Deck 5: Target Markets: Segmentation and Evaluation

Question 1

In order to be considered a market, people do not require:

A) a need or desire for a particular product.
B) the ability to purchase the product.
C) an organization of their own to purchase the product.
D) the willingness to use their buying power.
E) the authority to buy the specific products.

Answer 1

C

Question 2

What are the conditions under which an undifferentiated targeting strategy is effective? Why are these conditions essential?

Answer 2

The undifferentiated targeting strategy is effective under two conditions. First, a large proportion of customers in a total market must have similar needs for the product, a situation termed a homogeneous market. A marketer using a single marketing mix for a total market of customers with a variety of needs would find that the marketing mix satisfies very few people. For example, marketers would have little success using an undifferentiated strategy to sell a "universal car" because different customers have varying needs. Second, the organization must have the resources to develop a single marketing mix that satisfies customers' needs in a large portion of a total market and the managerial skills to maintain it.

Question 3

Compare and contrast the concentrated and differentiated targeting strategies of market segmentation.

Answer 3

When an organization directs its marketing efforts toward a single market segment using one marketing mix, it is employing a concentrated targeting strategy. The chief advantage of the concentrated strategy is that it allows a firm to specialize. The firm analyzes the characteristics and needs of a distinct customer group and then focuses all its energies on satisfying that group's needs. If the group is big enough, a firm may generate a large sales volume by reaching a single segment.
Concentrating on a single segment can also permit a firm with limited resources to compete with larger organizations that have overlooked smaller market segments.
Specialization, however, means that a company allocates all its resources on one target segment, which can be hazardous. If a company's sales depend on a single segment and the segment's demand for the product declines, the company's financial health also deteriorates.
With a differentiated targeting strategy, an organization directs its marketing efforts at two or more segments by developing a marketing mix for each segment. A benefit of a differentiated approach is that a firm may increase sales in the aggregate market because its marketing mixes are aimed at more customers. For this reason, a company with excess production capacity may find a differentiated strategy advantageous because the sale of products to additional segments may absorb excess capacity.
Differentiated strategy, however, often demands more production processes, materials, and people because the different ingredients in each marketing mix will vary. Thus, production costs may be higher than with a concentrated strategy.

Question 4

Define market potential. Explain the various factors that affect the same.

Question 5

Which of these statements is not true about business markets?

A) The purchase may be made to resell the item.
B) The purchase is always made by more than one individual.
C) The purchase may be made to use in general daily operations.
D) The purchase may be made to use in production of another product.
E) These markets can also be referred to as organizational markets.

Question 6

What are the major steps of the target market selection process?

Question 7

Which of the following is not a requirement or characteristic of a market?

A) The ability to purchase a product
B) A large number of people or organizations
C) The authority to buy a product
D) The willingness to use buying power
E) The need for a specific product in a specific product category

Question 8

Would a person's political views be an effective variable in the process of market segmentation? Why or why not?

Question 9

How do business markets differ from consumer markets?

Question 10

Why do marketers rely heavily on demographic characteristics when segmenting consumer markets?

Question 11

Distinguish between the breakdown and buildup approaches to assess company sales potential.

Question 12

Which of the following is not a characteristic of a consumer market?

A) It consists of purchasers who intend to consume or benefit from the purchased products.
B) Purchasers do not buy products for the main purpose of making a profit.
C) It is sometimes referred to as B2C markets.
D) The purchasing decisions of a consumer market are always made by only one individual.
E) Purchasers may buy the product but not use it themselves.

Question 13

What are the three major issues that need to be considered in the process of evaluating market segments?

Question 14

Discuss the advantages and disadvantages of using executive judgment in forecasting company sales.

Question 15

Why is it important for marketers to assess competitors before entering a market segment?

Question 16

A group of individuals and/or organizations that have desire or needs for products in a product class and have the ability, willingness, and authority to purchase those products is a:

A) business market.
B) market.
C) undifferentiated market
D) segmented market
E) market variable

Question 17

What are the variables involved in the process of segmenting business markets?

Question 18

Identify the four major categories of segmentation of variables for consumer products, and give one example for each of these variables.

Question 19

Why would a firm survey its sales force to forecast company sales? Why would it choose an expert forecasting survey?

Question 20

Discuss the difference between sales forecasts and company sales potential. Why is it important for a marketer to be able to forecast sales?

Question 21

Which of the following statements about the undifferentiated targeting strategy is false?

