marketing chapter 6

_______ is defined as the maximum percentage of market potential that an individual firm within an industry can expect to obtain for a specific product.

Company sales potential

You are an analyst in the marketing department for a major grocery store chain, and you recently submitted a report to your boss regarding potential market segments the company should consider targeting. Your boss just sent the report back to you with the following questions: What are the strengths and weaknesses of the competitors who are also targeting these markets? Does any firm dominate the market currently? Can we create a compelling marketing mix to effectively compete for business in this market segment? Based on the questions being asked, it appears your boss is using which one of the following segment evaluation approaches?

Competitive assessment approach

The ProMark Company manufactures a pencil that is about five inches long and has no eraser. It sells the product primarily to universities. What type of targeting strategy is the ProMark Company using?

Concentrated

The company Patek Philippe is known for its high-quality, Swiss-made watches priced at $20,000 and above and targeted to a very upscale target market that could afford to pay $20,000 or more for a watch. The advertising for Patek Philippe's watches says, "You never actually own a Patek Philippe, you merely look after it for the next generation." What type of targeting strategy does Patek Philippe utilize?

Concentrated

An appropriate method of developing sales forecasts for companies with a relatively small number of customers is a(n) _______.

Delphi technique

Axe has been a successful marketer of men's body spray, deodorant, and antiperspirants and is a division of Unilever. Axe supports a variety of fragrances and releases new products which are supported by marketing efforts including racy advertising spots and a company-owned YouTube channel. Unilever utilizes a complex type of expert forecasting called the _______ where experts create initial forecasts, submit them to the company for averaging, and have the results returned to them so they can make individual refined forecasts. The procedure is iterative and may be repeated several times until the experts who are working independently reach a consensus. The process typically results in a very reliable sales forecast.

Delphi technique

Secret utilized the tagline, "Strong enough for a man but made for a woman" in the early 1970s and the message is still strongly associated with the product and its line of deodorants and antiperspirants. What type of segmentation variable is Secret utilizing for its deodorant products?

Demographic

A marketer that is using segmentation to reach a consumer market can select one or several variables. Which of the following correctly specifies the four major categories of segmentation variables?

Demographic, behavioristic, psychographic, and geographic

Frito-Lay's Doritos snacks appeal to a wide range of consumers for consumption in their homes, and through a partnership with Taco Bell, Doritos brand shells under the name "Locos Tacos" are available in Taco Bell. What type of segmentation strategy is Frito-Lay utilizing with the Doritos and Locos Tacos products?

Differentiated

Lenovo has a variety of computer models to serve distinct consumer needs. A small tablet computer is targeted to young children, a sleek but powerful laptop is targeted to business people who frequently travel, and larger desktop models are targeted to businesses that purchase the computers for workers who use their computers at their desk in the office. What approach to market segmentation is Lenovo utilizing?

Differentiated

The Pillsbury company defines all individual consumers who are purchasers of flour as its target market. It also defines all businesses who purchase flour as its target market. What targeting strategy would be most appropriate in this case?

Differentiated

A market segment profile deals primarily with demographic characteristics.

False

A person who has buying power also has the authority to buy.

False

A product is produced for either the consumer market or the business market, but not for both.

False

Companies use one sales forecasting method, rather than multiple methods.

False

During the evaluation of relevant market segments, competitive assessment is used primarily to determine the possibility of additional competitors entering particular segments.

False

One company can only sell to either a consumer market or a business market, but not to both.

False

The Coca-Cola Company uses a concentrated strategy for its Coca-Cola branded drinks—Coca-Cola, Diet Coke, Coca-Cola Life, and Coca-Cola zero.

False

The five-step process usually used for target market selection includes identifying the appropriate targeting strategy, determining which segmentation variables to use, developing market segment profiles, evaluating relevant market segments, and deciding which targeting strategy to use.

False

A new company, Hang Ten Sports, sells surf boards, wet suits, swim suits, and many other items related to surfing and water sports. Which of the following ways would Hang Ten NOT use to segment its market?

Family size

Which of the following is an advantage of using a concentrated targeting strategy?

Firms can develop a special marketing mix for a single market segment

Which product would most likely use age as a segmentation base when targeting customers?

Fixodent Denture Cream

_______ markets are composed of individuals or organizations with diverse needs for products in a specific product class.

Heterogeneous

_______ segmentation groups individuals according to how they spend their time, the importance of things in their surroundings, beliefs about themselves and broad issues, as well as some demographic characteristics.

Lifestyle

_______ is defined as the total amount of a product that consumers will purchase within a specified period at a specific level of industry-wide marketing activity.

