CHAPTER 7
MARKET SEGMENTATION, TARGETING, AND POSITIONING
FOR COMPETITIVE ADVANTAGE
MULTIPLE CHOICE
QUESTIONS
1. At one time, firms
scattered their marketing efforts (a “shotgun” approach) to reach
consumers. Today, a firm is more likely to use:
a. a “bazooka” approach, where special effects
are used to “explode” into the buyer’s
consciousness.
b. a “knife” approach, where the firm tries to
“cut” to the most important product
advantage.
c. a “rifle” approach, where the firm focuses on
the buyers who have greater
interest in
the values that the firm creates best.
d. a “pistol” approach, where the firm realizes
that it has multiple chances to gain
consumer
interest.
Answer: (c)
Difficulty: (2) Page:
235
2. ________________ is
the process of dividing a market into smaller groups of buyers with distinct
needs, characteristics, or behaviors who might require separate products or
marketing mixes.
a. Mass marketing
b. Market segmentation
c. Target marketing
d. Market positioning
Answer: (b) Difficulty: (1) Page: 235
3. __________________
is the process of evaluating each market segment’s attractiveness and selecting
one or more segments to enter.
a. Mass marketing
b. Market segmentation
c. Market targeting
d. Market positioning
Answer: (c)
Difficulty: (2) Page:
235
4. Setting the
competitive positioning for the product and creating a detailed marketing mix
is called:
a. mass marketing.
b. target marketing.
c. market segmentation.
d. marketing positioning.
Answer: (d)
Difficulty: (1) Page:
235
5. During which step
of the marketing segmentation, targeting, and positioning process
does the firm
“develop a marketing mix for each segment?”
a. market segmentation
b. market targeting
c. market positioning
d. The firm does not go through the
“development” during any of the above steps.
Answer: (c)
Difficulty: (2) Page:
235, Figure 7-1
6. During one of the
steps in the marketing segmentation, targeting, and positioning
process, the
marketer develops measures of segment attractiveness. This procedure
belongs in the
category of:
a. market segmentation.
b. market targeting.
c. market massing.
d.
market positioning.
Answer: (b)
Difficulty: (2) Page:
235, Figure 7-1
7. When companies
divide large, heterogeneous markets into smaller segments that can be reached
more efficiently with products and services that match their unique needs, they
are conducting a ___________________ process.
a. marketing
aggregation
b. marketing
positioning
c. marketing target
d. marketing
segmentation
Answer: (d) Difficulty: (1) Page: 236
8. Market
segmentation can be carried out at several different levels. Which of the
following WOULD
NOT BE among these levels?
a. micromarketing
b. segment marketing
c. competition marketing
d. niche marketing
Answer: (c) Difficulty: (1) Page: 236
9. Another word for
complete segmentation is:
a. macromarketing.
b. micromarketing.
c. niche marketing.
d. mass marketing.
Answer: (b)
Difficulty: (2) Page:
236
10. For most of the 20th century, firms practiced which of
the following forms of
marketing?
a. mass marketing
b. micromarketing
c. niche marketing
d. segment marketing
Answer: (a)
Difficulty: (2) Page:
236
11. Which of the following marketers epitomized the mass
marketing strategy?
a. Henry Ford
b. Bill Gates
c. F.W. Woolworth
d. Thomas A. Edison
Answer: (a) Difficulty: (3) Page: 236
12. Which of the
following statements is closest to the traditional argument for mass marketing?
a. Find a need and
fill it.
b. The largest
potential market can lead to the lowest costs, which translates into either
lower prices or higher margins.
c. The rifle approach
rarely hits what it is aiming at.
d. The consumer is
king. Long live the king.
Answer: (b) Difficulty: (2) Page: 236
13. Isolating broad
segments that make up a market and adapting the marketing to match the needs of
one or more segments is called _________________.
a. niche marketing
b. mass marketing
c. segment marketing
d. micromarketing
Answer: (c) Difficulty: (1) Page: 237
14. When General Motors
designs specific models for different income and age groups, it is practicing
which of the following marketing formats?
a. micromarketing
b. macromarketing
c. mass marketing
d. segment marketing
Answer: (d) Difficulty: (1) Page: 237
15. Segment marketing
offers several benefits over mass marketing.
All of the following would be among those benefits EXCEPT:
a. the company can
market more efficiently and target its programs toward only those consumers
that it can serve best.
b. the company can fine-tune
its programs to meet the needs of carefully defined segments.
c. the company can
reduce costs because of the ability to sell to customers one-on-one.
d. the company may
face fewer competitors if fewer competitors are focusing on the company’s chosen
market segment.
