Marketing Management, 16e (Kotler)

Chapter 6 Identifying Market Segments and Target Customers

1) Which of these is NOT one of the requirements of effective targeting?

A) Identifying distinct groups of buyers with who differ in their needs and wants
B) Selecting one or more market segments to enter
C) Establishing and communicating the right benefit(s) for the company's market offering
D) Delivering the right benefit(s) for the company's market offering
E) Ensuring that the market offering is unique in every respect
Answer: E
Diff: 3
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

2) The process of identifying customers for whom the company will optimize its offering is
called ________.
A) targeting
B) dominance
C) positioning
D) segmentation
E) research
Answer: A
Diff: 1
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

3) In addition to identifying which customers the company will prioritize in its marketing efforts,
targeting also identifies which customers the company will ________.
A) ignore
B) set as second (and potentially third) priority
C) reserve for future focus
D) share with competitors
E) demarket to in order to reduce demand
Answer: A
Diff: 1
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

1
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4) ________ focuses on identifying customers whose needs the company can fulfill by ensuring
that its offerings are customized to their needs.
A) Tactical targeting
B) The marketing mix
C) Strategic targeting
D) Product customization
E) Mass customization
Answer: C
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Application of knowledge

5) ________ identifies the ways in which the company can reach those customers it has deemed
strategically important.
A) Tactical targeting
B) The marketing mix
C) Strategic targeting
D) Product customization
E) Mass customization
Answer: A
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Application of knowledge

6) ________ is the ability to meet each customer's requirements by preparing products on a mass
basis but then individually finalizing the product for each customer, along with corresponding
services, programs, and communications.
A) Strategic targeting
B) Customer focus
C) Tactical targeting
D) Mass customization
E) Mass marketing
Answer: D
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

7) How has media fragmentation complicated the strategy of mass marketing?

A) By expanding the number of products that need to be produced
B) By opening the company up to greater competition
C) By making it more difficult and more expensive to reach a mass audience
D) By losing messaging control through social media exchanges
E) By losing the ability to respond to individual customer communications
Answer: C
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking
2
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8) Which of these is considered the ultimate level of targeting?
A) The one-to-one approach
B) Mass marketing
C) Mass customization
D) Personalized service
E) Tactical targeting
Answer: A
Diff: 1
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

9) ________ reflects the company's choice of which customers it will prioritize and which
customers it will ignore when designing, communicating, and delivering its offering.
A) The marketing mix
B) Marketing strategy
C) Customer focus
D) Targeting
E) The customer-first approach
Answer: D
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

10) Bespoke tailoring, in which tailors create a unique garment for each individual customer, is
an example of ________.
A) mass marketing
B) mass customization
C) the one-to-one approach
D) customer focus
E) tactical targeting
Answer: C
Diff: 3
LO: 6.1: Explain the essence of targeting.
AACSB: Analytical thinking

11) ________ strives to reach all strategically important customers in an effective and cost-
efficient manner.
A) Strategic targeting
B) All-segment marketing
C) Customer focus
D) Tactical targeting
E) Customer prioritization
Answer: D
Diff: 3
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking
3
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12) In ________ marketing, the firm ignores segment differences and goes after the whole
market with one offer.
A) niche
B) mass
C) guerrilla
D) segmented
E) differentiated
Answer: B
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

13) Coca-Cola's original marketing strategy that offered a single drink Coca-Cola Classic in a
single sized bottle with the advertising theme "Coke is it," is an example of ________ marketing.
A) concentrated
B) niche
C) differentiated
D) micro
E) undifferentiated
Answer: E
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Analytical thinking

14) Although the one-to-one approach of extreme targeting is an attractive idea, for many
companies, the required investment in information collection, hardware, and software may
exceed the financial return.
Answer: TRUE
Diff: 1
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

15) An undifferentiated marketing approach to full market coverage designs a marketing

program for a product with a superior image that can be sold to the broadest number of buyers.
Answer: TRUE
Diff: 1
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

16) The ultimate level of targeting is the one-to-one approach.

Answer: TRUE
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

4
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17) Explain the difference between strategic targeting and tactical targeting.
Answer: Strategic targeting focuses on customers whose needs the company can fulfill by
ensuring that its offerings are customized to their needs. Tactical targeting identifies the ways in
which the company can reach these strategically important customers. Together, strategic and
tactical targeting seek to answer two questions, the first focusing on strategy and the second on
tactics: Who are the customers that the company can establish a mutually beneficial relationship
with? and How can the company reach these customers most effectively and efficiently?
Diff: 3
LO: 6.1: Explain the essence of targeting.
AACSB: Reflective thinking

18) How does the "configurator" typically found on car companies' websites reflect the concept
of mass customization?
Answer: These tools, and the manufacturing systems behind them, allow companies to offer a
standard vehicle platform (the "mass" part) that customers can then fine tune to their personal
preferences by choosing from an array of features and capabilities (the "customization" part).
Diff: 3
LO: 6.1: Explain the essence of targeting.
AACSB: Analytical thinking

19) How has media fragmentation complicated efforts to engage in mass marketing?
Answer: One of the theoretical advantages of mass marketing is the cost efficiency of sharing a
single message with a wide audience. However, many critics have pointed to the increased
splintering of the market and the proliferation of marketing channels and communication, which
make it difficult and increasingly expensive to reach a mass audience.
Diff: 2
LO: 6.1: Explain the essence of targeting.
AACSB: Analytical thinking

20) Explain the concept of mass marketing.

Answer: In mass marketing, the firm ignores segment differences and goes after the whole
market with one offer. It designs a marketing program for a product with a superior image that
can be sold to the broadest number of buyers via mass distribution and mass communications.
Diff: 1
LO: 6.1: Explain the essence of targeting.
AACSB: Analytical thinking

21) What is the first step in strategic targeting?

