Consumer Behavior 2nd Edition by Kardes Cronley Cline ISBN Test Bank

Test Bank for Consumer Behavior 2nd Edition by Kardes Cronley Cline ISBN
1133587674 9781133587675
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True I False
I. Market aggregation is the process of dividing the large and diverse market into subsets of consumers who share
common needs, characteristics, or behaviors.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: COBE.KARD.11.02.01- 02.01
NATIONAL STANDARDS: United States- BUSPROG: Analytic:- BUSPROG: Analytic
STATE STANDARDS: United States - NONE - DISC: Individual Dynamics - Individual Dynamics
TOPICS: AACSB Reflective Thinking Skills
CB&C Model Customer
CB&C Model Marketing Plan
KEYWORDS: Bloom's: Knowledge
2. Dividing groups of products into subgroups of products is the best way to segment a market.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
CB&C Model Customer
3. Market segmentation allows a company to efficiently focus resources and efforts by avoiding those parts of the
market it cannot satisfy well, thereby avoiding unwieldy competition.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
4. The ultimate goal of market segmentation is better serving the consumer while improving profitability.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
5. One key assumption that underlies market segmentation is consumer preference homogeneity.
a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Customer
CB&C Model Product
6. If all humans were the same in their preferences and behaviors, market segmentation would not be needed.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
7. A target market is simply the segrnent(s) toward which a finn's marketing efforts are directed.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
CB&C Model Promotion
8. Targeting is the process of communicating with our market segments through the use of marketing mix variables in
such a way as to help consumers differentiate our product from our competition.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
9. The four elements of the marketing mix are product, price, position, and place.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
CB&C Model Product
10. One unfortunate consequence of market segmentation is that consumers spend more time in search, evaluation, and
purchase activities.
a. True
b. False
ANSWER: False
POINTS: 1
LEARNING OBJECTIVES: COBE.KARD.ll.02.02- 02.02
CB&C Model Customer
11. Market segmentation benefits consumers and has increased society's standard ofliving.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
12. Market aggregation is the opposite of market segmentation.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
13. Market aggregation strategies ignore differences among different groups of consumers.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
14. Jungle Jim's International Market, featured in your readings, uses a market aggregation strategy.
a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Customer
CB&C Model Product
15. A market segment must have more than one person.

a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Challenging
CB&C Model Customer
KEYWORDS: Bloom's: Comprehension
16. The opposite of micromarketing is mass customization.
a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Customer
17. Mass customization is the targeting of large segments, or traditionally mass markets, with highly customized
products.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
18. Henry Ford, founder of the Ford Motor Co., is generally considered the first mass marketer.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
19. The four main factors influencing market segmentation strategy are customer preference heterogeneity, the sales-cost
trade-off, the majority fallacy, and psychographies.
a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Customer
CB&C Model Product
20. Because it is logical to assume that size of a potential market segment is positively correlated to profit, pursuing the
largest market segment makes sound business sense.
a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Customer
21. Cannibalization is the phenomenon that as market segmentation increases, sales increase; but as market
segmentation increases, costs also increase.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Product
22. Market size is a key factor that is overlooked when a manager commits the majority fallacy.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Product
23. The majority fallacy suggests that consumers' tastes are normally distributed.
a. True
b. False
ANSWER: True
POINTS: I
CB&C Model Product
24. Demographic segmentation involves segmenting on the basis of cultural differences among consumers living in
different cities, states, regions, or countries.
a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Product
25. Demographic bases for segmenting consumer markets include customers' vital population statistics, such as age,
gender, income, and education.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
26. Demographic based segmentation is the most popular segmentation base.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
27. Geographic bases for segmenting consumer markets are based on a consumer's physical location.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
28. Horne Depot, a home-improvement retail chain, sells scorpion traps in its stores in New Mexico, Texas, Arizona, and
California. This is an example of geographic segmentation.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
29. An underlying assumption when using geographic-based segmentation is that consumers located in geographic
proximity share similar product and service needs and preferences.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Customer
30. In the United States, as well as world-wide, people no longer want to live in cities and are moving away from urban
areas.
a. True
b. False
ANSWER: False
POINTS: 1
TOPICS: AACSB Multicultural and Diversity Understanding
AACSB Reflective Thinking Skills
CB&C Model Customer
31. Geo-dernographic segmentation is sometimes called zip-code marketing.