Answer: (c) Difficulty: (3) Page: 237
16. A company is
practicing ________________ if it focuses on subsegments with distinctive
traits that may seek a special combination of benefits.
a. micromarketing
b. niche marketing
c. mass marketing
d. segment marketing
Answer: (b) Difficulty: (2) Page: 237
17. As an example of
_______________, a company could build sport utility vehicles and direct
marketing efforts towards the luxury SUV market (as does Lexus).
a. micromarketing
b. niche marketing
c. mass marketing
d. segment marketing
Answer: (b) Difficulty: (3) Page: 237
18. American Express offers not only its traditional green
cards but also gold cards,
corporate cards,
and even a black card, called the Centurian, with a $1,000 annual
fee aimed at a
small group of “superpremium customers.”
Which of the following
marketing efforts
is American Express following with their credit card policies?
a. macromarketing
b. segment marketing
c. niche marketing
d. self-marketing
Answer: (c) Difficulty: (2) Page: 237
19. _________________ is
the practice of tailoring products and marketing programs to suit the tastes of
specific individuals and locations.
a. Niche marketing
b. Micromarketing
c. Segment marketing
d. Mass marketing
Answer: (b) Difficulty: (2) Page: 238
20. Micromarketing includes:
a. segment marketing and niche marketing.
b. mass marketing and demographic marketing.
c. local marketing and individual marketing.
d. individual marketing and self-marketing.
Answer: (c) Difficulty: (2) Page: 238
21. ______________ involves tailoring brands and promotions to
the needs and wants of specific small groups such as cities, neighborhoods, and
even specific stores.
a. Niche marketing
b. Local marketing
c. Detail marketing
d. Individual
marketing
Answer: (b) Difficulty: (1) Page: 238
22. All of the following
are considered to be drawbacks of local marketing EXCEPT:
a. it can drive up
manufacturing and marketing costs by reducing economies of scale.
b. it can create
logistical problems when the company tries to meet varied requirements.
c. it can attract
unwanted competition.
d. it can dilute the
brand’s overall image.
Answer: (c) Difficulty: (3) Page: 238
23. ________________ is
tailoring products and marketing programs to the needs and preferences of
individual customers.
a. Niche marketing
b. Local marketing
c. Self-marketing
marketing
d. Individual
marketing
Answer: (d) Difficulty: (1) Page: 238
24. Individual marketing is known by a variety of
names. All of the following would
appropriately be
called individual marketing EXCEPT:
a. mono-marketing.
b. one-to-one marketing.
c. customized marketing.
d. markets-of-one marketing.
Answer: (a)
Difficulty: (2) Page:
238
25. ______________ is the
process through which firms interact one-to-one with
masses of customers
to create customer-unique value by designing products and
services tailor-made
to individual needs.
a. Mass marketing
b. Detail marketing
c. Mass globalization
d. Mass customization
Answer: (d) Difficulty: (2) Page: 239
26. The move toward individual marketing mirrors the trend
in consumer _________.
a. backlash
b.
self-marketing.
c. dialog marketing
d. niche marketing
Answer: (b)
Difficulty: (1) Page:
242
27. All of the following are considered to be major
variables for segmenting markets
EXCEPT:
a. geographic
variables.
b. trait variables.
c. demographic
variables.
d. psychographic
variables.
Answer: (b) Difficulty: (2) Page: 243, Table 7-1
28. If a marketer attempts segmentation of a market by
dividing the market into different
units based on
nations, regions, states, counties, cities, or even neighborhoods, then
the marketer is
practicing ____________ segmentation.
a. demographic
b. geographic
c. political
d. cartographic
Answer: (b) Difficulty: (1) Page: 243, Table 7-1
29. When Campbell Soup makes Cajun gumbo soup for Louisiana
and Mississippi and nacho cheese soup for Texas and California, it is
practicing _______________ segmentation.
a. geographic
b. demographic
c. psychographic
d. behavioral variable
Answer: (a)
Difficulty: (2) Page:
242
30. All of the following
would be ways to segment within the category of psychographic segmentation EXCEPT:
a. social class.
b. occupation.
c. lifestyle.
d. personality.
Answer: (b) Difficulty: (3) Page: 243, Table 7-1
31. All of the following
would be ways to segment within the category of behavioral variable
segmentation EXCEPT:
a. occasions.
b. user status.
c. loyalty status.
d. lifestyle.