A) Designing the product offering
B) Pinpointing the customer need(s) the offering will be designed to fulfill
C) Crafting the positioning statement
D) Outlining the marketing mix
E) Deciding how the product line can be promoted
Answer: B
Diff: 3
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking
5
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22) Which of these is the difficult trade-off that must always be made in strategic targeting?
A) Reducing the workforce to align with chosen targets
B) Eliminating part of the product portfolio
C) Changing advertising agencies and other strategic partners
D) Changing the company's core messaging
E) Deliberately foregoing some potential customers
Answer: E
Diff: 3
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

23) In addition to asking if the company can create superior value for a group of potential
customers, what other question must the company ask about these customers?
A) Can these customers create superior value for the company?
B) Do these customers support the company's image?
C) Can the company reach them via advertising?
D) Do these customers present a reputational risk?
E) Do these customers have the ability to pay?
Answer: A
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

24) Companies with large fixed costs and smaller variable costs, as well as young companies in
their early stages looking for rapid growth, might target low-margin or even unprofitable
customers because of their ________ value.
A) scale
B) economic
C) social
D) informational
E) feedback
Answer: A
Diff: 3
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

6
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25) ________ is a reflection of the company's ability to outdo the competition in fulfilling the
needs of target customers—in other words, to create superior customer value.
A) Target profitability
B) Target compatibility
C) Segment ranking
D) Segment priority
E) Competitive compatibility
Answer: B
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

26) Access to scarce resources gives the company a distinct competitive edge because it
________.
A) allows the company to charge more for its products
B) restricts the strategic options of competitors
C) gives the company a prestige image
D) ensures an uninterrupted supply of materials
E) positions the company as the market leader
Answer: B
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

27) A ________ has three characteristics: (1) It is a source of competitive advantage and makes a
significant contribution to perceived customer benefits, (2) it has applications in a wide variety
of markets, and (3) it is difficult for competitors to imitate.
A) strategic competency
B) company strength
C) benefit strength
D) core competency
E) tactical advantage
Answer: D
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

28) ________ refers to nonmonetary benefits that customers bring to the company.
A) Customer-company benefits
B) Tactical value
C) Perceived value
D) Nonmeasurable value
E) Strategic value
Answer: E
Diff: 1
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge
7
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29) Lead users or early adopters can present important ________ to a company in the early
stages of a product launch.
A) information value
B) scale value
C) monetary value
D) confirmation value
E) company value
Answer: A
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

30) Target customers can create two kinds of value for a company: monetary and ________.
A) tactical
B) financial
C) strategic
D) market share
E) profitability
Answer: C
Diff: 1
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

31) ________ reflects the ability of a market segment to create superior value for the company.
A) Target attractiveness
B) Target value
C) Estimated segment profitability
D) Tactical value
E) Net present value
Answer: A
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

32) Which of these was NOT mentioned in the chapter as one of the essential for the success of a
company's targeting strategy?
A) Business infrastructure
B) Access to scare resources
C) First mover advantage
D) Skilled employees
E) Strong brands
Answer: C
Diff: 3
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

8
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33) The decision to own and nurture the resources and competencies that make up the essence of
the business is a decision to focus on ________.
A) strategic priorities
B) value-added functions
C) core competencies
D) essential technologies
E) management priorities
Answer: C
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

34) Relative to the monetary value of a target market, its potential strategic value is not as readily
observable and can be difficult to quantify.
Answer: TRUE
Diff: 1
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

35) A well-managed company would never knowingly target customers who have little potential
to generate profits.
Answer: FALSE
Diff: 1
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

36) A company's decision to offshore the manufacturing of its products reflects the desire to
focus on its core competencies in other business functions.
Answer: TRUE
Diff: 1
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

37) Describe a situation in which a company might deliberately target certain customers even if
those buyers have little potential to generate profit for the company.
Answer: A company might target highly influential customers who might never generate any
profit for the company directly because these customers can exert significant influence on
broader and more profitable segments of the market that decide to purchase the company's
offering.
Diff: 3
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Reflective thinking

9
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38) What are the two kinds of value that target customers can create for a company?
Answer: Target customers can create two kinds of value for a company: monetary and strategic.
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

39) What are the three main types of strategic value that customers can bring to a company?
Answer: The three main types of strategic value are social value, scale value, and information
value.
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

40) Identify and provide examples of six company resources that are essential to success in its
targeting strategy.
Answer: The six resources are
• Business infrastructure (examples include manufacturing infrastructure and service
infrastructure such as call centers and customer relationship management solutions)
• Access to scarce resources (examples include prime retail locations or unique natural
resources)
• Skilled employees (including those with valuable technological, operational, and business
expertise in such as areas as research and development and consulting)
• Technological expertise (including proprietary processes and intellectual property such as
patents and trade secrets)
• Strong brands (particularly in commoditized industries where only minor differences exist
among the competitive products and services; the Coca-Cola brand is a great example)
• Collaborator networks (including vertical networks of collaborators in the company's supply
chain and horizontal networks of manufacturing and other functional capabilities)
Diff: 3
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

41) What are the three characteristics of a core competency?