a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Customer
32. PRIZM is a segmentation tool that uses psychographies.

a. True
b. False
ANSWER: False
POINTS: 1
CB&C Model Customer
33. Retail operations, such as Pottery Bam Outlet Store, Williams-Sonoma Outlet Store, Designer's Store Warehouse, and
Overstock.com, that aim at appealing to the
"value segment" are segmenting the market based on price.
a. True
b. False
ANSWER: True
POINTS: I
CB&C Model Product
34. Procter and Gamble offers a $1.00 coupon when consumers purchase three bottles ofPantene brand shampoo. This
strategy represents segments based on geo-demographics.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Customer
CB&C Model Product
35. People that live near one another often become more alike over time.
a. True
b. False
ANSWER: True
POINTS: I
CB&C Model Customer
36. The V ALS System is a segmentation tool that uses behavioral-based segmentation.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Customer
37. Within the V ALS System, Strivers have the fewest resources, often feel powerless, and are primarily concerned
with safety and security.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Customer
38. In the price segmentation model presented in your readings, the "convenience segment" is less concerned with price and
wants to have a high level of value and/or product differentiation.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Customer
39. Delta Airlines now offers a preferred seating section on many flights (usually the front part of the coach section of the
airplane) to appeal to and reward members of its frequent flyer club. This is an application of product usage
segmentation.
a. True
b. False
ANSWER: True
POINTS: I
CB&C Model Customer
40. Most pioneer brands position themselves as "standards of comparison."

