Chapter 06 Segmentation, Targeting, and Positioning

In this case, the segmentation approach used by the company is: Accessibility: Keyboard Navigation Blooms: Apply Difficulty: Difficult Learning Objective: 06-01 Describe the bases market

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Chapter 06 Segmentation, Targeting, and Positioning

Multiple Choice Questions

1 What is the first step in the STP process?

D Establishing overall strategy

The first step in planning process is to articulate the mission and the objectives of the

company's marketing strategy clearly The segmentation strategy must be consistent with and derived from the firm's mission & objectives

Accessibility: Keyboard Navigation

Blooms: Remember

Difficulty: Easy

Learning Objective: 06-01 Describe the bases marketers use to segment a market.

Topic: 06-02 Step 1: Establish Overall Strategy or Objectives

2 Geographic segmentation refers to the segmentation of consumers based on:

B where they live.

Geographic segmentation organizes customers into groups on the basis of where they live It

is most useful for companies whose products satisfy needs that vary by region

Blooms: Remember

Difficulty: Easy

Topic: 06-03 Step 2: Segmentation Bases

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3 A chainsaw company markets its products only in areas with forests In this case, the segmentation approach used by the company is:

4 A company makes packaged juices for the Canadian market, and different flavours are developed for specific regions In this case, the segmentation approach used by the company is:

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Blooms: Understand

Difficulty: Moderate

5 A company develops a variety of exotic breads targeted at suburban areas where large families reside, and the demand for easy breakfast options is high In this case, the

segmentation approach used by the company is:

Blooms: Apply

Difficulty: Difficult

6 Jimmy's Own Inc introduces different kinds of snacks for the Asian and European market

In the context of segmentation bases, this is an example of:

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7 Of the various methods for segmenting consumers, which of the following is the one that delves into how consumers describe themselves?

Blooms: Remember

Difficulty: Easy

8 A new startup company decided to target Canadians between age of 18 and 35 who use iPhone mobile for their new application Which segmentation base(s) does the company use?

C Geographic and behavioural segmentation

The company is targeting Canadian (geographic), between age of 18 and 35 (demographic) who use iPhone (behavioural)

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Blooms: Apply

9 A company that sells bags launches a category of bags featuring children's favourite

cartoon characters It also launches a line of stylish travel bags for adults In this case, the segmentation approach used by the company is:

Demographic segmentation groups consumers according to easily measured, objective

characteristics such as age, gender, and income Hence, when a company uses age as a factor

to segment its customer base, it is using demographic segmentation

Blooms: Apply

10 Demographic segmentation refers to the segmentation of consumers based on:

E the consumers' age, gender, or education.

characteristics such as age, gender, income, education, race, occupation, religion, marital status, family size, family life cycle, and home ownership These variables represent the most common means to define segments because they are easy to identify

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Blooms: Remember

Difficulty: Easy

11 A credit card company issues a special card only to those customers who spend more than

$100,000 a year on its other cards In this case, the segmentation approach used by the

12 A sports goods manufacturing company has started creating marketing campaigns to specifically target the female market In this case, the segmentation approach used by the company is:

characteristics such as age, gender, income, and education Hence, when the company creates marketing campaigns to specifically target the female market, it is using demographic

segmentation to segment its consumers

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13 Skincare Inc., a company known for its women's care products, starts offering care products specifically developed for single men, with income of 50k or more/year who live in large cities in the US and Canada Which segmentation approach(es) used by the company?

C Demographic and geographic segmentation.

Demographics: marital status, gender, and income

14 A lifestyle store deals with expensive and aesthetic products Most of its target customers belong to the elite class of society who want to make a style statement associated with exclusivity In this case, the segmentation approach used by the store is:

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Blooms: Apply

15 An automobile ad is created in such a way that it appeals to people who value

individuality The company aims at grouping customers based on their personality

characteristics This is an example of:

16 A furniture manufacturer deals in furniture with antique designs The furniture mimics the designs used in royal households and provides customers with a means of self-expression People who buy such furniture feel like they are part of a royal family In this case, the

segmentation approach used by the manufacturer is:

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Blooms: Apply

17 Goals for life, not just the goals one wants to accomplish in a day, are called:

Blooms: Remember

Difficulty: Easy

18 Which of the following allows people to describe themselves by using those

characteristics that help them choose how they occupy their time (behaviour) and what underlying psychological reasons determine those choices?