Answer: The three characteristics are (1) being a source of competitive advantage and makes a
significant contribution to perceived customer benefits, (2) having applications in a wide variety
of markets, and (3) being difficult for competitors to imitate.
Diff: 2
LO: 6.2: Define the key principles of strategic targeting.
AACSB: Application of knowledge

10
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42) Which of these is NOT one of the major categories of characteristics that make up an
insightful customer profile?
A) Demographic factors
B) Credit usage factors
C) Geographic factors
D) Behavioral factors
E) Psychographic factors
Answer: B
Diff: 1
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

43) Age, gender, income, occupation, level of education, religion, ethnicity, nationality,
employment status, population density, social class, household size, and stage in the life cycle
are all considered ________ factors.
A) personal
B) behavioral
C) demographic
D) psychographic
E) geographic
Answer: C
Diff: 1
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

44) Product experience, buying frequency, and role in the purchase decision are all ________
factors.
A) personal
B) behavioral
C) demographic
D) psychographic
E) geographic
Answer: B
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

11
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45) If Walmart divides potential customers into those who prefer to shop online versus those
who prefer to shop in person at a Walmart location, it is using a ________ factor.
A) personal
B) behavioral
C) demographic
D) psychographic
E) geographic
Answer: B
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Analytical thinking

46) A company that sends digital coupons to consumers as they roam through the local retail
zone with their phones in hand is using a ________ factor to select target buyers.
A) personal
B) behavioral
C) demographic
D) psychographic
E) geographic
Answer: E
Diff: 1
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Analytical thinking

47) Of the four categories of factors that make up a customer profile, which is unique in that it
includes unobservable characteristics?
A) personal
B) behavioral
C) demographic
D) psychographic
E) geographic
Answer: D
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

48) A company that analyzes web-surfing habits to infer consumers' interest in cultural activities
is using ________ factors to for tactical targeting.
A) personal
B) behavioral
C) demographic
D) psychographic
E) geographic
Answer: D
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Analytical thinking
12
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49) The increasing ability that marketers now have to link consumers' psychographic factors with
their demographic, geographic, and behavioral characteristics has been made possible by which
of these developments?
A) Looser regulations regarding digital privacy
B) Mobile and online tracking technologies
C) A better understanding of consumer psychology
D) The performance improvements of 4G and 5G mobile networks
E) The consolidation of social media platforms
Answer: B
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Analytical thinking

50) ________ identifies the most cost-effective ways to communicate and deliver value to
customers by linking customer needs that the offering wants to fulfill with observable customer
characteristics.
A) Demographic profiles
B) Strategic targeting
C) The marketing mix
D) Tactical targeting
E) Marketing planning
Answer: D
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

51) Which of these statements about strategic and tactical targeting is true?
A) Tactical targeting is far more important than strategic targeting.
B) Strategic targeting is far more important than tactical targeting.
C) They are complementary and inseparable facets of the process of identifying target customers.
D) With so much customer information available now, companies can often skip tactical
targeting.
E) It helps to start with tactical targeting and them "back up" to strategic targeting.
Answer: C
Diff: 1
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

13
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52) ________ are detailed profiles of hypothetical target consumers, imagined in terms of
demographic, psychographic, geographic, or other descriptive attitudinal or behavioral
information.
A) Personas
B) Target customers
C) Virtual shoppers
D) Brand personalities
E) Shopper images
Answer: A
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

53) Which of these is a key advantage of using one or more personas to represent target
customers?
A) Those personas can become the face of the brand, even to the point of appearing in the
company's advertising.
B) Doing so eliminates the need to conduct detailed customer research on a broad cross spectrum
of consumers.
C) Doing so makes it easier to visualize target buyers and understand how they are likely to
respond to the offering.
D) Because they represent all target customers, they reduce errors in tactical planning and
execution.
E) They help companies avoid accusations of unfair targeting.
Answer: C
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

54) Unilever's imaginary consumer "Katie," who personifies the haircare needs, perceptions, and
attitudes of 20-something women, is a ________.
A) spokesmodel
B) brand ambassador
C) brand enthusiast
D) persona
E) brand image
Answer: D
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Analytical thinking

14
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55) The ________ principle in tactical targeting reflects the degree to which the company is able
to reach all strategically viable customers whose needs can be fulfilled in a way that benefits the
company and its collaborators, make them aware of the company's offering, and give them
access to the offering.
A) effectiveness
B) cost-efficiency
C) productivity
D) payback
E) net present value
Answer: A
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

56) The ________ principle mandates that the company's communication and distribution reach
only the customers it has targeted.
A) effectiveness
B) cost-efficiency
C) productivity
D) payback
E) net present value
Answer: B
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Application of knowledge

57) Dennis asks his father to buy him a PlayStation for his birthday. With respect to consumer
decision roles, which role is Dennis currently playing?
A) Initiator
B) Influencer
C) Decider
D) Buyer
E) Gatekeeper
Answer: A
Diff: 2
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Analytical thinking

58) A well-designed persona represents all target customers.

Answer: FALSE
Diff: 1
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

15
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59) An essential element of tactical targeting is ascertaining the profile characteristics of
strategically important customer segments.
Answer: TRUE
Diff: 1
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

60) Differentiate the objectives of strategic and tactical targeting.

Answer: Although both processes involve identifying target customers, tactical targeting has a
different objective: to determine which customers to target and which to ignore, and to determine
how the company's offering can be effectively and cost-efficiently communicated and delivered
to the target customers that have already been selected.
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

61) What is the purpose of creating one or more personas as part of tactical targeting?
Answer: Personas are a way for marketing researchers and planners to bring their acquired
information and insights to life. By visualizing specific individuals, even if imaginary, marketers
can incorporate a well-defined target-customer point of view in all their marketing decision
making.
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

62) What is the risk of relying on personas for tactical targeting?