a. True
b. False
ANSWER: True
POINTS: I
41. One strategy for positioning a follower brand is to separate the brand from the market leader by creating what
appears to the customer as a new product category.
a. True
b. False
ANSWER: True
POINTS: I
42. According to your readings, 7Up Soda has successfully competed in the soft drink product category by pursuing a
"tum a disadvantage into an advantage" positioning strategy.
a. True
b. False
ANSWER: False
POINTS: I
43. The slogan, "Close-Up Toothpaste- Kissably Fresh Breath!" is an example of positioning by product user.
a. True
b. False
ANSWER: False
POINTS: I
CB&C Model Product
44. The slogan, "Subway is fresh!" is an example of positioning by core benefit.
a. True
b. False
ANSWER: True
POINTS: 1
CB&C Model Product
45. Perceptual maps show how a company's products and competitors' products are clustered by market share.
a. True
b. False
ANSWER: False
POINTS: 1
AACSB Use oflnforrnation Technology
CB&C Model Customer
CB&C Model Product
46. Premium pricing, which is sometimes called prestige pricing, is pricing a brand at the top end of a product category's
pnce range.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Pricing
CB&C Model Product
47. Premium priciug, which is sometimes called prestige pricing, is priciug a brand at the top end of a product category's
pnce range.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Pricing
CB&C Model Product
48. Consumers tend to use price as a gauge of quality. This phenomenon is called the price-quality heuristic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
CB&C Model Pricing
CB&C Model Product
Multiple Choice
49. is the process of dividing the large and diverse market into subsets of consumer who share common needs,
characteristics, or behaviors.
a. Market segmentation
b. Market aggregation
c. Branding
d. Advertising
e. Positioning
ANSWER: a
POINTS: 2
DIFFICULTY: Easy
CB&C Model Customer
50. is the segment(s) toward which a finn's marketing efforts are directed.
a. Micromarket
b. Niche market
c. Target market
d. Marketing Mix
e. None of the above is correct.
ANSWER: c
POINTS: 2
DIFFICULTY: Easy
CB&C Model Customer
51. The four elements of the marketing mix are:
a. product, price, place, and position
b. price, position, place, and promotion
c. place, product, price, and promotion
d. promotion, place, prestige, and product
e. position, price, product, and promotion
ANSWER: c
POINTS: 2
DIFFICULTY: Easy
CB&C Model Product
52. What marketing practice benefits the consumer and the marketer alike by encouraging the efficient use of marketing
resources and information, thus improving society's standard ofliving?
a. Segmentation
b. Word-of-mouth marketing
c. Branding
d. Advertising
e. Positioning
ANSWER: a
POINTS: 2
CB&C Model Customer
53. occurs when an organization chooses to aggregate the market and offer the same product or service and
marketing mix to all consumers.
a. Niche marketing
b. Mass marketing
c. Market consolidation
d. Micromarketing
e. Mass customization
ANSWER: b
POINTS: 2
DIFFICULTY: Easy
CB&C Model Customer
CB&C Model Product
54. What phenomenon recognizes that as market segmentation increases, sales increase; but as market segmentation
increases, costs also increase?
a. Cannibalization
b. Sales-cost trade-off
c. Customer preference heterogeneity
d. Majority fallacy
e. Expenses to sales ratio
ANSWER: b
POINTS: 2
DIFFICULTY: Easy
CB&C Model Customer
CB&C Model Strategy
55. is the tendency for a company to focus exclusively on large, average market segments and neglect small, less
typical segments.
a. Repositioning
b. False thinking
c. Market neglect
d. Majority fallacy
e. Market aggregation
ANSWER: d
POINTS: 2
DIFFICULTY: Easy
CB&C Model Customer
CB&C Model Strategy
56. What key factor is overlooked when a manager commits the majority fallacy?
a. Competition
b. Market size
c. Geography
d. Advertising
e. Customer attitudes
ANSWER: a
POINTS: 2
CB&C Model Customer
57. The fact that some people prefer mint flavored-toothpaste, while others prefer cinnamon-flavored is know as:
a. psychographies
b. stereotyping
c. cannibalization
d. the majority fallacy
e. customer preference heterogeneity
ANSWER: e
POINTS: 2
CB&C Model Customer
58. What factor is not a relevant influence when choosing between aggregation versus segmentation strategies?
a. The intuition trap
b. Customer preference heterogeneity
c. Sales-cost trade-off
d. Majority fallacy
e. All of the above are relevant influences.
ANSWER: a
POINTS: 2
CB&C Model Customer
59. is when products offered by the same firm are so similar they compete among themselves.
a. The majority fallacy
b. Cannibalization
c. The sales-cost trade-off
d. Mass customization
e. Market aggregation
ANSWER: b
POINTS: 2
DIFFICULTY: Easy
CB&C Model Product
CB&C Model Strategy
60. Procter and Gamble offers over 10 different diaper products. Unfortunately, many of these products are similar and
compete with each other. What is this consequence of segmentation?
a. The majority fallacy
b. Cannibalization
c. The sales-cost trade-off
d. Mass customization
ANSWER: b
POINTS: 2
CB&C Model Product
CB&C Model Strategy
61. Which of the following statements demonstrates the formation of a segment based on demographics?
a. A local restaurant is open for breakfast and lunch, and then closes at 3:00PM.
b. GE has developed a microwave that can run on batteries.
c. "University Park" is a new set of student apartments rented exclusively to graduate students.
d. Procter & Gamble offers a $1.00 coupon when consumers purchase three bottles of Pert Shampoo.
e. Cengage Publishing Company publishes a magazine called "Taste of Living" specifically for audiences who
enjoy cooking and trying new recipes.
ANSWER: c
POINTS: 2
CB&C Model Customer
CB&C Model Product
62. Which of the following is not a demographic characteristic?

a. Population age distributions
b. American family composition
c. Changing likes and dislikes of Americans
d. Average income of single Americans
e. All of the above are demographic characteristics.
ANSWER: c
POINTS: 2
CB&C Model Customer
63. Penturbia refers to:
a. remote suburbs
b. large towns/cities that have decreased in population by 10% in one year
c. remote suburbs that have decreased in population by 10% in one year
d. clusters of suburbs encircling cities
ANSWER: e
POINTS: 2
CB&C Model Customer
64. An exurb refers to:

