CH 6 Questions

Which of the following is calculated during the fourth step of the target market selection process, evaluating relevant market segments? a. market segmentation b. micromarketing c. target market selection d. regression analysis e. cost estimates

cost estimates

____ is the maximum percentage share of a market that an individual firm within an industry can expect to capture for a specific product

company sales potential

Which of the following is the fourth step of the target market selection process? a. Select specific target markets. b. Evaluate relevant market segments. c. Determine which segmentation variables to use. d. Develop market segment profiles. e. Identify the appropriate targeting strategy.

evaluating relevant market segments

A customer forecasting survey may be useful to a business with relatively few customers. a. True b. False

true

Geodemographic segmentation allows marketers to focus precise marketing efforts on very small geographic markets, such as community and even individual neighborhoods. a. True b. False

true Geodemographic segmentation allows marketers to engage in micromarketing. Micromarketing involves focusing precise marketing efforts on very small geographic markets, such as community and even individual neighborhoods.

At what stage of the target market selection process is the marketer first likely to unveil information that makes a segment less attractive than previously thought? a. Develop market segment profiles. b. Select specific target markets. c. Evaluate relevant market segments. d. Determine which segmentation variables to use. e. Identify the appropriate targeting strategy.

Develop market segment profiles Although marketers may initially believe certain segments are attractive, a market segment profile may unveil new information that makes a segment less attractive than thought.

Which of the following would be a cost-effective, fairly accurate way of coming up with a sales forecast if product demand is relatively stable and managers at the firm have a long tenure in the field? a. executive judgment b. customer forecasting survey c. regression analysis d. market tests e. time series analysis

Executive judgment, or relying on forecasts made by top executives, is a cost-effective, expedient way to develop a sales forecast. However, it is generally not very accurate unless demand is relatively stable and the executive has much experience in that particular field.

Which of the following statements about sales estimates is correct? a. Market potential is the maximum percentage share of a market that an individual firm within an industry can expect to capture for a specific product. b. Competitive efforts have little influence over company sales potential. c. Market potential places absolute limits on company sales potential. d. In the buildup approach, the marketing manager first develops a general economic forecast for a specific time period. e. Industry-wide marketing activities directly impact the company's sales potential.

Market potential places absolute limits on company sales potential

The first of two major components of developing a marketing strategy is to __________________. a. determine a segmentation strategy b. perform sales analyses c. perform a business analysis d. develop a product e. select a target market

select a target market

At what stage of the target market selection process is management likely to investigate whether the organization has sufficient financial resources, managerial skills, employee expertise, and facilities to compete effectively in selected segments? a. Identify the appropriate targeting strategy. b. Select specific target markets. c. Determine which segmentation variables to use. d. Evaluate relevant market segments. e. Develop market segment profiles

Select specific target markets.

Scenario 6.2. Angel wants to become a successful brewer. He analyzes the target market for beer and finds that there is a market niche for gluten-free beer. Angel considers the types of markets he can target with his beer. He knows that many people perceive gluten as unhealthy and might be inclined to buy his beer due to its gluten-free nature. However, he also knows there is a strong demand among those who suffer from Celiac disease. After doing sales and cost estimates, Angel feels ready to make a decision. Refer to Scenario 6.2. In making his decision, Angel is at what stage in the target market selection process? a. Develop market segment profiles. b. Select specific target markets. c. Evaluate relevant market segments. d. Determine which segmentation variables to use. e. Identify the appropriate targeting strategy.

Selecting specific target markets - the fifth step in the target market selection process. Angel is about to select the specific target market for his product.

A buffet restaurant targets its promotions toward those who love "all-you-can-eat" meals. Its promotion targets those who desire to get more for less money and/or those who like variety in their meals. However, the company knows that many of the people who come in will not eat as much. Others, however, may eat way past the value of what they paid. The buffet has balanced this out in its pricing strategy, classifying its diners as light eaters, moderate eaters, and heavy eaters. What type of segmentation strategy is the buffet using? a. customer size b. behavioristic c. demographic d. benefit segmentation e. psychographic

behavioristic The buffet is dividing the market according to consumer behavior toward a product, which commonly involves an aspect of product use. In this case, it is separating the market by users.

Refer to Scenario 6.4. Suppose a sales manager at Mistine wants to determine the company's market potential. She first estimates how many cosmetic products potential buyers will purchase in her sales territory during a given period. She multiples that amount by the total number of potential in that area and then performs the same calculations in the other territories in which Mistine operates. She then adds together the totals to get the company's market potential. What type of approach is the sales manager using? a. buildup approach b. breakdown approach c. cost estimates d. executive judgment e. competitive assessment

buildup approach -the marketing manager begins by estimating how much of a product a potential buyer in a specific geographic area, such as a sales territory, will purchase in a given period. The manager then multiplies that amount by the total number of potential buyers in that area. The manager performs the same calculation for each geographic area in which the firm sells products and then adds the totals for each area to calculate market potential.

Scenario 6.1. Cynthia works at an engineering firm in Arizona that installs transmission lines and works with the electrical systems of buildings. She is in charge of strategic planning. Mostly her firm has worked with cities such as Tucson and Phoenix. Once in a while they will receive a major project from the state, such as renovating a major government building in the capital. However, Cynthia's firm wants to expand its target market beyond government projects. Under her direction, the marketing team launched an initiative to target more potential clients in different areas. Two areas in which Cynthia would like to expand include colleges and large for-profit businesses. Refer to Scenario 6.1. A market is a group of individuals and/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. There are two types of markets. Cynthia's organization targets the _____

business market - consists of individuals or groups that purchase a specific kind of product for one of three purposes: resale, direct use in producing other products, or use in general daily operations.