Market potential

Katy Ramirez is a marketer for a company that produces in-ground swimming pools. When forecasting company sales, she finds a direct association between past sales and per capita income. Which sales forecasting technique is Katy using?

Regression analysis

_______ variables are the characteristics of individuals, groups, or organizations used to divide a market into segments.

Segmentation

Which of the following best describes the final step in the target market selection process?

Select specific target markets

Your marketing team is currently working through the target market selection process to identify which customers your firm will target with a new technology product being developed. You are currently in the process step where you must consider the target market characteristics, the product attributes, and the firm's objectives and resources. Which of the five steps in the target market selection process are you currently working on?

Step 1: Identify the appropriate targeting strategy

Which of the following is true about consumer markets?

The purchaser is not buying to make a profit

For heterogeneous markets, market segmentation is the best approach.

True

If long-term prospects look poor, a marketer may ultimately choose not to target a segment because it would be difficult to recoup expenses.

True

The undifferentiated strategy can be effective for an organization that has a homogeneous market and can develop and maintain a single marketing mix.

True

The first step in the market segmentation process is to select the appropriate targeting strategy. Which of the following are the three strategies for market segmentation?

Undifferentiated, concentrated, and differentiated

Which of the following is a disadvantage to using executive judgment as a method in developing sales forecasts?

Users of this method may be influenced by recent experiences.

An advantage of a differentiated strategy is that _______.

a company may increase sales because its marketing mixes are aimed at more customers

Yvonne and Garret are looking at information about how their organization's products could fit potential customers' needs. This information deals with demographic characteristics, product benefits sought, lifestyles, geographic factors, brand preferences, and usage rates. They are most likely looking at _______.

a market segment profile

Often, the Delphi technique is used in conjunction with an expert forecasting survey. The major objective is to _______.

allow experts to work separately to reach a consensus as to their forecasts

Target has been very innovative in creating partnerships with well-known brands to provide high quality but lower-priced products of items that are typically sold in department stores such as Macy's. For example, Target offers its Calphalon Kitchen brand of cookware at $120 for a set while a similar set of Calphalon Contemporary cookware sells at Macy's for $300. Target is appealing to customers who value the brand name of Calphalon and are sensitive to price. In this example, Target is utilizing _______ variables for market segmentation.

behavioristic

The Gap has recently produced a new line of athletic wear that closely competes with a designer label in its quality, utility, and appearance. However, it is about half the cost of the designer brand. Product managers for The Gap line plan to use price sensitivity, brand loyalty, and end use as variables to segment its target market. These are all _______ variables for market segmentation.

behavioristic

Verizon Wireless uses a segmentation strategy for its mobile phone and data packages based on market characteristics such as number of devices, amount of download capacity, and volume of minutes or text messages. Based on these variables, Verizon Wireless is using _______ variables for segmentation.

behavioristic

AMC Theaters that operate movie and entertainment locations across the United States may choose to segment its market based upon the frequency of visits to the cinema. For example, they might classify moviegoers into three groups including fanatical fans, moderate fans, or selective fans reflecting the frequency or number of movies an individual might see within a month. This is an example of market segmentation based on _______.

behavioristic variables

Billabong was founded in Australia by surfer and surfboard shaper Gordon Merchant in the 1970s. Today, the brand has a strong presence and is known as a lifestyle brand for board-sports including skate, snow, and wake. Billabong has company-owned specialty stores located throughout the United States and plans to open additional outlets in the future. Billabong also markets its clothing and equipment through its website and catalog. Billabong would most likely use _______ variables as a segmentation base for its online and catalog sales but would benefit most from _______ segmentation to determine the locations for future company-owned stores.

behavioristic; geographic

Crest toothpaste is available in several different versions, such as Crest Whitening, Crest Tartar Control, Crest Whitening with mouthwash, and Crest Total Effects. Given these different variations of the product, it appears that the marketers of Crest are segmenting the market by using _______ segmentation.

benefit

Tide laundry detergent offers a variety of different versions such as Tide HE Liquid, Tide Liquid with Downy fabric softener, Tide Plus Sport, and Tide with Bleach. The different variations of the product offer consumers the opportunity to fulfill a need based upon their particular circumstances and what they desire in terms of how a detergent might clean their clothes. Tide is using _______ segmentation.

benefit

A company can utilize two different methods to determine its company sales potential. The _______ method begins with the marketing manager first developing a general economic forecast for a specific time period.