Answer: Personas can oversimplify the marketer's view of target segments because these
imagined characters don't represent all target customers. A persona can help the marketer
visualize how customers will respond to the offering, but it doesn't take the place of solid
statistical research into real customers.
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

63) How does tactical targeting garner information on strategically targeted customers in order to
communicate and deliver the offering to them?
Answer: Tactical targeting identifies the most cost-effective ways to accomplish this by linking
the customer need that the offering wants to fulfill with observable customer characteristics.
These observable factors–the customer profile–involve demographic, geographic, behavioral,
and psychographic descriptors.
Diff: 3
LO: 6.3: Describe how to effectively communicate and deliver offerings to target customers.
AACSB: Reflective thinking

16
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64) Which of these statements about single-segment marketing is true?
A) It is the exception to the rule; most companies target multiple segments.
B) It is invariably more successful than the unfocused multi-segment approach.
C) It is the end goal of most developing companies.
D) Companies targeting single segments usually focus on large, vaguely defined groups of
customers.
E) It is never a good way to achieve a strong market presence.
Answer: A
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

65) Which of these is a key benefit that Allegiant Air has enjoyed from its decision to focus on
providing leisure travelers with affordable nonstop flights from smaller markets to popular
vacation destinations?
A) Its reputation as "Party Air" gives it a distinct positioning advantage.
B) By staying off the beaten track, it avoids serious competition on most of its routes.
C) It can fly to popular destinations multiple times per day.
D) As a niche marketer, it doesn't need to worry about profitability.
E) It is viewed by major airlines as an innovation leader.
Answer: B
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

66) Which of these is an advantage that firms often realize by focusing on a single market
segment?
A) The ability to concentrate risk
B) Greater freedom to raise prices
C) Less pressure to meet extreme customer demands
D) The opportunity to gain deep knowledge of customer needs
E) The lack of viable competition
Answer: D
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

67) Which of these is generally true of niche customers?

A) They will pay a premium to the firm that best satisfies their needs.
B) They are ferocious price shoppers, always in search of the lowest cost.
C) They are less demanding than mass-market consumers.
D) They value the sense of being unique and don't want multiple product offerings.
E) They are invariably less profitable.
Answer: A
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking
17
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68) Which of these is one of the recognized approaches to selective specialization?
A) Product specialization
B) Brand specialization
C) Reputational specialization
D) Innovation specialization
E) Need specialization
Answer: A
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

69) In which of these strategies does a firm concentrate on meeting multiple needs of a given
customer group?
A) Product specialization
B) Brand specialization
C) Reputational specialization
D) Market specialization
E) Need specialization
Answer: D
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

70) Which of these is a risk of creating offerings based on product development capability and
production capacity, instead of devising offerings designed to satisfy explicit customer needs?
A) Creating inventory overages and outages
B) Creating offerings that compete for the same customers
C) Failing to profit-balance the product portfolio
D) Overusing production capacity
E) Underusing production capacity
Answer: B
Diff: 1
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

18
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71) If Ford markets its Transit van to government agencies, package delivery companies, and
airport shuttle firms, it is engaging in the ________ specialization form of multi-segment
targeting.
A) product
B) market
C) customer
D) brand
E) niche
Answer: A
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Analytical thinking

72) Volkswagen concentrates on the small-car market and Porsche on the sports car market.
These would be examples of what is called ________.
A) single-segment targeting
B) selective targeting
C) product specialization
D) market specialization
E) full market coverage
Answer: A
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Analytical thinking

73) All of the following are benefits of the ________ approach to target market selection:
gaining a strong knowledge of the segment's needs; establishing a strong market presence; and
achieving operating economies through specializing in production, distribution, and promotion.
A) single-segment targeting
B) selective targeting
C) product specialization
D) market specialization
E) full market coverage
Answer: A
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

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74) Which of the following best represents the chief advantage of pursuing a selective
specialization multi-segment strategy?
A) It makes the company almost bulletproof to competitors' actions.
B) It minimizes the firm's risk through diversification.
C) It creates synergy between markets.
D) It is a low-cost strategy.
E) It treats all buyers the same and, therefore, lowers promotion costs.
Answer: B
Diff: 3
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

75) Hallmark has found enduring success in the greeting card industry with a mass marketing
approach.
Answer: FALSE
Diff: 1
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

76) With product specialization, the firm sells a certain product to multiple market segments with
different needs.
Answer: TRUE
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

77) Most companies today engage in single-segment marketing.

Answer: FALSE
Diff: 1
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

78) Discuss the problems that can arise when companies targeting multiple segments create
offerings based on their product development capability and production capacity, instead of
devising offerings designed to satisfy explicit customer needs.
Answer: When targeting multiple customer segments, some companies make the mistake of not
aligning the attributes of their offerings with the distinct value sought by target customers in each
segment. This often occurs when companies create offerings based on their product development
capability and production capacity, instead of devising offerings designed to satisfy explicit
customer needs. Such an approach is problematic, because unless the company is clear on how
its individual offerings will address the needs of each segment targeted, the offerings may end up
competing for the same customer segment(s) while the needs of other segments are ignored. In
addition, target customers might be confused and find it difficult to distinguish among multiple
offerings that lack the ability to deliver the specific value they seek.
Diff: 3
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking
20
Copyright © 2022 Pearson Education, Inc.
79) Give a good reason why a firm that starts out focusing on a single segment eventually target
multiple segment.
Answer: One good reason is that the firms initial customers grow and become more diverse,
requiring unique responses to their needs. Another reason is that to keep growing–or to survive at
all, if its original customer base disappears–the firm may find that it needs to find new markets
for its existing products. Competitive pressures may force it to become a market specialist as
well. If competing firms begin to offer a full spectrum of product solutions for a given market,
customers may pull away from any firm that offers only a single niche offering.
Diff: 3
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