A) The undifferentiated targeting strategy should be used when the needs of individual customers are similar.
B) The undifferentiated targeting strategy uses one promotional program aimed at everyone in the target market.
C) The undifferentiated targeting strategy is good for use with staple items, such as sugar and salt.
D) The undifferentiated targeting strategy uses multiple distribution systems to best reach individuals in the target market.
E) The opposite of the undifferentiated targeting strategy is the differentiated targeting strategy.

Question 22

Smart Balance produces a line of milk products that are lactose-free. The milk comes in pint, quart, and half-gallon cartons, as well as 16-ounce glass bottles. Smart Balance sells its pint cartons to school systems, its quart and half- gallon cartons to grocery stores, and its glass bottles to vending machine operators. Smart Balance appears to use a(n) strategy in marketing its product to a target market that is likely to be .

A) undifferentiated; homogeneous
B) undifferentiated; heterogeneous
C) differentiated; homogenous
D) differentiated; heterogeneous
E) concentrated; heterogeneous

Question 23

Why would a company use the undifferentiated strategy?

A) The needs of individual consumers are dissimilar, and distinctive marketing mixes are required to satisfy them.
B) The undifferentiated strategy is the one strategy that provides maximum satisfaction to the whole market.
C) The needs of individual consumers in the target market for a specific product are similar, so the organization can satisfy most customers with a single marketing mix.
D) The undifferentiated strategy is expensive to implement but tends to produce the most sales.
E) The undifferentiated strategy requires less time and fewer resources.

Question 24

Jack has just joined a law firm as its purchasing agent for all supplies, equipment, and service contracts. In his previous position at another company, Jack could make decisions for any purchase up to $1 million; however, at the new law firm, he can only make decisions for purchases less than $500,000. Recently, Jack has been working with a sales representative from a computer software firm about a contract for a new program to process the firm's billing statements. Jack signs the contract, even though it is for $950,000. In this case, Jack part of the market for the software because .

A) is; he has very little buying power.
B) is; has the need for the software.
C) is not; he is willing to spend the firm's money.
D) is; he has the desire for the software.
E) is not; he does not have the authority to purchase.

Question 25

If Morton Salt saw all table salt customers as pretty much alike and thus offered only one marketing mix, it would be using the strategy.

A) directed
B) undifferentiated
C) segmented
D) differentiated
E) product-use

Question 26

When a firm designs a single marketing mix and directs it at an entire market for a particular product, the company is using a(n) targeting strategy.

A) concentrated targeting
B) differentiated
C) heterogeneous market
D) undifferentiated
E) single mix

Question 27

Individuals, groups, or organizations that share one or more similar characteristics that cause them to have relatively similar product needs are called:

A) market segments.
B) heterogeneous markets.
C) concentrated markets.
D) demographic segments.
E) strategic segments.

Question 28

Eighteen-year-old students do not form a market for alcoholic beverages because they:

A) lack sufficient buying power to form a market.
B) lack the authority to purchase this type of product.
C) do not want to purchase this type of product.
D) do not have sufficient experience with this type of product.
E) lack the money to purchase this type of product.

Question 29

Mia is pet sitting for a friend's dog while he is on vacation. Her friend has given Mia all sorts of information, including the veterinarian's name and phone number, pet emergency center location, and the dog's favorite bedtime snack. The first evening of the vacation, Mia realizes that her friend did not bring the dog's food over, and she has no idea what the dog eats. Her friend's cell phone is "out of range" at the moment, so Mia must go to the grocery store and shop for dog food, even though she has never bought it before now. In this case, even though Mia is not a dog owner, she is likely to be part of the market for dog food for all of the following reasons except .

A) she has the authority to purchase the dog food.
B) she possesses the buying power for purchasing dog food.
C) she has the need or desire for dog food.
D) her ability to purchase the dog food is questionable.
E) she is willing to use her buying power.

Question 30

Walmart sells numerous products, including packaged food, produce, automotive maintenance services, eyeglasses, clothing, and toys. Walmart advertises itself as a store where "we save people's money so they can live better," focusing on its low prices as the customer's most important need. Walmart's advertising appears to use a(n) strategy to a market that is .

A) undifferentiated; homogeneous
B) undifferentiated; heterogeneous
C) differentiated; homogeneous
D) homogeneous; differentiated
E) heterogeneous; undifferentiated

Question 31

The producers of C & H Cane Sugar sell the product in five-pound bags, one-pound bags, and one-pound boxes. When developing its advertising strategy, C & H will most likely use a(n) approach in defining a target market.