breakdown

The owner of the remodeling company, Windows & More believes that sales for replacement windows, siding, sunrooms, and awnings will continue to be strong as more consumers decide to stay in their homes rather than upgrade to a larger, more expensive home. Therefore, based on the economic projections of stable levels of inflation, low to average income growth, but rising costs for some products, he forecasts his sales for the year based on these economic indicators. The owner of Windows & More is using a _______ approach to estimating sales potential.

breakdown

The _______ approach to measure a company's sales potential begins by estimating how much of a product a potential buyer in a specific geographic area will purchase in a given period.

buildup

Marketers segment _______ markets according to geographic location, type of organization, customer size, and product use.

business

Beats by Dre, is a leading audio brand founded in 2006 by Dr. Dre and Jimmy Iovine and was acquired by Apple Inc. in 2014. Beats has become a favorite brand among consumers who enjoy listening to music and somewhat of a status brand. The company markets a variety of products including headphones, earphones, speakers, and accessories. Beats works with companies such as Target, Best Buy, Amazon, and Game Stop who represent the company's _______ market, and also supports efforts to engage with individuals who will ultimately purchase the Beats products for their own use while listening to music or other audio files. The individuals who purchase Beats for their own personal use represent the company's _______ market.

business; consumer

A basic requirement of a market is that the consumer possesses the ability to purchase the product or service. This requirement is a function of a consumer's _______.

buying power

Using the breakdown approach to sales potential, estimates are made _______.

by starting with general economic conditions

The Buckle, based in Kearney, Nebraska, operates approximately 500 stores across the United States and is known for its denim which they design to fit a wide variety of body shapes and preferences for style for men and women. The Buckle has forecasted that it can sell 15% of all jeans or denim sold in the United States. This percentage represents The Buckle's _______ for denim.

company sales potential

All of the following are one of the major categories of market segmentation variables, except _______.

competitive

A(n) _______ strategy is defined as one in which an organization designs a single marketing mix and directs it at the entire market for a particular product.

concentrated

Ayush is a talented video game designer. He has recently developed a video game in which players take on the role of a sharp shooter in a military setting. Ayush realizes his game is not for everyone. There will be some violence and gore and a heavy emphasis on strategy. Ayush believes that his game is probably best suited for players 18 and older with an interest in the military. He will likely use a(n) _______ targeting strategy.

concentrated

Forever 21 is a clothing and fashion retailer that targets females aged 16 to 22 who are interested in the latest fashion and styles at affordable prices. It uses the same marketing mix to reach this target market and incorporates a(n) _______ strategy.

concentrated

Justin Squires is a brand manager of a popular sports apparel and shoe company and works primarily with the running shoe product category. Justin knows that there are many different types of runners who could be a good market segment for his category. However, he prefers to use a _______ targeting strategy by implementing just one marketing mix and focusing on the elite or high-distance runner who often competes in local, regional, or national races and averages over 100 miles per week in training. This segment of runners purchases more shoes annually since shoes must be replaced every 500 miles or so and are willing to spend more money on their shoes since they are so involved with the sport.

concentrated

Starwood Hotels and Resorts segments the market with different brands such as Four Points by Sheraton, Sheraton, W Hotels, Westin, and others. For market segmentation to succeed for Starwood, all of the following must be true, except _______.

customers' needs for the different hotel brands must be similar

Greenview Landscaping provides full-service landscaping services for new construction and established homes. Greenview typically caters to individuals who are married, two-income earners in the family, with annual incomes over $200,000. Greenview Landscaping is using _______ variables to segment its market.

demographic

Rainbow Outdoor is a family-owned business that sells play systems, basketball goals, and trampolines. They also install fence systems and tennis courts. Rainbow Outdoor has had the most success targeting families with children under the age of 15 and incomes of $100,000 or more. Rainbow Outdoor is using _______ variables to segment its market.

demographic

According to the text, the second step in the target market selection process is to _______.

determine which segmentation variables to use

Colgate manufactures and markets several varieties of toothpaste such as Colgate Optic White Whiten & Protect, Colgate Sensitive Complete Protection, and Teenage Mutant Ninja Turtles—Mild Bubble Fruit Toothpaste to name a few. These products are designed to appeal to different markets with specific marketing mixes for each segment. Colgate is using a(n) _______ targeting strategy.

differentiated

Crayola sells packages of crayons in 16- and 64-count packages as well as an 800-count "Classpack" geared towards schools and organizations. The company also sells colored pencils, markers, paints, and modeling clay. Crayola uses a(n) _______ targeting strategy.