80) Can a firm be both a product specialist and a market specialist when it comes to choosing
target segments? Explain your answer and provide an example.
Answer: Yes, a firm can engage in both product (selling a given product to multiple segments)
and market specialization (meeting multiple needs of a given segment). John Deere for example,
operates as a product specialist when it sells riding lawn mowers to both homeowners and
residential landscape companies. And it operates as market specialist when it offers a diverse
range of products to meet multiple needs of farmers, with different machines for planting,
spraying, harvesting and other farming needs.
Diff: 3
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

81) Why would any firm want to restrict itself to a single segment, when multiple segments
suggest the promise of more sales?
Answer: There could be several good reasons to remain a single segment company. (1) The
simplest reason is that a firm may not be capable of creating and delivering a compelling value
offering to more than one segment. It might be limited by technological capabilities, production
or service capacity, or geographical reach, for instance. (2) A firm may conclude that focusing its
resources and "going deep" in a single segment will generate more revenues and profits than
spreading itself thin by "going wide" across multiple segments. (3) When brand image is an
important factor, there could be reputational risks for entering some markets. If Rolls-Royce
suddenly entered the economy car segment, for instance, this would tarnish the reputation of
exclusivity that helps the brand compete in the very top of the luxury car segment. (4) A firm
may conclude that even though it can offer compelling customer value to additional segments,
some of these segments might not hold out promise of providing adequate company value in
return. Bricks-and-mortar retailers, for instance, routinely choose to stay out of geographic
market segments that are too thinly populated to support the costs of running stores, even if they
could meet the needs of those customers.
Diff: 3
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

21
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82) Briefly describe single-segment targeting with an example.
Answer: With single-segment targeting, the firm markets to only one particular segment.
Porsche concentrates on the sports car market and Volkswagen on the small-car market – its
foray into the large-car market with the Phaeton was a failure in the United States.
Through concentrated marketing, the firm gains deep knowledge of the segment's needs and
achieves a strong market presence. It also enjoys operating economies by specializing its
production, distribution, and promotion. If it captures segment leadership, the firm can earn a
high return on its investment.
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

83) Briefly differentiate product specialization and market specialization.

Answer: With product specialization, the firm sells a certain product to several different market
segments. A microscope manufacturer, for instance, sells to university, government, and
commercial laboratories, making different instruments for each and building a strong reputation
in the specific product area. The downside risk is that the product may be supplanted by an
entirely new technology. With market specialization, the firm concentrates on serving many
needs of a particular customer group, such as by selling an assortment of products only to
university laboratories. The firm gains a strong reputation among this customer group and
becomes a channel for additional products its members can use. The downside risk is that the
customer group may suffer budget cuts or shrink in size.
Diff: 2
LO: 6.4: Explain how to develop strategies to target multiple market segments.
AACSB: Reflective thinking

84) What sort of segmentation is DeBeers using when it markets a "right-hand ring" for
unmarried women?
A) Demographic—age
B) Demographic—life cycle stage
C) Psychographic
D) Gender
E) Race and culture
Answer: B
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

22
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85) What sort of segmentation is Pfizer using when it markets both Centrum Adults and Centrum
Silver Adults?
A) Demographic—age
B) Demographic—life cycle stage
C) Psychographic
D) Gender
E) Race and culture
Answer: A
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

86) In addition to being easy to measure, why are demographic variables used so often in
consumer marketing?
A) Consumers happily supply these data points to help marketers.
B) These variables are often associated with consumer needs and wants.
C) As much as they don't like to admit it, consumers are driven by social class and income status.
D) There are no government regulations to restrict the collection of these variables.
E) They are foolproof predictors of consumer purchasing behavior.
Answer: B
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

87) A common label for Generation Y, born between 1982 and 2000, is ________.
A) the digital divide
B) the Silent Generation
C) the Net Generation
D) Baby Boomers
E) Millennials
Answer: E
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

23
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88) Why do marketers often use specific images, phrases, and music when targeting specific
generations?
A) It's cheaper to keep licensing the same intellectual property.
B) Each generation expects advertisers to use creative elements that remind them of their shared
youth.
C) These communication elements reflect the shared experiences that a generation typically has.
D) Generation-specific creative materials help marketers exclude customers they aren't targeting.
E) People's emotional connections tend to stagnate as they age, so images of younger days are
more appealing.
Answer: C
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

89) Why do you think lists of the names of newlyweds so much more expensive than other
contact lists sold in the direct-marketing industry?
A) Marketing to newlyweds is a prestige segment of marketing.
B) Newlyweds often go through a spending burst as they set up households and consolidate
spending patterns.
C) Newlyweds charge more to sell their personal data.
D) Information on new marriages is difficult to find and verify.
E) Marriage is an optimistic event so people naturally spend more.
Answer: B
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

90) The gigantic "Singles Day" shopping extravaganza in China is a reflection of which variable
in demographic targeting?
A) Age
B) Location
C) Income
D) Stage in life cycle
E) Gender
Answer: D
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

24
Copyright © 2022 Pearson Education, Inc.
91) Which of these is a potential shortcoming of using income as a consumer segmentation
variable?
A) Income is nearly impossible to find as a research variable.
B) People don't like talking about how much money they make.
C) It's discriminatory to only market products to higher-income consumers.
D) Income doesn't always track with purchase behavior.
E) New U.S. advertising regulations prohibit targeting based on income.
Answer: D
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

92) What does the "hourglass" phenomenon reflect in consumer segmentation?