Answer: (d) Difficulty: (3) Page: 243, Table 7-1
32. _______________
factors are the most popular bases for segmenting customer groups.
a. Geographic
b. Demographic
c. Psychographic
d. Behavioral
Answer: (b) Difficulty: (3) Page: 244
33. _________________
factors or variables are generally easier to measure than most of the other types
of variables or factors.
a. Geographic
b. Demographic
c. Psychographic
d. Behavioral
Answer: (b) Difficulty: (3) Page: 244
34. Age is often a poor
predictor of a person’s life-cycle, health, work, or family status.
Therefore, when using age and life-cycle segmentation, the
marketer must guard
against:
a. stereotyping.
b. gender bias.
c. racial bias.
d. intellectual bias.
Answer: (a) Difficulty: (2) Page: 244-245
35. Proctor & Gamble joined a growing list of marketers
who use __________
segmentation when they developed Secret, a
brand specially formulated for a
woman’s
chemistry.
a. geographic
b. income
c. benefit
d. gender
Answer: (d) Difficulty: (1) Page: 245
36. All of the following Web sites would be examples of
sites wishing to make gender
segmentation
appeals as their primary marketing segmentation strategy EXCEPT:
a. www.iVillage.com.
b. www.girlson.com.
c. www.playboy.com.
d. www.neimanmarcus.com.
Answer: (d) Difficulty: (1) Page: 246
37. ___________________
is the process of dividing a market into different groups based on social
class, lifestyle, or personality characteristics.
a. Gender segmentation
b. Behavioral
segmentation
c. Psychological
segmentation
d. Psychographic
segmentation
Answer: (d) Difficulty: (2) Page: 247
38. Many marketers
believe that ________________ are the best starting point for building market
segments and programs.
a. behavioral
variables
b. geographic
variables
c. demographic
variables
d. psychographic
variables
Answer: (a) Difficulty: (3) Page: 247
39. “Coke in the morning” is an attempt to segment according
to which of the following?
a. gender segmentation
b. psychographic segmentation
c. benefit segmentation
d. occasion segmentation
Answer: (d) Difficulty: (2) Page: 248
40. The orange juice manufacturers know that orange juice is
most often consumed in the mornings.
However, they would like to change this and make the drink acceptable
for other time periods during the day.
Which form of segmentation would they need to work with to establish a
strategy reflective of their desires?
a. gender segmentation
b. benefit
segmentation
c. occasion
segmentation
d. age and life-cycle
segmentation
Answer: (c) Difficulty: (2) Page: 248
41. When companies market
products on the basis of what the product’s attributes will do for a given
segment of consumers, they are using a powerful form of behavioral segmentation
known as:
a. occasion segmentation.
b. benefit
segmentation.
c. user status
segmentation.
d. usage rate
segmentation.
Answer: (b) Difficulty: (2) Page: 249
42. If people that take
cruise ship vacations do so because of “gambling,” “fun,” or “for adventure or
educational purposes,” then it is possible to segment this market based on what
might be called:
a. psychographic
segmentation.
b. benefit
segmentation.
c. demographic
segmentation.
d. gender
segmentation.
Answer: (b) Difficulty: (1) Page: 249
43. A marketing firm classifies customers as nonusers,
ex-users, potential users, first-
time users, and
regular users. Which of the following classifications is the firm most
likely using to
segment its market and devise strategies for selling its products and
services?
a. user status
b. user rate
c. loyalty status
d. benefit status
Answer: (a)
Difficulty: (1) Page:
249
44. One of the most promising developments in multivariable
segmentation is called _________________, where a host of demographic and
socioeconomic factors are used.
a. terragraphic
segmentation
b. fermagraphic
segmentation
c. geothermal
segmentation
d. geodemographic
segmentation
Answer: (d) Difficulty: (2) Page: 250
45. All of the following
are major variables that can be used to segment business markets
EXCEPT:
a. operating
characteristics.
b. psychographics.
c. demographics.
d. situational
factors.
Answer: (b) Difficulty: (2) Page: 250
46. ____________________
is forming segments of consumers who have similar needs and buying behavior
even though they are located in different countries.
a. External
segmentation
b. International
segmentation
c. Intermarket
segmentation
d. Enriched
segmentation
Answer: (c) Difficulty: (2) Page: 253
47. When Mercedes-Benz
targets the world’s well-to-do, regardless of their country, they are most
likely following a segmentation strategy called:
a. external
segmentation.
b. international
segmentation.
c. enriched
segmentation.
d. intermarket
segmentation.
Answer: (d) Difficulty: (2) Page: 253
48. Clearly, there are
many ways to segment markets. However,
not all segmentations are effective or successful. To be useful, market segments must have all
the following characteristics EXCEPT being:
a. measurable.
b. plausible.
c. accessible.
d. actionable.
