Chapter 7 - Customer-Driven Marketing Strategy: Creating Value for Target Customers

1) ----- consists of evaluating each market segment’s attractiveness and selecting one or more segments to enter.
A) Positioning
B) Mass customization
C) Market targeting
D) Market segmentation
E) Differentiation

C

2) ----- involves dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.
A) Mass customization
B) Market targeting
C) Market segmentation
D) Differentiation
E) Positioning

C

3) ----- involves actually distinguishing the firm’s market offering to create superior customer value.
A) Mass customization
B) Differentiation
C) Market segmentation
D) Diversifying
E) Targeting

B

4) When marketers at Fair & Leigh Inc. selected the Millennials, a demographic group that includes many college students, as an untapped group of potential customers for their new line of products, they were engaging in ----- .
A) occasion segmenting
B) local marketing
C) market diversification
D) market targeting
E) product positioning

D

5) ----- 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) Mass customization
B) Positioning
C) Segmentation
D) Differentiation
E) Targeting

B

6) Mass marketing involves identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each.

FALSE

7) The customer-driven marketing strategy involves four steps: market segmentation, market targeting, positioning, and differentiation.

TRUE

8) What is differentiation?

Differentiation refers to differentiating the market offering to create superior customer value.

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

The first step is market

10) ----- calls for dividing the market into regions, states, counties, cities, or even neighborhoods.
A) Benefit segmentation
B) Geographic segmentation
C) Demographic segmentation
D) Psychographic segmentation
E) Occasion segmentation

B

11) “Many companies today are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions, cities, and neighborhoods.” This is an example of ----- .
A) geographic segmentation
B) product diversification
C) branding
D) psychographic segmentation
E) demographic segmentation

A

12) ----- segmentation divides the market into segments based on variables such as age, life- cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.
A) Geographic
B) Benefit
C) Occasion
D) Psychographic
E) Demographic

E

13) Delta Motorworks markets its cars based on the age, gender, and income of its customers. Which of the following types of market segmentation is evident here?
A) geographic segmentation
B) benefit segmentation
C) occasion segmentation
D) demographic segmentation
E) psychographic segmentation

D

14) A company selling child-care products ran a television ad depicting woman as being primarily responsible for childcare. Many women viewers considered this regressive, alleging that the ad failed to recognize the much more diversified role of women in today’s world. This is an example of ----- .
A) cause marketing
B) stereotyping
C) niche marketing
D) scapegoating
E) positioning

B

15) ----- segmentation has long been used in clothing, cosmetics, toiletries, and magazines.
A) Behavioral
B) Gender
C) Benefit
D) Occasion
E) Geographic

B

16) Gilron Holidays runs a premium membership club that caters to customers whose annual salary exceeds $100,000. Members of this club are offered seasonal discounts on select luxury hotels in select cities worldwide. Gilron Holidays most likely follows a(n) ----- segmentation approach.
A) gender
B) income
C) occasion
D) benefit
E) geographic

B

17) ----- segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics.
A) Benefit
B) Occasion
C) Geographic
D) Demographic
E) Psychographic

E

18) Marketers who use ----- often segment their markets by consumer lifestyles and base their marketing strategies on lifestyle appeals.
A) demographic segmentation
B) geographic segmentation
C) benefit segmentation
D) psychographic segmentation
E) occasion segmentation

D

19) ----- segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses concerning a product.
A) Behavioral
B) Psychographic
C) Age and life cycle
D) Gender
E) Geographic

A

20) ----- segmentation refers to dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.
A) Gender
B) Psychographic
C) Occasion
D) Geographic
E) Income

C

21) Malcolm Sanders, a graduate student from Boston, makes customized snowboards for local snowboarding enthusiasts. The demand for snowboards peaks during the winter months, a busy time for Malcolm. He advertises more aggressively and sells most of his snowboards around this time. Which market segmentation approach does Malcolm most likely use?
A) gender segmentation
B) psychographic segmentation
C) occasion segmentation
D) geographic segmentation
E) age and life-cycle segmentation