A) The hourglass reflects how time-starved most U.S. consumers now are.
B) Many consumers are migrating away from middle ground offerings and retailers toward
discount and premium offerings.
C) Record numbers of consumers now buy luxury products over middle tier offerings.
D) It represents online shopping at one end and bricks-and-mortar at the other.
E) It represents the collapse of the mainstream shopping mall.
Answer: B
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

93) Which of these is an advantage some companies have discovered after targeting lower-
income segments of consumers?
A) Less competition
B) Reputational rebound
C) Lower expectations
D) More sales channels
E) Simpler distribution
Answer: A
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

25
Copyright © 2022 Pearson Education, Inc.
94) ________ reflects awareness that different ethnic and cultural segments have sufficiently
different needs and wants to require targeted marketing activities and that a mass market
approach is not refined enough for the diversity of the marketplace.
A) The multi-price strategy
B) Multicultural marketing
C) The end of mass marketing
D) Single-segment targeting
E) Music-based promotion
Answer: B
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

95) ________ divides the market into units such as nations, states, regions, counties, cities, or
neighborhoods.
A) Spatial segmentation
B) Location-based social networking
C) GPS targeting
D) Geographic segmentation
E) Localization
Answer: D
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

96) The PRIZM segments the United States to a neighborhood level using ________.
A) income data
B) postal data
C) demographics
D) GPS tracking
E) geoclustering
Answer: E
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

97) Understanding why certain consumers shun a particular product would be a question raised
in ________ segmentation.
A) demographic
B) behavioral
C) psychographic
D) geographic
E) belief
Answer: B
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking
26
Copyright © 2022 Pearson Education, Inc.
98) Understanding where consumers are in terms of their readiness to buy a particular product
would be a question raised in ________ segmentation.
A) demographic
B) psychographic
C) behavioral
D) geographic
E) belief
Answer: C
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

99) What is a risk associated with targeting heavy users of a given product category?
A) Heavy users routinely expect discounts.
B) Heavy users can dominate distribution channels.
C) Some heavy users are switchers who show no loyalty to any brand and are always looking for
the lowest price.
D) Heavy users tend to be vocal complainers on social media.
E) Supporting several light users is cheaper than supporting one heavy user.
Answer: C
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

100) The VALS framework is one of the oldest and best known ________ segmentation systems.
A) psychographic
B) demographic
C) geographic
D) economic
E) behavioral
Answer: A
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

27
Copyright © 2022 Pearson Education, Inc.
101) When Honda discovered that baby boomers were attracted to the Element, which the
company was marketing to college-aged drivers and positioning as a "youthful" vehicle, this was
an example of which targeting phenomenon?
A) Generational boundaries are of little value in marketing.
B) Age is not always a good predictor of income.
C) Age is not always a good predictor of attitudes.
D) Consumers will sometimes sabotage segmentation and target efforts.
E) Misunderstanding the role of influencers in the buying decision.
Answer: C
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

102) American Airlines' Rainbow Team with its dedicated LGBT staff and website is an example
of ________ segmentation.
A) demographic
B) psychographic
C) behavioral
D) geographic
E) belief
Answer: B
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

103) A company is trying to understand why a large segment of a target population shows no
loyalty to any of the brands in a particular product category, even though the brands seem to
have some noticeable differences. This investigation would fall under ________ segmentation
research.
A) demographic
B) psychographic
C) behavioral
D) geographic
E) belief
Answer: C
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

28
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104) Roland wants to start a mobile vehicle detailing service targeting owners of luxury cars, and
he wants to restrict his market to a 20-mile radius around his home. Which two types of
segmentation will he need to consider?
A) Demographic and geographic
B) Demographic and psychographic
C) Behavioral and psychographic
D) Economic and psychographic
E) Behavioral and geographic
Answer: A
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

105) Which of the following statements about market segmentation is true?

A) It involves changing the identity of a product, relative to the identity of competing products,
in the collective minds of the target market.
B) It is a process of evaluating each segment's attractiveness and selecting one or more to enter.
C) It is a process of creating an image or identity of the product in the minds of the target market.
D) It is a process of identifying and profiling distinct groups of buyers who differ in their needs
and wants.
E) It is the quality of how marketers go to market with the goal of optimizing their spending to
achieve good results.
Answer: D
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

106) A ________ consists of a group of customers who share a similar set of needs and/or profile
characteristics.
A) vertical marketing system
B) market basket
C) market share
D) market segment
E) market level
Answer: D
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

29
Copyright © 2022 Pearson Education, Inc.
107) Hilton Hotels customizes rooms and lobbies according to location. Northeastern hotels are
sleeker and more cosmopolitan. Southwestern hotels are more rustic. This is an example of
________ segmentation.
A) demographic
B) behavioral
C) psychographic
D) geographic
E) cultural
Answer: D
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

108) Segmenting on the basis of neighborhoods is the ________ method of segmentation.

A) demographic
B) psychographic
C) geographic
D) cultural
E) behavioral
Answer: C
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

109) When the Modern Museum of Art separated its consumers by whether they were culture-
oriented or outdoor-oriented for its new exhibit on art that used natural materials, they were
using ________ segmentation.
A) psychographic
B) personality
C) behavioral occasions
D) social class
E) demographic
Answer: A
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

30
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110) Pampers divides its market demographically on the basis of ________ into prenatal, new
baby, baby, toddler, and preschooler.
A) life stage
B) gender
C) age
D) income
E) social class
Answer: C
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

111) The fact that Honda described its boxy Element as a "dorm room on wheels," but then
attracted so many baby boomers that the average age of the Element turned out to be 42 is an
illustration of the fact that baby boomers may be ________.
A) male-oriented
B) female-oriented
C) Young Digerati
D) Cosmopolitans
E) psychologically young
Answer: E
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