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Blooms: Remember

Difficulty: Easy

19 The image a person has of himself or herself is called:

Blooms: Remember

Difficulty: Easy

20 An up-and-coming businessman buys a certain brand of apparel This brand is associated with the image of an individual who values exclusivity and style, which is the kind of person the businessman would like to be In the context of psychographic segmentation, the brand is appealing to the businessman's:

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Blooms: Apply

21 Self-respect, self-fulfillment, or a sense of belonging are typically examples of:

Blooms: Remember

Difficulty: Easy

22 How we live our lives to achieve goals is called:

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Blooms: Remember

Difficulty: Easy

23 Which of the following is part of the vertical dimension as established by VALS™?

VALS™ classifies consumers into eight segments in two dimensions On the vertical

dimension, segments are described by their resources, including their income, education, health, energy level, and degree of innovativeness

Blooms: Remember

Difficulty: Easy

24 A company uses a youth icon to endorse its new range of biker glasses The commercial symbolizes youth and freedom An individual who wants to live a life of freedom would be attracted to the ad In the context of psychographic segmentation, the commercial is appealing

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25 Which of the following types of segmentation groups consumers based on the benefits they derive from products or services, their usage rate, their user status, and their loyalty?

Behavioural segmentation groups consumers based on the benefits they derive from products

or services, their usage rate, their user status, and their loyalty Benefit segmentation is a type

of behavioural segmentation

Blooms: Remember

Difficulty: Easy

26 Behavioural segmentation based on when a product or service is purchased or consumed

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Blooms: Remember

Difficulty: Easy

27 Childcare Inc produces baby products It provides product samples to parents-to-be in order to capture a share of their future purchases It has created a website where parents can get expert parenting advice It targets potential user groups who can be converted into heavy users In this case, the company is using:

Blooms: Apply

28 Benefit segmentation refers to the segmentation of consumers based on:

A the worth they get from products or services.

Benefit segmentation looks at the benefits customers derive from products or services Benefitsegmentation is a type of behavioural segmentation

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Blooms: Remember

Difficulty: Easy

29 Belco, a fast-food chain, targets young males as they account for almost 75 percent of all customers They are called Jumbo customers Belco has segmented its customers on the basis

of usage rate, with the Jumbo customers being the heavy users To segment its customers, Belco is using:

30 Olympic Athletic Wear segments its markets according to the advantages that different consumers seek from its products It has products for consumers who seek style, and it has products for others who seek performance This is an example of:

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Blooms: Apply

31 A toothpaste manufacturer segments its target population based on the four characteristics

of toothpaste that it believes a customer requires: economic worth, medicinal value, cosmetic value, and taste In this case, the segmentation approach used by the manufacturer is:

Blooms: Apply

32 Which of the following best describes loyalty segmentation?

services

themselves

D It refers to the strategy of investing in retention and initiatives to retain a firm's most

profitable customers

characteristics such as age, gender, income, and education

Loyalty segmentation refers to the strategy of investing in retention and loyalty initiatives to retain the firm's most profitable customers Loyal customers buy almost exclusively from a firm

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Blooms: Remember

Difficulty: Easy

33 Makers Shoes often has interesting offers for regular customers These customers are the first to be informed about a new collection Also, when shoes are on sale, they receive a newsletter in which they are given the opportunity to be the first to avail themselves of the special discounts available In this case, the segmentation approach used by the company is:

customers, who are likely to be the most profitable, it is using loyalty segmentation

Blooms: Apply

34 Magas is a business information service provider that helps companies by dividing the consumer market into different consumer segments One such segment consists of

neighbourhoods that are populated by wealthy families People in this segment are more likely to take vacations on cruises and store money in offshore banks To identify this

segment, Magas has used:

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Blooms: Apply

35 The grouping of consumers on the basis of a combination of geographic, demographic, and lifestyle characteristics is called:

36 In a certain Canadian province, an area is populated by young Haitians who are mainly blue-collared workers as they are unskilled manual labourers They are not highly educated and live in rented apartments However, some Haitians who are college graduates also inhabit this low-income area They are white-collar workers as they have desk jobs Even though there is a difference in income, both the blue-collared workers and white-collared workers share the same lifestyle A company that develops products to serve both groups of people is using:

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Blooms: Apply

37 Which of the following is true of the PSYTE system?

the consumer's mind

wants or needs

C It refers to the grouping of all neighbourhoods in Canada into 60 different lifestyles

clusters with specific locations

realign the brand's core emphasis with changing market preferences

custom-made products or services

Canada Post uses PSYTE cluster profiles for geodemographic segmentation in Canada The PSYTE system groups all neighbourhoods in Canada into 60 different lifestyles clusters with specific locations