a. remote suburbs
b. large towns/cities that have decreased in population by 10% in one year
c. small towns that have decreased in population by 10% in one year
d. clusters of small towns encircling cities
ANSWER: a
POINTS: 2
CB&C Model Customer
65. The price segmentation model divides customers into four broad categories based on the customer's "perceived pain"
of paying a high price and the "perceived value" of product differentiation. A customer who is in a "Value Segment"
is best characterized by which of the following?
a. This customer wants the lowest price and will not make trade-offs for value-added product benefits. Getting the
lowest price is the priority.
b. This customer wants both the lowest price possible and the largest combination of value-added product
benefits. This person "wants it all" and will search for the best combination.
c. This customer is less concerned with price and wants to have a high level of product differentiation.
d. This customer is not overly concerned with price or value-added product benefits, but is mainly concerned
with minimizing product search and evaluation.
e. This customer is highly brand loyal, perceiving value in his/her favorite brand, and will pay any price for that
favored brand.
ANSWER: b
POINTS: 2
CB&C Model Customer
66. According to the price segmentation model in your readings, which segment represents a combination oflow
"perceived pain" and high "perceived value" and is a highly desirable segment to marketers?
a. The price segment
b. The loyal segment
c. The value segment
d. The convenience segment
e. The brand segment
ANSWER: b
POINTS: 2
CB&C Model Customer
67. is the measurement of lifestyle, typically defmed in terms of activities, interests, and opinions.
a. Demographics
b. Ethnographies
c. Psychographies
d. Polygraphics
e. Geo-demographics
ANSWER: c
POINTS: 2
DIFFICULTY: Easy
CB&C Model Customer
68. is segmentation based on consumer preference for specific product attributes or benefits, usage occasion, user
status, rate of product usage, or loyalty.
a. Demographic-based segmentation
b. Ethnographic-based segmentation
c. Psychographic-based segmentation
d. Geo-demographic based segmentation
ANSWER: e
POINTS: 2
CB&C Model Customer
69. Air Walk is a brand of athletic shoes that is marketed to appeal to individuals who engage in skateboarding. This is an
example of what kind of segmentation strategy?
a. Benefits sought
b. Price
c. Psychographic
d. Demographic
e. Geo-demographic
ANSWER: c
POINTS: 2
CB&C Model Customer
70. Volvo manufactures a station wagon to meet all of the goverrnnent's strictest safety ratings, and Volvo emphasizes this
in its advertising, claiming to be, "the safest car on the road." From this information, it appears that Volvo may be
engaging in what type of segmentation strategy?
a. Geographic
b. Price
c. Psychographic
d. Demographic
e. Benefits sought
ANSWER: e
POINTS: 2
STATE STANDARDS:
CB&C Model Customer
71. Which of the following statements demonstrates the formation of a segment based on benefits sought?
a. Campbell's Soup makes a spicier chili for its market in Texas than it does in Maine.
b. GE built a downsized microwave oven to hang under kitchen cabinets.
c. Kings Island Park offers a special discount to senior citizens.
d. Procter and Gamble offers a $1.00 coupon when consumers purchase three bottles of Pert Shampoo.
e. Cengage Publishing Company publishes a magazine called "Underground" specifically for audiences who
enjoy punk and alternative forms of rock music.
ANSWER: b
POINTS: 2
CB&C Model Customer
72. "Movers and Shakers," "City Roots," and ''Domestic Duos" are:
a. psychographic profiles of urban consumers
b. groups in the PRIZM system
c. segments in the V ALS system
d. types of positioning strategies
e. None of the above are correct.
ANSWER: b
POINTS: 2
CB&C Model Customer
73. The PRIZM segmentation model discussed in your readings is based in what market segmentation strategy?
a. Demographic segmentation
b. Geo-dernographic segmentation
c. Psychographic segmentation
d. Behavioral-based segmentation
e. Price segmentation
ANSWER: b
POINTS: 2
CB&C Model Customer
74. Cindy, Bob, and Tina are all college students.
Cindy is a music major. While she enjoys composing and playing her own music, she doesn't have strong ambitions
toward having a career. Ideally, she would like to find a nice guy (but not a business major), get married, move out to the
country so she can have a garden and maybe even a horse, and teach piano lessons out of her horne.
Bob is currently a frnance major, after recently changing from management. (He has also been a political science major
and an engineering major- they all seem cool, but none of the majors seem to be able to hold his interest.) Besides
changing majors, Bob loves to play club sports, really enjoys going to bars and socializing with his fraternity brothers,
and considers himself to be fairly "hip" and "cool."
Tina is an education major. Like Cindy, she eventually wants to settle down, get married, and have children, although
she wants to work with children as a school teacher. Ideally, she would like to move back to her small-town horne,
where the rest of her family lives. She often goes horne on the weekends because her strong Christian religion doesn't
condone drinking and "partying."
Based on the descriptions provided above and according to the V ALS System, which student most likely belongs to
the "makers" segment?
a. Cindy
b. Bob
c. Tina
d. None of them belong to the makers segment.
e. All of them belong to the makers segment.
ANSWER: a
POINTS: 2
CB&C Model Customer
75. Abby is an education major in college. Abby eventually wants to settle down, get married, and have children, although
she wants to work with children as a school teacher. Ideally, she would like to move back to her small-town horne, where
the rest of her family lives. She often goes horne on the weekends because her strong Christian religion doesn't condone
drinking and "partying." According to the VALS System segmentation model, to what segmentation group does Cindy
most likely belong?
a. Makers
b. Survivors
c. Believers
d. Experiencers
e. Striver
ANSWER: c
POINTS: 2
CB&C Model Customer
76. According to marketing experts, positioning is not something you do to a product, it's something you do:
a. to your competitors
b. in the mind of the potential customer
c. to your organization and products
d. to your competitor's product
e. All of the above are correct.
ANSWER: b
POINTS: 2
77. Which of the following related to positioning is true?
a. The first brand to enter and define a market is known as a pioneering brand.
b. According to Reis and Trout, positioning is something you do to your product and your competitors' products.
c. "Tylenol- The first word in relief' is an example of positioning by usage occasion.
d. Perceptual maps show how our products and our competitors' product are clustered by market share.
e. All of the above are true.
ANSWER: a
POINTS: 2
CB&C Model Product
78. Which of the following about positioning is false?