112) Newlyweds in the United States buy more in the first six months than an established
household does in five years. Newlyweds are an example of a(n) ________ segment.
A) life stage
B) age
C) behavior
D) user status
E) income
Answer: A
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

31
Copyright © 2022 Pearson Education, Inc.
113) Jose and Erika have just divorced. Which of the following demographic segmentation
subsegment formats might be used by marketers to reach Jose or Erika?
A) Life stage
B) Benefits
C) Age segment
D) Personality type
E) Social class
Answer: A
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

114) The key to attracting potential users of a product or service, or even possibly nonusers, is
________.
A) understanding the reasons they are not using it
B) offering financial incentives for first-time use
C) increasing the usage rate of existing users
D) developing a new product that better meets their needs
E) increasing advertising expenditures
Answer: A
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

115) The sale of turkeys in the United States is highest in mid- to late November, as people buy
turkeys to serve at Thanksgiving. Grocery stores that specifically advertise turkeys at this time of
year are segmenting on the basis of ________.
A) benefits
B) user status
C) buyer-readiness stage
D) demographics
E) occasion
Answer: E
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

32
Copyright © 2022 Pearson Education, Inc.
116) Mingmei was buying all her groceries from Home Needs supermarket for the past 5 years.
She recently came across The Convenience Store, another supermarket just a few miles away
from her place and started buying her groceries from them. Mingmei can be best described as
a(n) ________.
A) split loyal
B) antiloyal
C) shifting loyal
D) hard-core loyal
E) switcher
Answer: C
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

117) When Amy goes shopping for clothes, she goes into every store in the mall looking for the
best deal. She is very price conscious. On the basis of loyalty status, Amy can be described as
a(n) ________.
A) switcher
B) split loyal
C) shifting loyal
D) hard-core loyal
E) anti-loyal
Answer: A
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

118) Mothers-to-be are potential users who will turn into heavy users of infant products and
services. By targeting mothers-to-be as future heavy users, producers of these products and
services are segmenting consumers on the basis of ________.
A) attitude
B) buyer-readiness stage
C) loyalty status
D) user status
E) benefits
Answer: D
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

33
Copyright © 2022 Pearson Education, Inc.
119) If a buyer rotates among two or three different brands of soap, this buyer's loyalty status can
be described as being among the ________.
A) switchers
B) shifting loyals
C) split loyals
D) hard-core loyals
E) antiloyals
Answer: C
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

120) Binh always buys Purina dog food for his dog because he believes that it is the best value
for the nutritional content. Binh's loyalty status is best described as ________.
A) split loyal
B) shifting loyal
C) consistent loyal
D) hard-core loyal
E) switcher
Answer: D
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

121) A local service company has decided to segment its market based on occupation; therefore,
it has chosen a form of demographic segmentation for its approach.
Answer: TRUE
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

122) Life stage defines a person's age.

Answer: FALSE
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

123) Income always predicts the best customers for a given product.
Answer: FALSE
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

34
Copyright © 2022 Pearson Education, Inc.
124) Members of the same generational cohort share major cultural, political, and economic
experiences and have similar outlooks and values.
Answer: TRUE
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

125) The main dimensions of the VALS segmentation framework are consumer motivation and
consumer resources.
Answer: TRUE
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

126) Heavy users of a particular product are often a small percentage of the market but account
for a high percentage of total consumption.
Answer: TRUE
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

127) With respect to loyalty status, if a consumer is loyal to two or three brands, he or she is
called shifting loyal.
Answer: FALSE
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

128) How clear-cut do you think the boundaries between generations are?
Answer: (Student answers will vary here, but they should be able to reflect on the fact that, for
example, the first Gen X person born at 12:00 AM on January 1, 1965, probably hasn't had a
dramatically different life experience than the last Baby Boomer born a second earlier at 11:59
PM on December 31, 1964.)
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

129) Even if a company finds an attractive segment using psychographic or behavioral variables,
why might it need to use demographic segmentation tactics to implement its market offering?
Answer: Two reasons mentioned in the chapter for still needing demographic data are to
estimate the size of the market and to identify the best media for reaching it effectively.
Diff: 1
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

35
Copyright © 2022 Pearson Education, Inc.
130) Why is gender becoming less of a clear-cut segmentation variable?
Answer: Gender is becoming less of a clear-cut segmentation variable for two key reasons:
traditional expectations of gender roles (such as cooking and childcare responsibilities) have
changed and many people no longer view gender as a simple male/female dichotomy.
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

131) Identify the four market segment groups based on brand loyalty status and list what a
company can learn from analyzing the degrees of brand loyalty.
Answer: Marketers usually envision four groups based on brand loyalty status:
1. hard-core loyals
2. split loyals
3. shifting loyals
4. switchers

Hard-core loyals can help identify the products' strengths. Split loyals can show the firm 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 attempt to correct them.
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge

132) What is customer cloning and how is it used?

Answer: Customer cloning is a way of identifying new prospects by assuming that the best
prospects live where most of a company's existing customers come from.
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Analytical thinking

133) Increasingly, companies are finding that their markets are "hourglass shaped." What does
this mean for consumers and for marketers?
Answer: Middle-market U.S. consumers are migrating toward both discount and premium
products. Companies that miss out on this new market risk being "trapped in the middle" and
seeing their market share steadily decline.
Diff: 3
LO: 6.5: Describe how to segment consumer markets.
AACSB: Reflective thinking

134) Explain psychographic segmentation.