Answer: (b) Difficulty: (2) Page: 254
49. It is a fact that
there are 32.5 million left-handed people in the United States. However, most
marketers do not attempt to appeal to or design products for this group because
there is little in the way of census data about this group. Therefore, this group fails in one of the
requirements for effective segmentation.
Which of the following is most likely to apply in this case?
a. actionable
b. substantial
c. differentiable
d. measurable
Answer: (d) Difficulty: (2) Page: 254
50. Knowing the size,
purchasing power, and profiles of a market segment are all part of which of the
following characteristics?
a. substantiality
b. measurability
c. actionability
d. accessibility
Answer: (b)
Difficulty: (2) Page:
254
51. The ability to reach
and serve a market segment defines the characteristic of:
a. measurability.
b. actionability.
c. accessibility.
d. substantiality.
Answer: (c)
Difficulty: (1) Page: 254
52. Married and unmarried
women may use the same perfume, and might respond in a similar way to
promotional sales of this fragrance. It
might, therefore, be difficult to consider that marital status designates
separate segments in this case. Which of
the following requirements of effective segmentation would probably rule out
segmentation based on marital status in this case?
a. actionable
b. substantial
c. differentiable
d. measurable
Answer: (c) Difficulty: (2) Page: 254
53. Stephanie Cross has a small clothing store, and has
identified seven separate
categories of
clothing buyers that form the general market for clothing stores in her
city. Her problem is that because of a limited
advertising budget, she cannot
effectively reach these various segments
(especially since several of the segments are
distant from her
store). Which of the following requirements of effective
segmentation
would probably rule out segmentation based on Stephanie’s current
segmentation
classification scheme?
a. actionable
b. substantial.
c. differentiable
d. measurable
Answer: (a) Difficulty: (3) Page: 254
54. In market targeting, a firm looks at all of the following
factors EXCEPT:
a. segment size and
growth.
b. segment structural
attractiveness.
c. company objectives
and resources.
d. segment public
relations value.
Answer: (d) Difficulty (2) Page: 255
55. All of the following
factors can affect the attractiveness of a market segment
EXCEPT:
a. the presence of
many strong and aggressive competitors.
b. the likelihood of
government monitoring.
c. actual or potential
substitute products.
d. the power of buyers
in the segment.
Answer: (b)
Difficulty: (2) Page:
256
56. A(n) __________________ is a set of buyers sharing
common needs or
characteristics
that the company decides to serve.
a. undifferentiated market
b. market segment
c. target market
d. differentiated market
Answer: (c)
Difficulty: (1) Page:
255
57. A market-coverage strategy in which a firm decides to
ignore market segment
differences and
go after the whole market with one offer is called:
a. undifferentiated marketing.
b. differentiated marketing.
c. concentrated marketing.
d. turbo marketing.
Answer: (a)
Difficulty: (1) Page:
255, 256, Figure 7-3
58. Deciding to target several market segments and design
separate offers for each is
called:
a. undifferentiated marketing.
b. differentiated marketing.
c. concentrated marketing.
d. turbo marketing.
Answer: (b)
Difficulty: (1) Page:
256, Figure 7-3
59. A growing number of firms have adopted differentiated
marketing. However, one
drawback to this
approach is that it:
a. is
hard for managers to understand.
b. increases the costs of doing business.
c. alerts competitors as to your strategy.
d. is a poor strategy internationally.
Answer: (b)
Difficulty: (2) Page:
256
60. The practice of going after a large share of a smaller
market or subsets of a few
markets is
called:
a. undifferentiated marketing.
b. differentiated marketing.
c. concentrated marketing.
d. turbo marketing.
Answer: (c)
Difficulty: (1) Page: 257,
Figure 7-3
61. All of the following would be among the chief factors to
consider when choosing a
market-coverage
strategy EXCEPT:
a. organizational culture.
b. product variability.
c. product’s life-cycle.
d. market variability.
Answer:
(a) Difficulty: (1)
Page: 258
62. The way the product is defined by consumers on important
attributes is called
________________.
a. market segmentation
b. image psychology
c. product position
d. market targeting
Answer: (c)
Difficulty: (1) Page: 260
63. The positioning task consists of three steps. Which of the following does not belong?
a. Identifying a set of possible competitive
advantages upon which to build a position.
b. Choosing the right competitive advantages.
c. Comparing the position with ethical and legal
guidelines established by the trade.
d. Selecting an overall positioning strategy.
Answer: (c)
Difficulty: (2) Page: 260
64. The key to winning and keeping customers is to
understand their needs and buying
processes better
than competitors do and:
a. advertise constantly to let customers know
about changes in products and
services.
b. hire the best sales people.
c. have an updated Web presence.
d. to deliver more value.