Scenario 6.3. Eaton sells many industrial products for the lighting and solar industry, including lighting controls, landscape lighting, lighting relay and metering panels, flood lighting, and more. Among its vast array of products, it also sells lighting accessories and lighting solutions for private residences. Refer to Scenario 6.3. Eaton is targeting most of its industrial products to the ____________ market and targeting its residential lighting systems to the _________________ market. a. business; residential b. consumer; business c. consumer; consumer d. business; business e. business; consumer

business; consumer Many of Eaton's products are industrial products targeted toward the business market. Because it also targets lighting solutions for homes and residences, it is targeting these types of products to consumers.

Which of the following food products would most likely use an undifferentiated marketing strategy? a. hot sauce b. coffee c. corn d. soy milk e. pizza

corn -require the least differentiation as it is more of a commodity.

Scenario 6.4. Mistine is a direct selling cosmetics firm based in Thailand. Originally, it made a name for itself selling an affordable product that was of good quality. It focused mainly on housewives. However, over the years Mistine has expanded its focus, targeting more groups such as teenagers and higher-income women. Unlike many comparable direct selling firms, Mistine engages in much advertising. Its advertising campaigns must be tailored toward the appropriate target market. Refer to Scenario 6.4. What type of segmentation strategy is Mistine using? a. concentrated targeting strategy b. undifferentiated targeting strategy c. differentiated targeting strategy d. heterogeneous targeting strategy e. homogenous targeting strategy

differentiated targeting strategy - an organization directs its marketing efforts at two or more segments by developing a marketing mix for each segment. Mistine appears to be targeting different segments including housewives, higher-income women, and teenagers. All will likely require different marketing mixes.

Scenario 6.2. Angel wants to become a successful brewer. He analyzes the target market for beer and finds that there is a market niche for gluten-free beer. Angel considers the types of markets he can target with his beer. He knows that many people perceive gluten as unhealthy and might be inclined to buy his beer due to its gluten-free nature. However, he also knows there is a strong demand among those who suffer from Celiac disease. After doing sales and cost estimates, Angel feels ready to make a decision. Refer to Scenario 6.2. Assume that Angel decides that he wants to specifically target those who suffer from celiac disease. Although he realizes that many consumers avoid gluten simply for health reasons, he believes putting his marketing muscle behind a marketing strategy that would target one specific market segment is the way to go. Angel is adopting a differentiated targeting strategy. a. True b. False

false Angel is using a concentrated targeting strategy because he is only targeting one specific group of the population.

An undifferentiated targeting strategy uses market segmentation. a. True b. False

false segmentation is not needed for an undifferentiated targeting strategy because the market is homogeneous

Refer to Scenario 6.4. Assume that Mistine wants to break into the Kenyan market. It is entering the market for the first time and is unsure about how successful its products will be. Mistine's management team wants to develop a sales forecast for the area. Which of the following would be most appropriate in terms of accuracy? a. surveys b. regression analysis c. executive judgment d. time series analysis e. market tests

market test -involves making a product available to buyers in one or more test areas and measuring purchases and consumer responses to the product, distribution, promotion, and price. Because it does not require historical sales data, a market test is effective for forecasting sales of new products or of existing products in new geographic areas.

On Eaton's website, the firm segments its product offerings as aerospace, filtration, hybrid power, electrical, hydraulics, industrial clutches and brakes, plastic extrusion, and vehicle. What type of segmentation strategy has Eaton most likely adopted? a. customer size b. type of organization c. product use d. benefit segmentation e. lifestyle

product use segmented based on what they will be used for

Scenario 6.2. Angel wants to become a successful brewer. He analyzes the target market for beer and finds that there is a market niche for gluten-free beer. Angel considers the types of markets he can target with his beer. He knows that many people perceive gluten as unhealthy and might be inclined to buy his beer due to its gluten-free nature. However, he also knows there is a strong demand among those who suffer from Celiac disease. After doing sales and cost estimates, Angel feels ready to make a decision. Refer to Scenario 6.2. Angel is segmenting the market based on what type of segmentation variable? a. behavioristic b. benefit c. psychographic d. demographic e. geographic

psychographic These segments—gluten free based on diet and health—would most likely qualify as psychographic variables, which include variables such as personality characteristics, motives, and lifestyles.

Shawn works at a retail store that sells a variety of items, including umbrellas. Shawn knows that people buy umbrellas more in the summer season because of the higher frequency of storms. He has identified a formula based on past umbrella sales during the summer season. Shawn believes he can use this formula to predict future sales forecasts with a high degree of accuracy. This is an example of what type of sales forecast? a. surveys b. executive judgment c. time series analysis d. regression analysis e. market tests

regression analysis -the forecaster seeks to find a relationship between past sales (the dependent variable) and one or more independent variables, such as population, per capita income, or gross domestic product. In this case, Shawn is using the season as the independent variable and believes that the dependent variable—sales—is directly impacted by the storm season in such a way that it can be used to accurately forecast sales in the future.

A market segment profile describes the _____ among potential customers within a segment and explains the ____ among people and organizations in different segments.

similarities, differences

Scenario 6.1. Cynthia works at an engineering firm in Arizona that installs transmission lines and works with the electrical systems of buildings. She is in charge of strategic planning. Mostly her firm has worked with cities such as Tucson and Phoenix. Once in a while they will receive a major project from the state, such as renovating a major government building in the capital. However, Cynthia's firm wants to expand its target market beyond government projects. Under her direction, the marketing team launched an initiative to target more potential clients in different areas. Two areas in which Cynthia would like to expand include colleges and large for-profit businesses. Refer to Scenario 6.1. How is Cynthia's company segmenting the market for its services? a. geographic location b. product use c. demographic d. customer size e. type of organization

type of organization - it looks to be targeting government organizations, colleges, and for-profit businesses.