C

22) ----- requires finding the major advantages people look for in a product class, the kinds of people who look for each positive aspect of a product, and the major brands that deliver it.
A) Gender segmentation
B) Psychographic segmentation
C) Benefit segmentation
D) Geographic segmentation
E) Age and life-cycle segmentation

C

23) Calypso Motors recently rolled out its Proteus hatchback. Proteus combines the attractiveness of a luxury car with the excellent agility of a sports car. Calypso Motors is confident that Proteus will appeal to both sports car enthusiasts as well as the luxury segment. Which of the following types of market segmentation is evident here?
A) gender segmentation
B) income segmentation
C) benefit segmentation
D) geographic segmentation
E) age and life-cycle segmentation

C

24) Which of the following refers to a behavioral segmentation variable that involves segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product?
A) user status
B) usage rates
C) gender status
D) income status
E) loyalty status

A

25) In the context of behavioral segmentation, who among the following is a potential user?
A) Anita, who recently had a baby
B) Peter, who recently changed his job
C) Mary, who enrolled as a graduate student in a university last year
D) Gina, who opened a dental clinic in Orange County
E) Raj, who is planning a trip to Hawaii with friends

A

26) In the context of behavioral segmentation, markets segmented by ----- can be categorized into light, medium, and heavy product users.
A) benefits sought
B) loyalty status
C) usage rate
D) user status
E) occasion

C

27) A recent study conducted by Estelle Cosmetics Company showed that heavy users of Estelle’s products comprise a small percentage of the market. The study indicated that less than 7 percent of all shoppers buy nearly 71 percent of Estelle’s products in the United States. This is an example of ----- .
A) benefit segmentation
B) segmentation by loyalty status
C) segmentation by usage rate
D) psychographic segmentation
E) occasion segmentation

C

28) Consumers who show their allegiance to brands, stores, or companies help marketers to segment consumers by their ----- .
A) user status
B) degree of loyalty
C) income
D) geographic location
E) benefit-seeking attitudes

B

29) Which of the following is true about behavioral segmentation on the basis of the loyalty variable?
A) Consumers tend to pay more for products that are targeted at their respective age group or generation.
B) By looking at customers who are shifting away from its brand, a company can learn about its marketing weaknesses and take actions to correct them.
C) Highly loyal customers of a brand are less likely to engage in word-of-mouth publicity than those who are not.
D) Completely loyal customers of a brand are typically loyal to two or three brands of a given product.
E) Only consumers who seek premium or luxury services are subjected to behavioral segmentation based on the loyalty variable.

B

30) Which of the following is true about multivariable segmentation systems?
A) Marketers using multiple segmentation bases tend to ignore smaller markets.
B) Marketers often use multiple segmentation bases to control inflation.
C) Multiple segmentation rarely involves the use of demographic data.
D) Multiple segmentation is ineffective in large markets.
E) Multiple segmentation bases help identify smaller, better-defined target groups.

E

31) Which of the following is NOT a common variable used by both consumer and business marketers while segmenting markets?
A) operating characteristics
B) loyalty status
C) usage rate
D) geographic location
E) benefits sought

A

32) ----- segmentation assumes that nations close to one another will have many common traits and behaviors.
A) Geographic
B) Occasion
C) Psychographic
D) Benefit
E) Demographic

A

33) Double Drill Inc. segments its foreign markets by per capita income. This firm segments the international markets based on ----- .
A) political factors
B) legal factors
C) geographic location
D) economic factors
E) cultural factors

D

34) Pacific Fisheries divides its customers into different regional units, such as Asia, Australia, and the Americas. This is an example of ----- segmentation.
A) demographic
B) psychographic
C) geographic
D) occasion
E) benefit

C

35) Marketers often segment international markets according to the type and stability of government. In such instances, they segment markets based on ----- .
A) geographic location
B) economic factors
C) cultural factors
D) political factors
E) socio-cultural factors

D

36) Which of the following refers to a cultural factor in the context of segmenting international markets?
A) receptivity of foreign firms
B) economic development of the country
C) population income levels
D) stability of the government
E) values and attitudes

E

37) Using ----- segmentation, marketers form segments of consumers who have similar needs and buying behaviors even though they are located in different countries.
A) psychographic
B) demographic
C) occasion
D) benefit
E) intermarket

