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Marketing: An Introduction, 13e (Armstrong) Chapter 6 Customer-Driven Marketing Strategy: Creating Value for Target Customers 1) ________ is the process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behavior.

A) Differentiation B) Mass marketing C) Market targeting D) Market segmentation E) Positioning Answer: D Diff: 1 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

2) Harry's caters to the clothing needs of men, manufacturing two different lines of fashion based on the purchasing power of its customers. One product line caters to the needs of affluent, middle-aged men, and the other line targets younger, up-and-coming professionals. Harry's most likely segments the consumer market based on ________ variables.

A) geographic B) psychographic C) universal D) demographic E) behavioral Answer: D Diff: 3 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical 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 Diff: 1 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

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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 Diff: 1 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

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

Answer: FALSE Diff: 1 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

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

Answer: TRUE Diff: 1 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

7) 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.

Diff: 2 LO: 6-1: Define the major steps in designing a customer value-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

AACSB: Analytical thinking

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8) Lilly's, a furniture retailer, sells low-end furniture and accent pieces that are targeted toward lower-income consumer groups. Lilly's most likely segments the consumer market based on ________ variables.

A) demographic B) psychographic C) universal D) geographic E) behavioral Answer: A Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 9) Gulf Coast, a wholesale shrimp distributor, groups its customers by regions in the United States, such as Midwest, Northeast, and Southwest. For each region, Gulf Coast tailors a different set of advertisements and promotions. The supplier is segmenting its market according to ________.

A) behavioral factors B) personality characteristics C) geographic location D) benefits sought E) demographics Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 10) 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 Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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11) One reason demographic variables are the most popular bases for segmenting customer groups is because they ________.

A) create smaller segments B) create more easily accessible segments C) do not involve stereotypes D) are easier to measure than other variables E) involve fewer attributes to consider Answer: D Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

12) Delta, an American video game manufacturer, targets teens between the ages of 13 and 18, providing free game trials and applications. The firm's marketing approach exemplifies ________ segmentation.

A) age and life-cycle B) geographic C) occasion D) gender E) income Answer: A Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 13) ________ segmentation factors divide buyers into different groups based on social class, lifestyle, or personality characteristics.

A) Geographic B) Demographic C) Psychographic D) Behavioral E) User status Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

14) P&G was among the first to use ________ segmentation when it introduced Secret, a deodorant brand specially formulated for women's chemistry.

A) age and life-cycle B) gender C) behavior D) psychographic E) geographic Answer: B Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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15) Which type of market segmentation is generally used by marketers who sell luxury products targeted to the affluent segments of a population?

A) usage rate B) occasion C) income D) benefits sought E) gender Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

16) Bass Pro Shops recognizes that outdoors enthusiasts are a diverse group. Likely segments include hunters, campers, and boaters. What is this segmentation method called?

A) user status B) usage rate C) benefit D) behavioral E) psychographic Answer: E Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 17) 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 Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

18) Bakeries and coffee bistros that offer pumpkin-flavored items only during the autumn season target their consumers primarily through ________ segmentation.

A) psychographic B) demographic C) income D) occasion E) age and life-cycle Answer: D Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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19) 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, lowcalorie meals that appeal to dieters. Frizzles' approach is best referred to as ________ segmentation.

A) age and life-cycle B) user status C) benefit D) demographic E) geographic Answer: C Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 20) 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 Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

21) 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 Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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22) 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 Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 23) Danko International is a multinational company that targets the BRIC countries (Brazil, Russia, India, and China) because they're fast-growing developing economies and use ________ to segment its world markets.

A) political factors B) legal factors C) personality factors D) economic factors E) cultural factors Answer: D Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 24) 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 Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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25) 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 Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

26) 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 Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

27) 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 Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

28) 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 Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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29) If men and women respond dissimilarly to the marketing efforts for a root beer-flavored malt beverage, they are considered ________ market segments.

A) accessible B) measurable C) reachable D) differentiable E) observable Answer: D Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 30) Target and Kohl's have opened smaller-format stores designed to fit the needs of densely packed urban neighborhoods. This is an example of geographic segmentation.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Ethical understanding and reasoning 32) Demographic factors are the most popular bases for segmenting customer groups.

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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

Answer: FALSE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

34) Not all companies that use income segmentation target the affluent.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

35) Cupcake Gourmet, a high-end bakery in Manhattan, segments its customers according to those who frequent their store regularly, those who visit infrequently, and those who have never visited. This is an example of usage-rate segmentation.

Answer: FALSE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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

Answer: FALSE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

37) Multivariable segmentation systems merge and analyze geographic, demographic, lifestyle, and behavioral data to help companies segment their markets.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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

Answer: FALSE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

40) New communications technologies like satellite TV and social media are likely to eliminate the need for markets to be geographically segmented as clusters of countries.

Answer: TRUE Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Information technology 41) For market segments to be beneficial for companies, they must be measurable.

Answer: TRUE Diff: 1 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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42) 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 behavioral variables are the best starting point for building market segments.

Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 43) 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's Oscar Mayer brand markets Lunchables, convenient prepackaged lunches for children. To extend the substantial success of Lunchables, however, Oscar Mayer later introduced Lunchables Uploaded, a version designed to meet the tastes and sensibilities of teenagers. Most recently, the brand launched an adult version, but with the more adult-friendly name P3 (Portable Protein Pack). Other companies focus on the specific age of life-stage groups. For example, whereas most tablet makers have been busy marketing their devices to grown-ups, Amazon has spotted a tinier tablet market. Feedback from parents suggested that they were handing their entertainment-packed Kindle Fire tablet over to their young children for entertainment, education, and babysitting purposes. To tap this young-family market, Amazon introduced FreeTime Unlimited, a multimedia subscription service targeted toward 3- to 8-year-olds. 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.

Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking

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44) 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, Schwinn makes affordable, quality bikes in seven major benefit groups: cruisers, hybrid, bike path, mountain, road, urban, and kids.

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 changes — such as new parents and newlyweds — who 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.

Diff: 3 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 45) 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.

Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Analytical thinking 46) 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.

Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

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47) 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.

Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

AACSB: Reflective thinking 48) 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.

Diff: 2 LO: 6-2: List and discuss the major bases for segmenting consumer and business markets.

49) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

50) 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 Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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51) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

52) 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 Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 53) Although not recommended, some marketers decide to ignore market segmentation and target the whole market with one offer. This is known as ________ marketing.

A) undifferentiated B) differentiated C) niche D) local E) individual Answer: A Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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54) The marketing manager of Refresh Inc., a leading producer of soft drinks, is considering a differentiated marketing strategy. An important consideration is weighing increased sales against ________ before selecting this strategy.

A) decreased production B) increased demand C) increased costs D) decreased prices E) increased profits Answer: C Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 55) 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 Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 56) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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57) Unlike other car rental agencies that are based in airports to serve travelers, Rental Wheelz 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. Rental Wheelz caters to a small share of the large car rental market. From this description, it can be concluded that Rental Wheelz most likely practices ________.

A) undifferentiated marketing B) multi-segmented marketing C) individual marketing D) local marketing E) concentrated marketing Answer: E Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 58) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

59) ________ 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 Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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60) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 61) At the extreme, micromarketing becomes ________ insofar as products and marketing programs are tailored to the needs and preferences of customers.

A) differentiated marketing B) multi-segmented marketing C) local marketing D) mass marketing E) individual marketing Answer: E Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

62) When a company interacts one-on-one with large numbers of customers to create customerunique 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

63) Smaller companies may lack the skills and resources needed to serve larger segments.

Answer: TRUE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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64) A segment is more attractive if it is easy for new competitors to enter the market.

Answer: FALSE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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

Answer: FALSE Diff: 1 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

66) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

67) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

68) The low cost of setting up shop on the Internet makes it even more profitable to serve seemingly small niches.

Answer: TRUE Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Information technology 69) 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 Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

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70) The full positioning of a brand is called the unique selling proposition.

Answer: FALSE Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

71) 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 strategies — ranging 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 marketing — developing 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.

Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 72) 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 massmarketing 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.

Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking

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73) Compare and contrast local and individual marketing.

Answer: Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups — cities, 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.

Diff: 3 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Analytical thinking 74) 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.

Diff: 2 LO: 6-3: Explain how companies identify attractive market segments and choose a markettargeting strategy.

AACSB: Ethical understanding and reasoning 75) 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 with or without the help of marketers.

Answer: D Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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76) Bose promises "better sound through research." This is an example of ________.

A) people differentiation B) channel differentiation C) price differentiation D) services differentiation E) product differentiation Answer: E Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 77) 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 Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

78) 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 Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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79) 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 Diff: 3 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 80) The distinctive yellow and blue "hands held high" logo of a local daycare distinguishes it from other establishments. The logo is prominently displayed on its building, t-shirts worn by the children, and at fundraising events. The daycare has differentiated itself through ________.

A) image B) people C) services D) channels E) positioning Answer: A Diff: 3 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 81) 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 Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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82) 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 relative to 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 Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 83) Eastline, a manufacturer of outdoor patio furniture, positions its products as superior in weatherproofing and durability. This is an example of ________ differentiation.

A) product B) services C) image D) people E) channels Answer: A Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 84) 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 Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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85) 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 Diff: 3 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 86) Using a ________ 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) same-for-less D) less-for-much-less E) less-for-more Answer: A Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 87) 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) same-for-less D) less-for-much-less E) more-for-more Answer: C Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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88) The full positioning of a brand is referred to as the ________.

A) differentiated strategy B) concentrated strategy C) unique selling proposition D) value proposition E) undifferentiated strategy Answer: B Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

89) 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 Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

90) 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 Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

91) 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 Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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92) 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 Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

93) Zeal is a popular automobile brand, and its positioning statement is: "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 Diff: 3 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 94) 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 Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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

Answer: TRUE Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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

Answer: TRUE Diff: 1 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

97) 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 Diff: 3 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 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 attributes — the 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.

Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking 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.

Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

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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 lowerpriced 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.

Diff: 2 LO: 6-4: Discuss how companies differentiate and position their products for maximum competitive advantage.

AACSB: Analytical thinking

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