Answer: In psychographic segmentation, buyers are divided into different groups on the basis of
psychological traits, lifestyle, or values. Psychographic segmentation is important because
demographic, geographic, and behavioral characteristics of consumers do not always accurately
reflect their underlying needs.
Diff: 2
LO: 6.5: Describe how to segment consumer markets.
AACSB: Application of knowledge
36
Copyright © 2022 Pearson Education, Inc.
135) What is the phenomenon that describes the opportunity (brought about by e-commerce) to
keep selling low-volume products that a company previously might have dropped for not
generating enough revenue?
A) The long tail
B) The Pareto principle
C) Product usage segmentation
D) Niche marketing
E) The one-to-one approach
Answer: A
Diff: 1
LO: 6.6: Describe how to segment business markets.
AACSB: Application of knowledge

136) If a heavy equipment manufacturer decided not to pursue customers who prefer leasing over
buying, it would be using which segmentation variable?
A) Economic stability
B) Operating variables
C) Demographic factors
D) Purchasing approaches
E) Situational factors
Answer: D
Diff: 1
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

137) Assume you're the CEO of a new company that makes computer networking equipment.
For the time being, you have enough capacity to manufacture quality products and provide great
customer service for them, but you don't have the staff to provide related consulting services
such as designing corporate IT systems. Consequently, you won't pursue customers who will
expect consulting services like this. Which segmentation variable are you using to make this
decision?
A) Economic stability
B) Operating variables
C) Demographic factors
D) Purchasing approaches
E) Situational factors
Answer: B
Diff: 3
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

37
Copyright © 2022 Pearson Education, Inc.
138) E-commerce has heightened expectations among consumers and businesses alike for fast
delivery. Products that used to arrive in a week or two are now expected to arrive overnight or
even the same day. However, not all companies are equipped or willing to respond to this new
expectation near-immediate delivery. If you chose not to target customers who expected this
level of service, which segmentation variable would you be using?
A) Economic stability
B) Operating variables
C) Demographic factors
D) Purchasing approaches
E) Situational factors
Answer: E
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

139) Urgency, specific application, and size of order are examples of ________ segmentation
variables for business markets.
A) situational factors
B) demographic
C) purchasing approaches
D) personal characteristics
E) operating variables
Answer: A
Diff: 3
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

140) A marketer is interested in segmenting a business market on ________ if the marketer

intends to segment the market based on industries and geographical areas to serve.
A) demographic variables
B) situational factors
C) operating variables
D) purchasing approaches
E) personal characteristics
Answer: A
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

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141) A marketer is interested in segmenting a business market based on urgency of delivery and
the size of the order. Which of the following major segmentation variables would the marketer
most likely use to assist with the task?
A) Purchasing approaches
B) Situational factors
C) Operating variables
D) Personal characteristics
E) Demographic variables
Answer: B
Diff: 1
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

142) A marketer is interested in segmenting a business market based on technology and customer
capabilities. Which of the following major segmentation variables would the marketer most
likely use to assist with the task?
A) Demographic variables
B) Purchasing approaches
C) Situational factors
D) Personal characteristics
E) Operating variables
Answer: E
Diff: 3
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

143) A marketer is interested in segmenting a business market on ________ if the marketer

intends to eventually segment the market based on loyalty and attitudes toward risk.
A) situational factors
B) purchasing approaches
C) personal characteristics
D) operating variables
E) demographic variables
Answer: C
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

39
Copyright © 2022 Pearson Education, Inc.
144) A marketer interested in segmenting a business market based on ________ intends to
eventually segment the market based on power structure and nature of existing relationship.
A) situational factors
B) purchasing approaches
C) personal characteristics
D) operating variables
E) demographic variables
Answer: B
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

145) Purchasing approaches segmentation variables in the business marketplace include

technology, user and nonuser status, and general purchasing policies.
Answer: FALSE
Diff: 1
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

146) Situational factor segmentation variables in the business marketplace include urgency,
specific application, and size of order.
Answer: TRUE
Diff: 1
LO: 6.6: Describe how to segment business markets.
AACSB: Analytical thinking

147) How did the industrial manufacturer Timken use segmentation research to improve its
profits?
Answer: When Timken saw its net income and shareholder returns dip compared with those of
competitors, it became concerned that it was not investing in the most profitable areas. To
identify businesses that operated in financially attractive sectors and would be most likely to
value its offerings, it conducted an extensive market study and discovered that some customers
generated a lot of business but offered little profit potential, whereas for others the opposite was
true. As a result, Timken shifted its attention away from the auto industry and into the heavy-
processing, aerospace, and defense industries. By adjusting its products, prices, and
communications to appeal to the right types of firms, Timken experienced record revenue despite
a recession.
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

40
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148) How has the quality of online recommendation systems affected the "long tail"
phenomenon?
Answer: Some research has found that poor recommendation systems render many very-low-
share products in the tail so obscure and hard to find that they disappear before they can be
purchased frequently enough to justify their existence.
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

149) What are some examples of situational factors that can be used to segment business
markets?
Answer: Urgency, specific application, and size of order are examples of situational factors used
for business market segmentation.
Diff: 2
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

150) List the three premises on which Anderson's long tail theory is based and the two aspects of
internet shopping that support these premises.
Answer: Anderson's long tail theory is based on three premises:
1. Lower costs of distribution make it economically easier to sell products without precise
predictions of demand.
2. The more products available for sale, the greater the likelihood of tapping into latent demand
for niche tastes unreachable through traditional retail channels.
3. If enough niche tastes are aggregated, a big new market can result.
Anderson identifies two aspects of internet shopping that support these premises. First, the
increased inventory and variety afforded online permit greater choice. Second, the search costs
for relevant new products are lowered due to the wealth of information online, the filtering of
product recommendations based on user preferences that vendors can provide, and the word-of-
mouth network of internet users.
Diff: 3
LO: 6.6: Describe how to segment business markets.
AACSB: Reflective thinking

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