E

38) Orion Inc. markets luxury watches. It targets the wealthy global elite segment, regardless of their geographic location. Orion most likely uses ----- segmentation.
A) income
B) age-group
C) occasion
D) benefit
E) cross-market

E

39) Teen Mania Inc., a company marketing adventure sports merchandise for teenagers, targets the world’s teenagers, who have similar needs and buying behavior even though they are located in different countries. Which of the following market segmentation is evident here?
A) income segmentation
B) psychographic segmentation
C) gender segmentation
D) intermarket segmentation
E) occasion segmentation

D

40) An American cola-manufacturing company that primarily targets rebellious and adventurous people most likely uses ----- segmentation.
A) occasion
B) geographic
C) income
D) benefit
E) psychographic

E

41) Venus Inc., a company designing and marketing branded diamond jewelry, targets wealthy consumers with similar needs and buying behaviors, even though the consumers are located in different countries. This is an example of ----- segmentation.
A) intermarket
B) loyalty
C) life-cycle
D) income
E) psychographic

A

42) Papillon, a popular retailer of chic women’s clothing, segments its market according to consumer lifestyles. Papillon most likely uses ----- segmentation for segmenting its market.
A) geographic
B) psychographic
C) benefit
D) age and life-cycle
E) occasion

B

43) When the size, purchasing power, and profile of a market segment can be calculated, the market is ----- .
A) measurable
B) profitable
C) substantial
D) actionable
E) competitive

A

44) A market segment that is large enough or profitable enough to serve is ----- .
A) measurable
B) accessible
C) substantial
D) profitable
E) differentiable

C

45) When an effective program can be designed for attracting and serving a particular segment, the segment is best described as ----- .
A) accessible
B) measurable
C) competitive
D) actionable
E) differentiable

D

46) Bailey’s Burgers promotes the Bailey’s Jumbo Burger as a fun snack for teens and young adults. In this instance, Bailey’s Burgers is practicing ----- segmentation.
A) benefit
B) age and life-cycle
C) psychographic
D) geographic
E) gender

B

47) ----- segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
A) Complex
B) Measurable
C) Competitive
D) Differentiable
E) Homogeneous

D

48) Market segments that can be effectively reached and served are ----- .
A) measurable
B) accessible
C) substantial
D) actionable
E) profitable

B

49) Different soft drinks target different personalities. This is an example of ----- segmentation.
A) psychographic
B) demographic
C) occasion
D) life-cycle
E) benefits

A

50) In the scenario, Ruben has segmented his market based on ----- .
A) geography
B) benefits sought
C) occasion
D) degree of loyalty
E) demographics

E

51) Geographic segmentation divides the market into segments based on variables such as age, life- cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.

FALSE

52) Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.

TRUE

53) Psychographic segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics.

TRUE

54) Demographic segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses concerning a product.

FALSE

55) 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.

TRUE

56) When segmenting by user status, markets are segmented into light, medium, and heavy product users.

FALSE

57) When segmenting by usage rate, markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users of a product.

FALSE

58) Marketers usually limit their segmentation analysis to only one major variable.

FALSE

59) Inter-market segmentation refers to forming segments of consumers who have different needs and buying behaviors in a given geographical region.

FALSE

60) Briefly describe geographic segmentation.

Geographic segmentation calls for dividing the market into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. A company may decide to operate in one or a few geographical areas or operate in all areas but pay attention to geographical differences in needs and wants.

61) Why are demographic factors the most popular bases for segmenting customer groups?

One reason is that consumer needs, wants, and usage rates often vary closely with demographic variables. Another is that demographic variables are easier to measure than most other types of variables. Even when marketers first define segments using other bases, such as benefits sought or behavior, they must know a segment’s demographic characteristics to assess the size of the target market and reach it efficiently.

62) Why must marketers guard against stereotypes when using age and life-cycle segmentation?

This is primarily because age is often a poor predictor of a person’s life cycle, health, work or family status, needs, and buying power.

63) Define psychographic segmentation.

Psychographic segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic characteristics.

64) Briefly describe occasion segmentation.