A) undifferentiated
B) differentiated
C) product strategy
D) cost-benefit
E) demographic

Question 32

Prodigy Placement is a private elementary school located in the center of Manhattan. Students at the school are considered in the top 1% of their age group in terms of IQ scores and aptitude. Parents who want to send their children to the school must get on a waiting list as soon as the child is 12 months old and must make a deposit of $5,000 to the school in order to hold the child's "application" until they reach the age of 5 years. Emma's parents put her on the waiting list at the age of 1 year and paid the deposit; however, when Emma turned five, she did not want to attend the school although she tested above the requirement. Her parents made the decision to enroll her for the upcoming school year. In this case, Emma part of the market for Prodigy Placement, and her parents part of the market:

A) was; were; because Emma needed to attend school.
B) was; were; because Emma had the authority to attend the school.
C) was; were; because they had the authority.
D) was not; were; because Emma lacked the desire.
E) was not; were; because Emma lacked the authority.

Question 33

The first step in the target market selection process is:

A) determining which segmentation variables to use.
B) selecting specific target markets.
C) identifying an appropriate targeting strategy.
D) evaluating relevant market segments.
E) developing market segment profiles.

Question 34

The Pillsbury Company defines all individual consumers who are purchasers of flour as its target market. It also defines all businesses that purchase flour as its target market. Which targeting strategy would be most appropriate in this case?

A) Concentrated
B) Undifferentiated
C) Wide appeal
D) Differentiated
E) Clustered

Question 35

The undifferentiated targeting strategy for finding a target market will likely not be successful if:

A) product positioning is needed.
B) the firm defines the total market as its target market.
C) people within the market have heterogeneous needs.
D) people within the market have homogeneous needs.
E) the firm is capable of developing a single marketing mix that satisfies all people's needs.

Question 36

A market comprised of individuals or organizations with diverse product needs is called a(n) market.

A) undifferentiated
B) concentrated
C) homogenous
D) differentiated
E) heterogeneous

Question 37

The ProMark Company manufactures a pencil that is about five inches long and has no eraser. It sells the product primarily to golf courses and universities. Which of the following targeting strategies has been implemented by this company?

A) Extensive targeting strategy
B) Concentrated targeting strategy
C) Undifferentiated targeting strategy
D) Intensive targeting strategy
E) Differentiated targeting strategy

Question 38

To find a target market, a firm can use the:

A) total market strategy and the undifferentiated strategy.
B) product differentiation strategy and the customer differentiation strategy.
C) demographic strategy and the psychographic strategy.
D) socioeconomic strategy and the psychological strategy.
E) undifferentiated strategy, the concentrated strategy, and the differentiated strategy.

Question 39

When the needs of individual consumers in a target market for a specific product are similar and the organization can satisfy most customers with a single marketing mix, the best approach to use may be the strategy.

A) undifferentiated
B) differentiated
C) segmented
D) concentrated
E) heterogeneous

Question 40

Generally speaking, individuals who are unemployed would not be considered a target market for lawn care services because:

A) they would not desire such products.
B) they would not be willing to purchase such products.
C) they would not have the ability to purchase such products.
D) such markets are narrowly defined geographically.
E) they would not be authorized to purchase such products.

Question 41

The purpose of market segmentation is to:

A) differentiate products.
B) divide a total market to enable a marketer to develop a more precise marketing mix.
C) reduce the overall cost of marketing activities.
D) identify a single marketing mix that will be satisfactory for the general market.
E) meet the needs of homogeneous markets.

Question 42

If Georgia-Pacific, a producer of home siding, decking, and other wood products, focused its marketing efforts to home construction companies only, it would be using a(n) strategy. If it sold the same products to both construction companies and DIY retailers such as Home Depot, it would be using a(n) strategy.

A) undifferentiated; undifferentiated
B) undifferentiated; differentiated
C) differentiated; multisegmented
D) concentrated; differentiated
E) concentrated; concentrated

Question 43

Tiffany's markets its exclusive jewelry and gifts to high-income individuals interested in high-quality products and a well-known brand name. It uses the same marketing mix to reach this market. Tiffany's uses a (n) strategy.

A) undifferentiated
B) differentiated targeting
C) exclusive targeting
D) heterogeneous
E) concentrated targeting

Question 44

Interior Designs Inc. sells expensive custom-made draperies, bedding, and accessories through sales representatives who are also interior designers. It also has another, slightly less expensive line that it sells through stores such as Nordstrom's and Saks Fifth Avenue. Interior Designs Inc. is most likely using a (n) targeting strategy.

A) differentiated
B) undifferentiated
C) concentrated
D) homogeneous
E) heterogeneous

Question 45

Which of the following products is most likely to be marketed using an undifferentiated approach?