Answer: (d)
Difficulty: (1) Page: 260
65. Product differentiation can be along all of the
following lines EXCEPT:
a. consistency.
b. durability.
c. reliability.
d. competitive parity.
Answer: (d)
Difficulty: (2) Page:
261
66. Gaining competitive advantage through speedy or careful
delivery is an example of
which type of
differentiation?
a. product
b. services
c. personnel
d. image
Answer: (b)
Difficulty: (2) Page:
261
67. The strategy of choosing one attribute to excel at to
create competitive advantage is
known as (the):
a. unique selling proposition.
b. underpositioning.
c. overpositioning.
d. confused positioning.
Answer: (a)
Difficulty: (1) Page:
262
68. In general, a company needs to avoid three major
positioning errors. Which of the
following is NOT
one of those errors?
a. underpositioning
b. repositioning
c. overpositioning
d. confused positioning
Answer: (b)
Difficulty: (2) Page:
263
69. In determining which differences to promote, focusing on
a difference that delivers a
highly valued
benefit to target buyers would mean selecting the difference that is
most:
a. important.
b. distinctive.
c. superior.
d. communicable.
Answer: (a)
Difficulty: (3) Page:
263
70. Choosing a product difference that competitors cannot
easily copy would be which
kind of differentiation
criterion?
a. important
b. distinctive
c. superior
d. preemptive
Answer: (d)
Difficulty: (3) Page:
263
71. A brand’s _____________ is the full positioning of the
brand—the full mix of
benefits upon
which it is positioned.
a. distinctive proposition
b. preemptive proposition
c. value proposition
d. superior proposition
Answer: (c)
Difficulty: (2) Page:
263
72. The text describes a series of value propositions. Of these propositions, Southwest
Airlines has
chosen to adopt the:
a. more for less proposition.
b. less for much less proposition.
c. same for less proposition.
d. more for more proposition.
Answer: (b)
Difficulty: (3) Page:
263-269, Figure 7-4, Marketing at Work 7-3
TRUE/FALSE
QUESTIONS
73. Companies today realize that they can appeal to all
buyers in the marketplace by
using
concentrated marketing.
Answer: (False)
Difficulty: (2) Page:
235
74. Because of profit pressures and the threat of the
Internet, most companies have now
moved away from
market segmentation and targeting and toward mass marketing.
Answer: (False)
Difficulty: (2) Page:
235
75. With respect to markets, the “shotgun” approach in
marketing efforts seems to be
better than the
“rifle” approach.
Answer: (False)
Difficulty: (2) Page:
235
76. Market segmentation is the process of taking a market
and dividing the buyers into
distinct groups
for which marketing mixes can be constructed.
Answer: (True)
Difficulty: (1) Page:
235
77. Today, most companies are rushing toward mass marketing
because of the changing
nature of the
marketplace.
Answer: (False)
Difficulty: (2) Page:
236
78. A good illustration of the niche marketing approach was
when Henry Ford said
(with respect to
cars) “they can have any color they want as long as it’s black.”
Answer: (False)
Difficulty: (2) Page:
236
79. Micromarketing is focusing on subsegments or niches with
distinctive traits that may
seek a special
combination of benefits.
Answer: (False)
Difficulty: (2) Page:
237
80. If a marketer were to tailor products and marketing
programs to the needs and wants
of specific
individuals and local customer groups, the marketer would be practicing
micromarketing.
Answer: (True)
Difficulty: (1) Page:
238
81. One of the drawbacks for adopting a policy of local
marketing is that it can drive up
manufacturing and
marketing costs by reducing economies of scale.
Answer: (True)
Difficulty: (1) Page:
238
82. Because buyers have unique needs and wants, each buyer
is potentially a separate
market.
Answer: (True)
Difficulty: (1) Page:
238
83. Customized marketing is often called individual
marketing.
Answer: (True)
Difficulty: (1) Page:
238
84. An example of a firm that practices individual marketing
is Mattel, with its My
Design page of
its Barbie Web site.
Answer: (True)
Difficulty: (2) Page:
240-242, Marketing at Work 7-1
85. The move toward individual marketing mirrors the trend
in consumer concentration
strategy.
Answer: (False)
Difficulty: (3) Page:
239
86. The most popular base for segmenting markets and
customer groups is geographic
segmentation.
Answer: (False)
Difficulty: (2) Page:
242, 243
87. Demographic variables are easier to measure than most
other types of variables with
respect to
segmentation.
Answer: (True)
Difficulty: (1) Page:
244
88. Income segmentation is used not only with the affluent,
but also with the consumers
with lower
spending power.
