Bombay Gifts divides its markets into units of nations, regions, and cities. Bombay uses geographic segmentation.

121) Bombay Gifts divides its markets into units of nations, regions, and cities. Bombay uses geographic segmentation.

Answer:  TRUE

Diff: 2        Page Ref: 191

AACSB:  Analytic Skills

Skill:  Application

Objective:  7-2

122) Shopping for the Rich and Famous is a buying service that helps wealthy clients find the best buys in exclusive clothing, high-end cars, travel, and financial services. This firm most likely uses income segmentation.

Answer:  TRUE

Diff: 2        Page Ref: 194

AACSB:  Reflective Thinking Skills

Skill:  Application

Objective:  7-2

123) LaGrange Florists segments markets into groups of nonusers, ex-users, potential users, first-time users, and regular users of its flowers and services. This firm uses usage rate as its segmentation approach.

Answer:  FALSE

Diff: 2        Page Ref: 197

AACSB:  Analytic Skills

Skill:  Application

Objective:  7-2

124) Because Cruise Ships International currently has limited financial and personnel resources, it should avoid concentrated or niche marketing until its resources are again substantial.

Answer:  FALSE

Diff: 2        Page Ref: 203

AACSB:  Reflective Thinking Skills

Skill:  Application

Objective:  7-3

125) Kia offers a new car model with the same features as a comparable but higher priced Toyota or Ford and provides a longer warranty. Kia is following a more-for-less strategy.

Answer:  FALSE

Diff: 3        Page Ref: 213

AACSB:  Analytic Skills

Skill:  Application

Objective:  7-4

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

Answer:  The first step is market segmentation: dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors, who might require separate products or marketing mixes. The company identifies different ways to segment the market and develops profiles of the resulting market segments. The second step is market targeting: evaluating each market segment's attractiveness and selecting one or more of the market segments to enter. The third step is differentiation: actually differentiating the firm's market offering to create a superior customer value. Finally, the last step is market positioning: arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of consumers.

Diff: 2        Page Ref: 190

AACSB:  Reflective Thinking Skills

Skill:  Application

Objective:  7-1

127) Explain the four major segmenting variables for consumer markets.

Answer:  Geographic segmentation divides the market into different geographic units, such as nations, regions, states, countries, cities, or neighborhoods. Many companies are localizing their products, advertising, promotion, and sales efforts or are seeking to cultivate as-yet untapped geographic territory. Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. These are the most popular factors because they are easy to measure, and consumer needs, wants, and usage rates often vary closely with demographic variables. Psychographic segmentation, on the other hand, divides buyers into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic makeups. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product. Many marketers believe that behavior variables are the best starting point for building market segments.

Diff: 2        Page Ref: 192

AACSB:  Reflective Thinking Skills

Skill:  Application

Objective:  7-2

128) Describe how marketers use multiple-segmenting bases to their advantage.

Answer:  Marketers rarely limit their segmenting analysis to only one or a few variables. Instead, they use multiple segmentation bases in an effort to identify smaller, better-defined target groups of consumers who share likes, dislikes, lifestyles, and purchase behaviors. Companies often begin by segmenting their markets using a single base, and then expand using other bases.

Diff: 2        Page Ref: 198

AACSB:  Reflective Thinking Skills

Skill:  Application

Objective:  7-2

129) Why do businesses segment their markets?

Answer:  By going after segments instead of the whole market, companies have a much better chance to deliver value to customers and to receive maximum rewards for close attention to customer needs. Like consumer groups, business buyers can be segmented using geographic, demographic, benefits sought, user status, usage rate, and loyalty status segmentations. Business buyers are also segmented by the variables of operating characteristics, purchasing approaches, situational factors, and personal characteristics.

Diff: 2        Page Ref: 198-199

AACSB:  Reflective Thinking Skills

Skill:  Application

Objective:  7-2

130) Why do international markets need to be segmented?

Answer:  Few companies have either the resources or the will to operate in all, or even most, of the countries that dot the globe. Different countries, even those that are close together, can vary greatly in their economic, cultural, technological, and political makeup. International firms need to group their world markets into segments with distinctive buying needs and behaviors.

Diff: 2        Page Ref: 199

AACSB:  Dynamics of the Global Economy

Skill:  Application

Objective:  7-2

131) Imagine that you are presenting a workshop on the Requirements for Effective Segmentation. Briefly describe the five items that will help your audience understand your topic.

Answer:  The size, purchasing power, and profiles of the segments must be measurable. The major problem may be that the segment will be hard to identify and measure. The market segments must be accessible; that is they can be effectively reached and served. The segment must be substantial or large/profitable enough to serve. It should be the largest possible homogeneous group worth pursuing with a tailored marketing program. To be differentiable, the segments need to be conceptually distinguishable and respond differently to different marketing mix elements and programs. Finally, the segment must be actionable, meaning that effective programs can be designed for attracting and serving consumers who make up the segment.

Diff: 3        Page Ref: 200

AACSB:  Reflective Thinking Skills

Skill:  Synthesis

Objective:  7-2