A) bicycle
B) computer
C) notebook
D) seasoning salt
E) oscillating fan

Question 46

After a firm has identified an appropriate targeting strategy, the next step in the target market selection process is:

A) determining the demographic variables of the target market.
B) developing market segment profiles.
C) determining which segmentation variables to use.
D) selecting specific target markets.
E) evaluating relevant market segments.

Question 47

A targeting strategy in which an organization directs its marketing efforts at several segments is called a(n) targeting strategy.

A) differentiated
B) total market
C) concentrated
D) undifferentiated
E) integrated

Question 48

Several conditions must exist for market segmentation to be successful. These conditions include all of the following except:

A) the total market should be divided so that segments can be compared on sales potential, costs, and profits.
B) customers' needs for the product must be homogeneous.
C) the company must be able to reach the chosen segment with a particular marketing mix.
D) segments must be identifiable and divisible.
E) at least one segment must have enough profit potential to justify developing and maintaining a special marketing mix for that segment.

Question 49

Volkswagen markets its Routan to large families, its R32 racecar to men, and its Jetta to young singles. Which of the targeting strategies is being implemented by Volkswagen?

A) Concentrated targeting strategy
B) Strategic targeting strategy
C) Differentiated targeting strategy
D) Undifferentiated targeting strategy
E) Multi-segmented targeting strategy

Question 50

When markets are comprised of people with differing product needs, the marketing manager should use a(n) _____ targeting strategy.

A) differentiated
B) market-intensive
C) integrated
D) concentrated
E) undifferentiated

Question 51

A business advantage of the concentrated targeting strategy for any company is that it:

A) requires less market research and information.
B) requires less intensive analysis of customers' characteristics and needs.
C) allows a firm to utilize all of its production capacity.
D) maintains the firm's flexibility in moving into other market segments.
E) allows a firm to develop a special marketing mix for a single market segment.

Question 52

Mattel views the toy market as composed of four age groups, each with different needs and desires. Mattel is using a(n) targeting strategy for its groups, which are known as .

A) undifferentiated market; market segments
B) undifferentiated market; heterogeneous
C) differentiated; market segments
D) differentiated; the marketing mix
E) concentrated market; heterogeneous

Question 53

Characteristics of individuals, groups, or organizations that are used for dividing a total market into smaller homogeneous groups are called variables.

A) marketing
B) classification
C) segmentation
D) stratification
E) dividing

Question 54

The process of dividing a total market into market groups because people within each group have relatively similar product needs is called:

A) segmentation.
B) diversification.
C) target marketing.
D) concentration.
E) customization.

Question 55

A targeting strategy in which an organization targets a single market segment using one marketing mix is called a(n) _____ strategy.

A) selective
B) focused
C) differentiated
D) concentrated
E) undifferentiated

Question 56

A disadvantage of the concentrated targeting strategy is that:

A) the firm's financial condition is tied to a single and specialized marketing mix.
B) large sales volumes cannot be generated.
C) production costs may be higher than with other strategies.
D) marketing personnel may become dissatisfied with the limited opportunities provided by this approach.
E) marketing costs are often higher than for other strategies.

Question 57

The primary advantage of a concentrated targeting strategy is:

A) it meets the needs of a wide range of consumers.
B) it allows a firm to specialize to meet specific customer needs.
C) it is more flexible than any other approach.
D) it is the least risky targeting approach.
E) its customers are the most willing to repurchase the same brands.

Question 58

Segmentation variables are usually grouped into four categories:

A) demographic, geographic, religion, and income.
B) geopolitical, income, behavioristic, and psychographic.
C) attitudes, lifestyles, behaviors, and gender.
D) geographic, demographic, psychographic, and attitudes.
E) demographic, geographic, psychographic, and behavioristic.

Question 59

Age, rate of product use, location, and gender are all examples of common:

A) demographic variables.
B) geographic characteristics.
C) targeting strategies.
D) psychographic variables.
E) segmentation variables.

Question 60

Procter & Gamble markets Cheer detergent to young singles and couples and Tide detergent to families. Procter & Gamble is using a(n) targeting strategy for laundry detergents.

A) multiuse
B) differentiated
C) stratified
D) undifferentiated
E) concentrated

Question 61

Cosmopolitan magazine, Car and Driver magazine, Secret deodorant, and Axe body wash are all products whose marketers have used segmentation based on:

A) behavior.
B) psychographics.
C) product use.
D) gender.
E) income.

Question 62

A marketer that targets customers based on marital status and the presence and age of children is using:

A) behavioristic segmentation.
B) lifestyle variables.
C) psychographic variables.
D) family life cycle.
E) phase of life segmentation.