Blooms: Remember

Difficulty: Easy

38 Marketers can track and compare sales performance among various clusters in different locations with the help of PSYTE and PRIZM CE, which are:

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Blooms: Remember

Difficulty: Easy

39 The concept of being identifiable as a prerequisite for market segmentation refers to the fact that:

offering

product distribution

C market segments should be distinct from one another for a firm to be able to design

products or services to meet their needs

The concept of being identifiable as a prerequisite for market segmentation refers to the fact that market segments should be distinct from one another for a firm to be able to design products or services to meet their needs Firms must ensure that the identified market

segments do not overlap too much, as this would mean that distinct marketing strategies aren'tnecessary to meet segment members' needs

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The concept of being reachable as a prerequisite for market segmentation refers to the fact that market segments should be accessible to firms through persuasive communications and product distribution Consumers must know the product or service exists, understand what it can do for them, and recognize how to buy it

For a segmentation strategy to be successful, the customers in a market segment must react similarly and positively to a firm's offering If, through its distinctive competencies, the firm cannot provide products or services to that segment, it should not target it

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C The segment is not substantial and profitable

This segment size won't be substantial in a small town Therefore, it is not an attractive segment

D the buying power of customers in a market segment should be high enough to generate

substantial returns from the market

The concept of being substantial and profitable as a prerequisite for market segmentation refers to the fact that the buying power of customers in a market segment should be high enough to generate substantial returns from the market Marketers must also focus their assessments on the potential profitability of each segment, both current and future

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Learning Objective: 06-02 Identify the criteria for determining the attractiveness of a segment and whether it is worth pursuing (targeting) Topic: 06-04 Step 3: Evaluate Segment Attractiveness

44 Customer lifetime value (CLV) refers to the:

customer's loyalty for his or her lifetime

prospects

C total value of purchases of a customer over a lifetime of patronage.

otherwise equal product

Customer lifetime value (CLV) refers to the total value of purchases of a customer over a lifetime of patronage CLV helps in evaluating the attractiveness of a particular market segment

E customer lifetime value.

Customer lifetime value (CLV) refers to the total value of purchases of a customer over a lifetime of patronage Hence, the total value that the company is likely to receive from its customers over the period of three years of subscription is the CLV

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$6,000 with a profit margin of 25% His fixed cost to target the new segment would be around

$100,000 What would be the segment profit?

Topic: 06-04 Step 3: Evaluate Segment Attractiveness

47 Which of the following is an advantage of using the undifferentiated targeting strategy?

products overall

different segments of the market

E It does away with the need to develop separate strategies for different groups.

Undifferentiated targeting strategy is used by a firm if the product or service it provides is perceived to provide the same benefits to everyone An advantage of using undifferentiated targeting strategy is that it does away with the need to develop separate strategies for differentgroups

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Learning Objective: 06-03 Explain the differences among targeting strategies: undifferentiated; differentiated; concentrated; or

micromarketing.

Topic: 06-05 Step 4: Select Target Market

48 Which of the following companies is more likely to use undifferentiated targeting

Blooms: Analyze

micromarketing.

49 A company has launched a milk beverage containing chocolate Since the beverage appeals to all age groups, the company develops a single strategy to attract children,

teenagers, and adults alike In this case, the company is using a(n):

D undifferentiated targeting strategy.

Undifferentiated targeting strategy is used by a firm if the product or service it provides is perceived to provide the same benefits to everyone In the given scenario, as the company is providing a product that is appealing to everyone, it is using an undifferentiated targeting strategy

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micromarketing.

50 Sturdy International sells its helmets to everyone in the market There are no different strategies or products for different groups This is an example of a(n):

D undifferentiated targeting strategy.

Undifferentiated targeting strategy is used by a firm if the product or service it provides is perceived to provide the same benefits to everyone As Sturdy International targets everyone

in the market, it is using an undifferentiated targeting strategy

micromarketing.

51 The government of Ontario, like other provincial governments, charge the same fee to issue driver license Any citizen who is eligible with get the same card and has to pay the same cost This is an example of a(n):

B undifferentiated targeting strategy.

The service provide the same benefits to everyone and cost the same

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Blooms: Apply

micromarketing.

52 Which of the following strategies refers to the marketing strategy a firm can use if the product or service it provides is perceived to provide the same benefits to everyone and there

is no need to develop separate strategies for different groups?

D Undifferentiated targeting strategy

Undifferentiated targeting strategy is used by a firm if the product or service it provides is perceived to provide the same benefits to everyone An advantage of using the

undifferentiated targeting strategy is that it does away with the need to develop separate strategies for different groups

Difficulty: Easy

micromarketing.