Answer: (True)
Difficulty: (2) Page:
247
89. Psychographic segmentation occurs when a market is
divided into different groups
based on social
class, lifestyle, or personality characteristics.
Answer: (True)
Difficulty: (1) Page:
247
90. One of the forms of behavioral segmentation would be
lifestyle segmentation.
Answer: (False)
Difficulty: (2) Page:
243, 247, Table 7-1
91. If a marketer were to link U.S. Census data with
lifestyle patterns to better segment
markets, this
would be an example of geodemographic segmentation.
Answer: (True)
Difficulty: (2) Page:
250
92. A common way to segment a business market would be to
segment based on
operating
characteristics and situational factors.
Answer: (True)
Difficulty: (2) Page:
250
93. Segmenting international markets on the basis of
geographic, economic, political,
cultural, and
other factors is called international psychographics.
Answer: (False)
Difficulty: (2) Page:
253
94. To be useful, a market segment must be substantial.
Answer: (True)
Difficulty: (1) Page:
254
95. To be useful, a market segment must be conspicuous.
Answer: (False)
Difficulty: (1) Page:
254
96. A market segment is a set of buyers sharing common needs
or characteristics that the
company decides
to serve.
Answer: (False)
Difficulty: (3) Page:
255
97. Concentrated marketing is a market-coverage strategy in which
a firm decides to
ignore market
segment differences and go after the whole market with one offer.
Answer: (False)
Difficulty: (2) Page:
255
98. If a firm decides to go after a large share of one or a
few segments or niches, then
the firm will
probably be following a concentrated marketing strategy.
Answer: (True)
Difficulty: (2) Page:
257
99. In market targeting, the issue is not how and for what, but who is
targeted.
Answer: (False)
Difficulty: (3) Page:
259
100. A product’s position is the way the product is defined
by consumers on important
attributes.
Answer: (True)
Difficulty: (1) Page:
260
101. One of the major positioning errors that a company
needs to avoid is that of
confused
positioning.
Answer: (True)
Difficulty: (1) Page:
263
102. A difference is worth establishing to the extent that
it satisfies the criterion of
cultural
imperative.
Answer: (False)
Difficulty: (2) Page:
263
103. According to the nine cell matrix that describes
possible value propositions, the
cell that
produces a higher price for reduced benefits should be pursued by the
marketer.
Answer: (False)
Difficulty: (2) Page:
264, Figure 7-4
104. According to the value proposition presented by
Southwest Airlines, the customer
gets “less for
much less.”
Answer: (True)
Difficulty: (2) Page:
267, Marketing at Work 7-3
ESSAY QUESTIONS
105. Proctor & Gamble makes eight brands of laundry
detergent (Tide, Cheer, Bold, Gain, Era, Dreft, Febreze, and Ivory Snow). Each of these brands is directed toward a
different segment of the vast laundry detergent market. Comment on Proctor & Gamble’s strategy
for this market. Describe the company’s
attitude toward intracompany brand competition and competition from other
competitors. Finally, give examples of
how the various laundry detergent brands are directed toward specific market
segments by Proctor & Gamble.
Answer:
The various Proctor & Gamble brands compete with one
another on the same supermarket shelves.
Why would the company allow this to happen? The answer lies in the fact that different
people want different mixes of benefits from the products that they buy. For example, laundry detergent customers want
several different things: to get clothes clean, economy, bleaching power,
fabric softening, fresh smell, strength or mildness (depending on the cleaning
chore), and lots of suds. The various
Proctor & Gamble products address these issues. The company will accept intracompany brand
competition (and by doing so, it will keep all the money from the various
brands in one common pocket rather than giving it to competition). The company has also developed a separate
brand for each of the eight important laundry detergent segments. For example (for other information see the
introductory comments in the chapter where all eight segments are identified):
a) Tide—an all-purpose family detergent that is “tough on
greasy stains.”
b) Cheer—guards against fading, color transfer, and fuzzy build-up.
c) Bold—has a built-in fabric softener.
d) Gain—the “enzyme” fresh smelling detergent.
e) Era—built-in stain removers.
f) Dreft—removes baby stains.
g) Febreze Clean Wash—gets out difficult odors.
h) Ivory Snow—mild product for cleaning fine washables and
baby clothes.
Difficulty: (2)
Page: 233-235
106. Define market segmentation, market targeting, and
market positioning. Demonstrate through
the steps of a model how these concepts fit together to aid the decision maker
in his or her attempt to use market segmentation in the marketing process.