Question 63

Retail-site location analyses, unique product offerings, and special advertising campaigns are all examples of the use of:

A) market density.
B) demographic segmentation.
C) behavioristic segmentation.
D) environmental segmentation.
E) micromarketing.

Question 64

With its Venus razor, Gillette was the first marketer to offer a triple blade razor specifically designed for women. This is an example of market segmentation using variables.

A) demographic
B) psychographic
C) geographic
D) family life cycle
E) product use

Question 65

If Campbell were to offer single serving "Soup for One" packages to household markets, it would be using segmentation based on:

A) income.
B) age.
C) preferences.
D) geographic considerations.
E) family life cycle.

Question 66

Systems such as PRIZM and Acorn provide companies with lifestyle and demographic information about neighborhoods throughout the United States. This information is used to aid:

A) behavioristic segmentation.
B) geodemographic segmentation.
C) market density analysis.
D) demographic segmentation.
E) geographic segmentation.

Question 67

Which of the following products is most likely to have its market segment based on age?

A) Nike shoes
B) Lipton Iced Tea
C) Bic pens
D) Legos
E) Carpet

Question 68

Kelly's Kids is a home-based business that sells high-quality children's clothing at premium prices using in-home parties. These in-home parties typically cater to families with small children and middle- to upper-middle-class income. Kelly's Kids is using variables to segment its market.

A) demographic
B) psychographic
C) sociographic
D) behavioristic
E) geographic

Question 69

Family life cycle is most typically based on:

A) income.
B) geographic location.
C) marital status and age of children.
D) occupation.
E) buying power.

Question 70

Justin Franklin's company is interested in locating areas where the average income is high, the average age range is 25-35 years, and the lifestyles of the people involve extreme adventures and dangerous leisure activities. His company would most likely find possible markets through:

A) U.S. Census Bureau information.
B) geographic segmentation variables.
C) geodemographic segmentation.
D) climate information.
E) psychographic segmentation.

Question 71

Subaru is producing a new seven-passenger van with all-wheel drive. Which of the following would be the best variables for segmenting the market for this new model?

A) Gender and age
B) Geographic location and family life cycle
C) Income and geographic location
D) Family life cycle and income
E) Geographic location and gender

Question 72

TimeWarner Cable uses a segmentation strategy for its cable TV packages based on market characteristics such as age, gender, or income. Which of the following segmentation variables is being implemented by this ?

A) Demographic variable
B) Geographic variable
C) Psychographic variable
D) Product-related variable
E) Education variable

Question 73

Zerex markets its radiator liquid to different markets; one as a coolant and the other as antifreeze. Which of the following segmentation variables is being implemented by Zerex?

A) Demographic variable
B) Psychographic variable
C) Lifestyle variable
D) Geographic variable
E) Behavioristic variable

Question 74

Which of the following is the biggest drawback to using psychographic variables?

A) These variables are not strongly reflective of consumer behavior.
B) These variables are difficult to measure.
C) These variables give poor information about consumer needs.
D) These variables do not reflect socioeconomic characteristics of consumers.
E) The resulting segments are difficult to be reached.

Question 75

Which of the following is not one of the major categories of consumer market segmentation variables?

A) Demographic characteristics
B) Geographic variables
C) Psychographic dimensions
D) Situational variables
E) Behavioristic characteristics

Question 76

Alpine Ski Shops is looking for new markets for both its brick and mortar retail stores and its catalog division. Alpine Ski Shops would most likely use a(n) base for market segmentation of its stores and a(n) base for market segmentation of its catalog division.

A) behavioristic; geographic
B) geographic; demographic
C) demographic; psychographic
D) environmental; demographic
E) geographic; behavioristic

Question 77

Micromarketing is:

A) a market segmentation approach in which firms focus precise marketing efforts on very small geographic markets.
B) developing a very specific marketing mix that will effectively meet the needs of only a small segment of the market.
C) marketing efforts that are tightly controlled by high-level executives in the organization.
D) a way to segment the market to meet the needs of individuals with the same motives and personality attributes.
E) creating advertising that is so specific to a certain type of individual that few people outside that micromarket will respond to the message.

Question 78

Many marketers are concerned about the number of potential customers within a certain area of land because of the different requirements to serve dissimilar areas. This segmentation variable is known as .

A) micromarketing
B) population
C) market density
D) MSA
E) PMSA

Question 79

Population density and city size are variables used for market segmentation.

A) geographic
B) demographic
C) psychographic
D) environmental
E) geodemographic

Question 80

Which of the following products is least likely to be segmented according to stages in the family life cycle?

A) Single-family homes
B) Cars and SUVs
C) European vacations
D) Soft drinks
E) General Electric appliances