Occasion segmentation refers to dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

65) How does loyalty status enhance a company’s understanding of its consumers?

A company can learn a lot by analyzing loyalty patterns in its market. It should start by studying its own loyal customers. In contrast, by studying its less-loyal buyers, a company can detect which brands are most competitive with its own. By looking at customers who are shifting away from its brand, the company can learn about its marketing weaknesses and take actions to correct them.

66) List three variables that are used in segmenting business markets.

Business marketers use many variables to segment their markets, such as customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.

67) Explain the different segmentation variables used in segmenting consumer markets.

1. Geographic segmentation calls for dividing the market into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods. A company may decide to operate in one or a few geographical areas or operate in all areas but pay attention to geographical differences in needs and wants. 2. Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. Demographic factors are the most popular bases for segmenting customer groups. 3. Psychographic segmentation divides buyers into different segments based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic characteristics. 4. Behavioral segmentation divides buyers into segments based on their knowledge, attitudes, uses, or responses concerning a product. Many marketers believe that behavior variables are the best starting point for building market segments.

68) Describe how marketers use multiple segmentation bases to their advantage.

Marketers rarely limit their segmenting 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 who share likes, dislikes, lifestyles, and purchase behaviors. Companies often begin by segmenting their markets using a single base, and then expand using other bases.

69) Why do companies opt for market segmentation?

Buyers in any market differ in their wants, resources, locations, buying attitudes, and buying practices. Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.

70) Why do international markets need to be segmented?

Different countries, even those that are close together, can vary greatly in their economic, cultural, and political makeup. Thus, just as they do within their domestic markets, international firms need to group their world markets into segments with distinct buying needs and behaviors.

71) What are the primary requirements for effective market segmentation?

To be useful, market segments must

72) Which of the following is LEAST relevant when a firm evaluates different market segments?
A) segment size and growth
B) company resources
C) segment structural attractiveness
D) core competencies of competitors
E) company objectives

D

73) A segment is less attractive if it ----- .
A) is difficult for new entrants to enter
B) is substantial
C) is actionable
D) already contains many strong and aggressive competitors
E) contains weak suppliers

D

74) A ----- consists of a set of buyers who share common needs or characteristics that the company decides to serve.
A) marketing channel
B) citizen-action group
C) distribution channel
D) target market
E) customer franchise

D

75) ----- refers to a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.
A) Individual marketing
B) Local marketing
C) Niche marketing
D) Undifferentiated marketing
E) Segmented marketing

D

76) Sanguine Services is a small company that uses a marketing strategy in which its limited resources are employed to target a large share of two small market segments. Sanguine most likely uses which of the following marketing strategies?
A) individual marketing
B) one-to-one marketing
C) mass marketing
D) concentrated marketing
E) trigger-based marketing

D

77) A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each is known as ----- .
A) mass marketing
B) differentiated marketing
C) concentrated marketing
D) individual marketing
E) cross-marketing

B

78) Which of the following is a disadvantage of using a differentiated marketing strategy?
A) generates far lower sales compared to an undifferentiated marketing strategy
B) customer loyalty is negatively impacted and difficult to obtain
C) the costs of doing business increase
D) quality control problems increase
E) product safety decreases

C

79) With a(n) ----- marketing strategy, a firm goes after a large share of one or a few smaller niches.
A) individual
B) mass
C) concentrated
D) differentiated
E) local

C

80) Which of the following is true about the concentrated marketing strategy?
A) Companies that rely on a few segments for all of their business will suffer if a segment turns sour.
B) Concentrated marketing is not profitable for most firms.
C) Niche marketing involves few risks for most firms.
D) Concentrated marketing involves going after a small share of a large market.
E) The Internet has limited the use and benefits of niche marketing.

A

81) ----- is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.
A) Mass marketing
B) Trigger-based marketing
C) Differentiated marketing
D) Concentrated marketing
E) Micromarketing

E

82) ----- marketing tailors brands and promotions to the needs and wants of regional customer groups, such as cities, neighborhoods, and even specific stores.
A) Undifferentiated
B) Differentiated
C) Niche
D) Local
E) Individual

D

83) Which of the following is a drawback of local marketing?
A) Local marketing increases manufacturing costs by reducing the economies of scale.
B) Local marketing requires specialization that is difficult to identify.
C) Local marketing is not profitable for most small firms.
D) Local marketing cannot accommodate the needs of modern buyers who are technology savvy.
E) Local marketing almost always results in brand dilution.