differentiated

The Cannon Mills Company markets towels and linens using the brand name, Fieldcrest. Fieldcrest is sold at a variety of retail outlets including Macy's, Target, and Bed, Bath, & Beyond. The Cannon Mills Company offers a variety of models of Fieldcrest products to appeal to customers who are interested in owning the "best" products, those that are "good" and those that are in between. For example, at Macy's the Fieldcrest Luxury bath towels sell for $15, Bed, Bath & Beyond sells the Fieldcrest Resort towels for $12 each, and Target sells the Fieldcrest Home towels for $8 each. Cannon Mills Company is most likely using a(n) _______ targeting strategy.

differentiated

Companies may utilize _______ to develop sales forecasts where experts outside the firm such as economists, management consultants, advertising executives, or college professors are hired to prepare and present forecasts or answer specific questions for the firm.

expert forecasting surveys

The population of a city or county and what type of climate the area experiences are examples of _______ variables used for market segmentation.

geographic

Sales forecasts focus on the amount of a product the company expects to sell during a specific period. If a marketing manager overestimates her company's sales forecast, all of the following could occur, except _______.

higher profit margins than competitors in the same industry

David Tran, founder of Huy Fong Sriracha sauce, believes his product is suitable for everyone. When asked about people that think his product is too spicy, he responds they should "use less." David Tran believes he has a _______ market and uses _______ targeting strategy.

homogeneous; an undifferentiated

The Domino brand is a leading manufacturer of sugar and is part of the ASR Group, the world's largest refiner of cane sugar. Sugar is a staple product that most people keep on hand in their pantry for everyday use as a sweetener or baking ingredient. Domino believes its market is _______, where individuals have similar needs for the product and therefore utilizes a _______ targeting strategy as they can incorporate a single marketing mix and direct it at the entire market for their sugar products.

homogeneous; undifferentiated

The target market selection process is a five-step process and the first step is to _______.

identify the appropriate targeting strategy

Jack has just joined a law firm as its purchasing agent for all supplies, equipment, and service contracts. In his previous position at another company, Jack could make decisions for any purchase up to $1 million; however, at the new law firm, he can only make decisions for purchases less than $500,000. Recently, Jack has been working with a sales representative from a computer software firm on a contract for a new program to process the firm's billing statements. Jack signs the contract, even though it is for $950,000. In this case, Jack _______ part of the market for the software because _______.

is not; he does not have the authority to purchase

A consumer's stage in the family life cycle is often utilized as a segmentation variable for target marketing. Two variables are associated with family life cycle and affect consumers' needs for housing, appliances, food, automobiles, and recreational equipment. These two variables are _______.

marital status and age of children living at home

A group of individuals or organizations that have a desire or need for products in a product class and have the ability, willingness, and authority to purchase those products are known as a _______.

market

Duracell Battery has determined that the total number of batteries sold to consumers in the next year by all battery producers is 5 billion units based on estimates of manufacturers and global expansion of firms. This amount represents the industry's _______.

market potential

The marketing manager for Pillsbury is attempting to determine a sales estimate for the line of products such as cinnamon rolls, pie crusts, and crescent rolls that are available in the refrigerated section of the grocery store and can be baked in the consumer's home for bakery-fresh taste and quality. The marketing manager estimates the _______ to be $20 million annually for the category of refrigerated or frozen bakery items, while Pillsbury's _______ is 25% of the overall market.

market potential; company sales potential

Jessica Bond is a product manager for Crest toothpaste and is working to craft a description of customers who would most likely fit the intended target market for Crest with Whitening toothpaste. Jessica is including demographic characteristics, geographic factors, product benefits sought, lifestyles, and brand preferences in the description. Jessica is completing _______.

market segment profile

Starbucks has in-store coffee outlets in Target stores throughout the United States and Canada and also offers its extensive line of Via instant coffee and various flavors of the bottled Frappuccino beverage in Target stores. Prior to the partnership and roll-out of product throughout the Target system, a _______ was conducted where several "test" stores carried the products for a limited time and Target and Starbucks could measure the actual sales to gauge the strength of the brand and opportunity for success.

market test

People and organizations have needs and wants they seek to satisfy through the purchase of goods and services. These people and organizations represent a _______ that marketers try to appeal to. Marketers will sometimes find it more advantageous to attempt to appeal to a subgroup of these people and organizations which is called a _______. This subgrouping process is accomplished through the use of _______ techniques.

market; market segment; market segmentation

Personal appearance, affiliation, status, safety, and health are examples of _______ affecting the types of products purchased and the choice of stores in which they are bought. They reflect the reasons consumers use when making a purchase.

motives

A marketing manager can utilize executive judgment as a sales forecasting method. It is most appropriate to utilize when _______.

product demand is stable and the marketing manager has years of market-related experience