Answer:
Market segmentation is the process of dividing a market into
distinct groups of buyers with different needs, characteristics, or behavior
who might require separate products or marketing mixes. Market targeting involves evaluating each
segment’s attractiveness and deciding which segment(s) to enter. Market positioning is arranging for a product
to occupy a clear, distinctive, and desirable place relative to competing
products in the minds of target consumers.
The marketer formulates a competitive position for a product and a
detailed marketing mix.
A model that might show the relationships between these
three terms is found in
Figure 7-1 in the chapter.
The steps shown in this model are: (1) Identify bases for segmenting the
market, (2) Develop profiles of resulting segments—these two steps are related
to market segmentation; (3) Develop measures of segment attractiveness, (4)
Select the target segment(s)—these two steps are related to market targeting;
(5) Develop positioning for each target segment, and (6) Develop marketing
mix(es) for each target segment—these two steps are related to marketing
positioning.
Difficulty: (2)
Page: 235, Figure 7-1
107. Identify the
differences between the mass marketing, segment marketing, niche marketing, and
micromarketing strategies.
Answer:
For most of this century, businesses practiced mass
marketing. They mass produced, mass
distributed, and mass promoted the same product in almost the same ways to all
consumers. The argument for this
approach was that mass marketing creates the largest potential market, which
leads to lower costs, which in turn can translate into either lower prices or
higher margins. This approach has given
way to segment marketing, where marketers isolate broad segments that make up a
market and adapt the marketing to match the needs of one or more segments. The benefits of this approach are that the
company can market more effectively and efficiently by creating programs that are
directed only toward those consumers that can be most effectively served. In niche marketing, there is a focus on
subsegments or niches with distinctive traits that may seek a special
combination of benefits. Niche marketers
presumably understand their niches’ needs so well that their customers
willingly pay a price premium. The
newest form of segmentation is called micromarketing, where the marketer
tailors products and marketing programs to suit the tastes of specific
individuals and locations. This can take
the form of either local or individual marketing.
Difficulty: (2)
Page: 236-243, Figure 7-2
108. List and briefly discuss the major bases for segmenting
consumer markets. Demonstrate how these
major bases would compare to the bases used in segmenting business markets
(what are the differences and similarities?).
Answer:
The major bases for segmenting consumer markets are (1)
geographic, (2) demographic, (3) psychographic, and (4) behavioral. Examples within these categories might be:
geographic (country, region, density, or climate),
demographic (age, gender, family size, income, occupation, or race),
psychographic (social class, lifestyle, or personality), or behavioral
(occasions, benefits, user status, usage rate, loyalty, readiness stage, or
attitude toward the object). These bases
are contrasted to the major bases for segmenting business markets, which
include (1) demographics, (2) operating variables, (3) purchasing approaches,
(4) situational factors, and (5) personal characteristics. Examples within these categories might be
demographics (industry, company size, or location), operating variables
(technology, user/nonuser status, or customer capabilities), purchasing
approaches (purchasing function organization, power structure, nature of
existing relationships, or purchasing policies), situational factors (urgency,
specific application, or size of order), and personal characteristics
(buyer-seller similarity, attitudes toward risk, or loyalty). Notice that similarities exist between some
of the demographic and personal characteristics (behavioral) categories.
Difficulty: (3)
Page: 243-254, Table 7-1
109. Consumer and business markets use many of the same
variables to segment their markets.
However, there are also differences.
Using the approach suggested in the text, list and briefly describe the
additional variables that would be important to the business marketer who
wished to segment markets.
Answer:
Some additional variables would include:
a). Operating
characteristics—how does the customer operate within the industry?
b). Purchasing
approaches—are buying centers used?
c). Situational
factors—are there certain times of the year when the buyer is more likely to
purchase?
d). Personal
characteristics—are there characteristics about the purchasing unit or the
senior managers that might impact the purchase decision?
Difficulty: (3)
Page: 250-252
110. Define and give a specific example of intermarket
segmentation.
Answer:
To conduct intermarket segmentation, an international
marketer forms segments of consumers who have similar needs and buying behavior
even though they are located in different countries. The text uses the examples of MTV (who
targets the world of the teen) and Mercedes-Benz (who targets the affluent no
matter where they live).
Difficulty: (2)
Page: 253-254
111. As demonstrated in the text, there are several ways to
segment a market. However, not all of
these ways are always effective. To be
useful and effective, market segments should have five different
characteristics. List these and briefly
explain each.
Answer:
Market segments must be (1) measurable (in terms of size,
purchasing power, and clear profiles), (2) accessible (can be effectively
reached and served), (3) substantial (large or profitable enough), (4)
differentiable (the segments are distinguishable and respond differently to
different marketing mixes), and (5) actionable (can design programs for
attracting customers effectively).