53 Mancer is a company that sells clothes It has three different retail store formats to serve the varied needs of diverse fashion segments In this case, which targeting strategy is the company using?

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Blooms: Apply

micromarketing.

54 Ace Inc is a company that sells clothes It has two brand names, Ace 1 and Ace Kid Each

of these brands caters to the needs of two dissimilar market segments There are varied strategies and products for the dissimilar groups In this case, which targeting strategy is the company using?

Blooms: Apply

micromarketing.

55 A strategy through which a firm targets several market segments with a varied offering foreach is called a(n):

A differentiated targeting strategy.

Differentiated targeting strategy is a strategy through which a firm targets several market segments with a different offering for each Firms embrace differentiated segmentation because it helps them obtain a bigger share of the market and increase the market for their products overall

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Blooms: Remember

Difficulty: Easy

micromarketing.

56 Firms embrace differentiated segmentation because:

different segments of the market

B it helps them obtain a bigger share of the market and increase the market for their products

overall

Differentiated targeting strategy is a strategy through which a firm targets several market segments with a different offering for each Firms embrace differentiated segmentation because it helps them obtain a bigger share of the market and increase the market for their products overall

micromarketing.

57 A large passenger-ship company targets only old rich people for its around-the-world cruises It ensures that all its rooms are designed to be as comfortable as possible for older people In this case, the company is using the:

E concentrated targeting strategy.

When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market's needs, it is using a concentrated or niche targeting strategy As the passenger-ship company is focusing all its energies on providing a product to fit older people, it is using the concentrated targeting strategy

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Blooms: Apply

micromarketing.

58 The marketing strategy of selecting a single, primary target market and focusing all energies on providing a product to fit that market's needs is called a(n):

E concentrated targeting strategy.

When an organization selects a single, primary target market and focuses all its energies on providing a product to fit that market's needs, it is using a concentrated or niche targeting strategy Entrepreneurial startup ventures often benefit from using a concentrated strategy, which allows them to employ their limited resources more efficiently

Blooms: Remember

Difficulty: Easy

micromarketing.

59 A crane manufacturing company that solely manufactures and sells salvage cranes for salvage companies is using which strategy?

it is using the concentrated targeting strategy

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Blooms: Apply

micromarketing.

60 Which of the following is true of micromarketing?

the consumer's mind

B It refers to the segmentation that tailors a product or service to suit an individual customer's

wants or needs

services relative to competitors

provide the same benefits to everyone

Micromarketing refers to the segmentation that tailors a product or service to suit an

individual customer's wants or needs Small producers and service providers generally can tailor their offering to individual customers more easily, whereas it is far more difficult for larger companies to achieve this degree of segmentation

Blooms: Remember

Difficulty: Easy

micromarketing.

61 Rick, a neighbourhood tailor, makes clothes according to the requirements of each of his individual customers This is an example of:

individual customer's wants or needs As Rick makes clothing according to the requirements

of each of his customers, he is using micromarketing

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micromarketing.

62 A company that sells shoes has a website with a make-your-own-shoe feature It makes a vast number of styles in every major performance category available to the customer for personalization This is an example of:

Blooms: Apply

micromarketing.

63 A tattoo artist creates tattoos according to his customers' specifications This is an exampleof:

individual customer's wants or needs As the tattoo artist creates tattoos according to his customers' specifications, he is using micromarketing

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micromarketing.

64 A company launches a wide range of perfumes Customers can go to the company's store and combine the perfumes in different ways to create unique scents This is an example of:

micromarketing.

65 A local bakery customizes its pastries and cakes to suit individual customer requirements This is an example of:

individual customer's wants or needs As the bakery customizes its pastries and cakes to suit its individual customer's requirements, it is using micromarketing

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micromarketing.

66 Which of the following is true of mass customization?

the consumer's mind

provide the same benefits to everyone

services relative to competitors

E It refers to the practice of interacting on a one-to-one basis with many people to create

custom-made products or services

Mass customization is the practice of interacting on a one-to-one basis with many people to create custom-made products or services It provides one-to-one marketing to the masses

Blooms: Remember

Difficulty: Easy

micromarketing.

67 James lives in a small fishing town and builds boats for a living He lets his customers choose their own specifications for the boats they want to purchase This includes the colour, design, and material of the boat This is an example of:

individual customer's wants or needs As James tailors his product to meet his individual customer's needs, he is using micromarketing

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