Market segment _______ help marketers understand how a business can use its capabilities to serve potential customer groups and describes the similarities among potential customers within a segment as well as explains the differences among people and organizations in different segments.

profiles

Sherwin Williams Company utilizes a sophisticated and mathematical approach to forecasting sales. They first utilize historical sales data incorporating a 10-year history of sales for each product category such as different brands of paint and supplies—brushes, ladders, tarps, and so on. Its sales forecasting manager uses Excel to perform _______ where sales is the dependent variable and a variety of other factors such as company size, annual purchases, and number of years as a customer are the independent variables. The sales forecasting manager is then able to identify the relationship between the independent variables and the dependent variables to determine an accurate sales forecast.

regression analysis

A television marketer is likely to segment television viewers by all of the following, except _______.

religion

Guess? will be spending $22 million on marketing activities next year and expects to sell 30 million pairs of jeans. These 30 million pairs represent the company's _______.

sales forecast

The _______ is defined as the amount of product a company expects to sell during a specific period at a specified level of marketing activities.

sales forecast

The final step in the target market selection process is to select specific target markets. When making decisions about which segments to select, a marketing manager should _______.

select segments which provide significant opportunities to achieve organizational objectives

Tim has just opened a CherryBerry self-serve yogurt bar in his Midwest community of 250,000 people. He's identified several market segments: families with young children, teens and young adults, active adults, and active seniors and has utilized the breakdown approach to assess the market potential or his locations' sales potential. He has also assessed the competition since the market already supports one Orange Leaf yogurt shop and several ice cream locations such as Culver's and Baskin Robbins. In addition, Tim has developed cost estimates to develop and maintain a marketing mix that meets the wants and needs of the various segments. Now, Tim is ready to _______.

select specific target markets

All of the following are characteristics or requirements of a market, except _______.

the desire to make a profit on the product or service

All of the following are true about business markets, except _______.

the purchase is made by household members who intend to consume the product

In general, an individual who is under 16 years of age and does not work full-time would NOT be considered part of the target market for photocopier machines because _______.

they would not have the ability to purchase the product

Marketing managers may also utilize _______ to develop sales forecasts which uses the firm's historical sales data to discover a pattern or patterns in sales over time. This method assumes that past sales patterns will continue into the future.

time series analysis

Aon Insurance Company is an insurance brokerage company that caters to business markets and serves as the expert and consultant to risk managers or business owners to determine its risk profile and insurance needs. Once Aon account executives have determined a customer's needs for insurance, they contact insurance carriers to obtain a quote and then work with the customer to identify the best carrier for its company. Typically, Aon account managers are divided into teams based on the industry such as health care, education, government, or manufacturing. Aon is utilizing the _______ variable for segmenting business markets.

type of organization

Canon Business Systems specializes in office automation services, photocopiers, and printers and employs a large number of sales representatives to market its products. Typically, sales representatives are provided with a territory and become specialists according to the type of customer most appropriate to them. Canon divides its market into categories including professional services (accountants, lawyers, and consultants), health care (hospitals, physician offices, and dentists), K-12 education, higher education, corporate, and governmental. Canon is utilizing _______ segmentation for its business markets.

type of organization

Dell segments its business markets into small business, corporate, government agencies, K-12 schools, and higher education institutions. The primary segmentation variable used in this example is _______.

type of organization

A(n) _______ segmentation or targeting strategy is recommended when the needs of individual consumers in a target market for a specific product are similar and a company can satisfy most consumers with one marketing mix.

undifferentiated

Danielle grew up on a small farm in Iowa. Her parents grew corn and soybeans and also a small crop of sunflowers. Although the corn and soybeans were sold to manufacturers, Danielle's parents didn't sell the sunflowers. The farm has now been passed down to Danielle, and she thinks there is an opportunity to sell the sunflowers. She doesn't care to harvest them for seeds but would rather sell the flowers in bunches. Danielle plans to develop a website and sell the sunflowers in bunches of six flowers and ship them overnight in climate-controlled trucks. Danielle believes everyone loves sunflowers, so she will likely employ a(n) _______ targeting strategy.

undifferentiated

French's brand, makers of the famous yellow-packaged mustard, view all mustard consumers as very similar and utilizes only one marketing mix. French's brand uses a(n) _______ targeting strategy.

undifferentiated

The National Pork Board encourages consumers to buy pork through its advertising messages and theme, Pork—Be Inspired. The National Pork Board is utilizing a(n) _______ targeting strategy.

undifferentiated

Which product would most likely use an undifferentiated market segmentation approach to marketing?

Beef