A

84) Andrew Levitt runs a retail store in Norristown. Andrew’s store stocks cold weather products as Norristown mostly has sub-zero temperatures. Which of the following is evident here?
A) local marketing
B) concentrated marketing
C) segmented marketing
D) mass marketing
E) direct marketing

A

85) A public relations firm tailors its advertising and promotional services according to the needs and preferences of specific customers. This exemplifies ----- .
A) trigger-based marketing
B) mass marketing
C) segmented marketing
D) individual marketing
E) concentrated marketing

D

86) When a company customizes its merchandise store by store to meet shopper needs, it is practicing ----- marketing.
A) niche
B) mass
C) local
D) segmented
E) trigger-based

C

87) ----- is the process by which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs.
A) Product diversification
B) Micromarketing
C) Mass customization
D) Differentiated marketing
E) Local marketing

C

88) When order requests come in, the designers of Titus Furniture often go to a client’s location to note their requirements, budget, and expected date of delivery. In this way, Titus Furniture is successful in tailor-making products for its customers. This is an example of ----- .
A) market diversification
B) undifferentiated marketing
C) mass customization
D) differentiated marketing
E) trigger-based marketing

C

89) Which of the following marketing strategies is most suitable for smaller firms with limited resources?
A) mass marketing
B) undifferentiated marketing
C) niche marketing
D) differentiated marketing
E) one-to-one marketing

C

90) Rex Steelworks makes steel sheets which the firm markets and sells to companies all over the world. Which of the following marketing strategies is most suitable for Rex Steelworks?
A) one-to-one marketing
B) undifferentiated marketing
C) individual marketing
D) local marketing
E) trigger-based marketing

B

91) GamaPix makes point-and-shoot cameras and handycams for amateur photographers and hobbyists. It also has a separate line of cameras dedicated to professional photographers. Additionally, it designs separate offers for each segment. Which of the following marketing strategies does GamaPix most likely use in this instance?
A) mass marketing
B) differentiated marketing
C) individual marketing
D) local marketing
E) direct marketing

B

92) Jean Malone, a market researcher, recently found that most people in Bradburg County purchase automobiles with predominantly functional designs and prefer darker colors. Which of the following marketing strategies should Jean most likely recommend to an automobile dealer interested in opening a dealership in Bradburg County?
A) one-to-one marketing
B) undifferentiated marketing
C) segmented marketing
D) individual marketing
E) direct marketing

B

93) Shine Enterprises mass produces an all-purpose floor cleaner that is aimed at the whole market. This firm uses a(n) ----- marketing strategy.
A) segmented
B) undifferentiated
C) individual
D) niche
E) one-to-one

B

94) ----- marketing is more suited for uniform products, such as grapefruit or steel.
A) Niche
B) Undifferentiated
C) One-to-one
D) Trigger-based
E) Local

B

95) ----- marketing is more suited for products that vary in design.
A) Mass
B) Local
C) Direct
D) Differentiated
E) Individual

D

96) A catalog retailer in the United States has identified African American professionals between the ages of 35 and 45 as a group of potential customers for its products. The retailer plans to direct its marketing efforts toward this group of consumers. Which of the following market segmentation variables did the catalog retailer most likely use?
A) demographic
B) psychographic
C) user status
D) loyalty status
E) usage rate

A

97) In marketing his wooden pens and pencils to specialty-shop customers, Ruben was most likely using ----- marketing.
A) mass
B) trigger-based
C) concentrated
D) segmented
E) individual

C

98) If Ruben interacted one-to-one with his customers to design his products and services according to individual needs, he would be practicing ----- .
A) concentrated marketing
B) trigger-based marketing
C) undifferentiated marketing
D) mass customization
E) segmented marketing

D

99) In evaluating different market segments, a firm should look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources.

TRUE

100) The relative power of buyers affects segment attractiveness.

TRUE