Difficulty: (2)
Page: 254
112. A firm can adopt one of three market-coverage
strategies when attempting to market its goods and services. List and describe each of these possible
market-coverage strategies and provide and example of each.
Answer:
Undifferentiated
marketing—a market-coverage strategy in which a firm decides to ignore
market segment differences and go after the whole market with one offer. It relies on mass marketing techniques. Distributing salt might be an example of this
form.
Differentiated
marketing—a market-coverage strategy in which a firm decides to target
several market segments and designs separate offers for each. Automobiles might be examples of this
strategy.
Concentrated marketing—a
market-coverage strategy in which a firm goes after a large share of one or a
few sub-markets. A specialty truck
producer might be an example of this strategy.
Difficulty: (2)
Page: 255-258, Figure 7-3
113. What factors might a company need to consider when
choosing a market-coverage strategy?
Explain and justify your choices.
Answer:
The text suggests the following factors:
a). company resources
b). product
variability
c). the product’s
life cycle
d). market
variability
e). competitor’s
marketing strategies
If students present others, make sure they are justified.
Difficulty: (2)
Page: 258
114. In general, a company needs to avoid three major
positioning errors. What are these
errors? Present a brief description and
illustration of each.
Answer:
The major errors are:
a).
Underpositioning—failing to really position the company at all.
b).
Overpositioning—giving buyers too narrow a picture of the company.
c). Confused
positioning—leaving buyers with a confused image of a company.
Students are free to suggest their own illustrations. If you would like more structure, suggest
this structure prior to assigning this question.
Difficulty: (2)
Page: 264
115. Companies are often faced with the problem of deciding
which differences of a product or service to promote. This is especially relevant to product
positioning. According to the text, a
difference is worth promoting if it satisfies seven criteria. What are those criteria? Briefly explain each.
Answer:
The seven criteria suggested by the text include:
a). Important—the difference delivers highly
valued benefit to target buyers.
b). Distinctive—competitors do not offer the
difference, or the company can offer it in a more distinctive way.
c). Superior—the difference is superior to
other ways that customers might obtain the same benefit.
d). Communicable—the difference is
communicable and visible to buyers.
e). Preemptive—competitors cannot easily
copy the difference.
f). Affordable—buyers can afford to pay for
the difference.
g). Profitable—the company can introduce the
difference profitably.
Difficulty: (3)
Page: 263
APPLICATION
QUESTION
116. New Balance
athletic shoe company has a difficult problem—how to compete in the highly
competitive athletic shoe market against such industry giants as Nike and
Reebok. The company does have certain
advantages (it makes a quality product, has a good reputation with
distributors, and is the only athletic shoe that offers width sizes as well as
length sizes) that it hopes will help meet the challenges of the industry
giants. Your job as a strategic planning
consultant is to formulate a market-coverage strategy for New Balance. You have three options—undifferentiated
marketing, differentiated marketing, and concentrated marketing. Choose one of these methods and support your
choice with a logical explanation.
Answer:
Students are free to pick any method they wish, however,
considering the competition, the undifferentiated marketing method would be
hard to support. This mass-marketing
strategy focuses on what is common in the needs of consumers, rather than what
is different. The company designs a
product and a marketing program that will appeal to the largest number of
buyers. It relies on mass distribution
and mass advertising, and it aims to give the product a superior image in
people’s minds.
With the differentiated approach (the method most likely
chosen by Nike and Reebok), a firm decides to target several market segments or
niches and designs separate offers for each.
By offering product and marketing variations, the company using this
method hopes for higher sales and a stronger position within each market
segment. The student could make a case
for this method, however, this method requires expensive outlays such as extra
marketing research, forecasting, sales analysis, promotion planning, and channel
management.
With the concentrated approach (which generally appeals to
companies with limited resources), the company goes after a large share of a
small market rather than a small share of a large market. This method allows small companies to get a
foothold against larger, more resourceful competitors. The company is usually able to achieve a
strong market position because of its greater knowledge of the segment’s needs
and special requirements. The company
may also achieve economies in the various 4P areas. However, the segment that the company selects
for attention must be carefully chosen because “all the eggs are in one
basket.” New Balance currently sells
well in specialized shoe stores (such as orthopedic stores) because of their
width feature, their response to dealer needs, and a limited but quality
line. Mass merchandisers do not tend to
carry this brand.
Lastly, students should consider (when selecting the
strategy) a company’s resources, the degree of product variability, the stage
in the product’s lifecycle, market variability, and competitor’s marketing
strategies when making a final selection.
Difficulty: (3)
Page: 255-259, Figure 7-3
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