efficiently, and tailor market offerings and messages to their specific needs.


Chapter LO: 2



91) How do businesses segment their markets?

Answer: Consumer and business marketers use many of the same variables to segment their markets. Like consumer groups, business buyers can be segmented using geographic, demographic, benefits sought, user status, usage rate, and loyalty status segmentation. Business buyers are also segmented by the variables of operating characteristics, purchasing approaches, situational factors, and personal characteristics.


Chapter LO: 2


92) Why do international markets need to be segmented?

Answer: Few companies have either the resources or the will to operate in all, or even most, of the countries that dot the globe. Different countries, even those that are close together, can vary greatly in their economic, cultural, technological, and political makeup. International firms need to group their world markets into segments with distinctive buying needs and behaviors.


Chapter LO: 2


93) Briefly describe the characteristics of effective market segments.

Answer: To be useful, market segments must be:

Measurable: The size, purchasing power, and profiles of the segments can be measured.

Accessible: The market segments can be effectively reached and served.

Substantial: The market segments are large or profitable enough to serve. It should be the largest possible homogeneous group worth pursuing with a tailored marketing program.

Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.

Actionable: Effective programs can be designed for attracting and serving consumers who make up the segment.


Chapter LO: 2


94) Describe the process by which companies identify attractive market segments and choose a target marketing strategy.

Answer: To target the best market segments, a company first evaluates each segment's size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources. It then chooses one of four marketing strategiesranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated marketing. This involves mass producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. The seller can also adopt differentiated marketingdeveloping different market offers for several segments. Concentrated marketing involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing. Which targeting strategy is best depends on company resources, product variability, product life-cycle stage, market variability, and competitive marketing strategies.


Chapter LO: 3



95) Compare and contrast the four major strategies that are generally used to target market segments.

Answer: Market targeting can be carried out at several different levels. Companies can target very broadly (undifferentiated marketing), very narrowly (micromarketing), or somewhere in between (differentiated or concentrated marketing). An undifferentiated marketing strategy ignores market segment differences and targets the whole market with one offer. This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different. In contrast, a differentiated strategy targets several market segments and designs separate offers for each. Companies hope for higher sales and a stronger position within each market segment. Concentrated or niche marketing goes after a large share of one or a few segments or niches instead of going after a large share of a large market. These niches may be overlooked or unimportant. Niching offers smaller companies an opportunity to compete by focusing their limited resources more effectively. Finally, using micromarketing, a company can tailor products and marketing programs to suit the tastes of specific individuals and locations. It includes local and individual marketing.


Chapter LO: 3



96) Compare and contrast local and individual marketing.

Answer: Local marketing involves tailoring brands and promotions to the needs and wants of local customer groupscities, neighborhoods, and even specific stores. Advances in communications technology have given rise to new high-tech versions of location-based marketing. Local marketing has some drawbacks, however. It can drive up manufacturing and marketing costs by reducing the economies of scale. It can also create logistics problems as companies try to meet the varied requirements of different regional and local markets. Still, local marketing helps a company to market more effectively in the face of pronounced regional and local differences in demographics and lifestyles. In contrast, individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers. Individual marketing has also been labeled one-to-one marketing, mass customization, and markets-of-one marketing. Today, new technologies are permitting many companies to return to customized marketing. More detailed databases, robotic production and flexible manufacturing, and interactive communication media such as cell phones and the Internet have combined to foster mass customization. Mass customization is the process by which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs.


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97) Describe a few ways in which a marketer can engage in socially responsible target marketing.

Answer: In order to engage in socially responsible target marketing, marketers must avoid purposefully targeting vulnerable or disadvantaged consumers with controversial or potentially harmful products. In addition, marketers should reconsider the marketing of adult products that may spill over into the child segment either intentionally or unintentionally; primary examples include beer, cigarettes, and fast food.


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AACSB: Ethical understanding and reasoning

98) Explain the concept of positioning for competitive advantage.

Answer: A product's position is the way the product is defined by consumers on important attributesthe place the product occupies in consumers' minds relative to competing products. Positioning involves implanting the brand's unique benefits and differentiation in customers' minds. To carry out effective positioning, a company must identify a set of possible competitive advantages upon which to build a position, choose the right competitive advantages, and select an overall positioning strategy. The company must then effectively communicate and deliver the chosen position to the market.


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99) Brand differences are worth promoting if they satisfy certain criteria. What are these criteria?

Answer: A brand difference is worth establishing to the extent that it satisfies the following criteria:

(a) Important: The difference delivers a highly valued benefit to target buyers.

(b) Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way.

(c) Superior: The difference is superior to other ways that customers might obtain the same benefit.

(d) Communicable: The difference is communicable and visible to buyers.

(e) Preemptive: Competitors cannot easily copy the difference.

(f) Affordable: Buyers can afford to pay for the difference.

(g) Profitable: The company can introduce the difference profitably.


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100) Describe the different types of value propositions on which a company might position its products.

Answer: Companies can generally choose one of five types of value propositions for their customers:

(a) More for more: More-for-more positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. A more-for-more market offering not only offers higher quality, it also gives prestige to the buyer. It symbolizes status and a loftier lifestyle.

(b) More for the same: Companies can attack a competitor's more-for-more positioning by introducing a brand offering comparable quality at a lower price.

(c) The same for less: Offering the same for less can be a powerful value proposition. Many companies that offer this proposition don't claim to offer different or better products. Instead, they offer many of the same brands as their competitors but at deep discounts based on superior purchasing power and lower-cost operations. Other companies develop imitative but lower-priced brands in an effort to lure customers away from the market leader.

(d) Less for much less: A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford "the very best" in everything they buy. In many cases, consumers will gladly settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price. Less-for-much-less positioning involves meeting consumers' lower performance or quality requirements at a much lower price.

(e) More for less: The winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions.


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2Copyright 2015 Pearson Education, Inc.

Armstrong Mai12 Tif 06

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