a. When product benefits are difficult to communicate, positioning on price may be a good choice.
b. Characters like the "Betty Crocker" help companies position by user.
c. All marketing activities influence positioning and vice versa.
d. Positioning on price is usually only used for luxury items.
e. One advantage of using price to position is that consumers often use price to gauge quality.
ANSWER: d
POINTS: 2
CB&C Model Product
79. The first brand to enter a new market often enjoys a long-term consumer preference advantage over follower
brands. This phenomenon is known as what?
a. Diversification effect
b. Repositioning
c. Majority fallacy
d. Cannibalization
e. Pioneering advantage
ANSWER: e
POINTS: 2
DIFFICULTY: Easy
CB&C Model Product
80. For years, Secret brand deodorant has run the slogan, "Strong enough for a man but made for a woman." This is an
example of what type of positioning?
a. Positioning by doing the opposite
b. Positioning by turning a disadvantage into an advantage
c. Positioning as a leader
d. Positioning with respect to use or application
ANSWER: e
POINTS: 2
CB&C Model Product
81. For years, Campbell's Soup ran ad campaigns showing chilly kids and parents corning horne for lunch to a steaming
bowl of soup. This is an example of what type of positioning?
a. Positioning by doing the opposite
b. Positioning by turning a disadvantage into an advantage
c. Positioning as a leader
d. Positioning with respect to usage situation
e. Positioning by user
ANSWER: d
POINTS: 2
CB&C Model Product
82. Politicians often market themselves by emphasizing situations in which their opponents exercised poor judgment in an
attempt to get voters to change how the opponent is judged. This is an example of what type of positioning?
a. User
b. Attribute/benefit
c. Usage Situation
d. Positioning a leader
e. Repositioning the competition
ANSWER: e
POINTS: 2
83. Marketers use perceptual maps as a means to display or graph the location of products or brands:
a. with respect to the geographic areas where they are manufactured
b. as they are clustered by retailer, normally in major metropolitan areas
c. within distribution channels
d. in the minds of consumers
e. in terms of the utility created by each product attribute
ANSWER: d
POINTS: 2
AACSB Use oflnformation Technology
CB&C Model Customer
Essay
84. Defme segmentation, target market, and positioning.
ANSWER: Market Segmentation is the process of dividing the large and diverse mass market
into subsets of consumers who share common needs, characteristics, or behaviors, and
then targeting one or more of those segments with a distinct marketing mix.
Target market is simply the segment(s) toward which a firm's marketing efforts are
directed.
Positioning is the process of communicating with our target market(s) through the use of
marketing mix variables-a specific product, price, distribution channel, and promotional
appeal-in such a way as to help consumers differentiate a product from competitors and
understand how a particular product best satisfies their needs.
POINTS: 10
DIFFICULTY: Easy
TOPICS: AACSB Communication Abilities
CB&C Model Customer
CB&C Model Product
85. Define the steps in the "divide and conquer" process described in your readings.
ANSWER: -- Match strengths with opportunities

-- Segment the market
--Determine target(s)
-- Differentiate via positioning strategy
-- Design and execute the marketing mix
POINTS:10
DIFFICULTY:Moderate
STATE STANDARDS:United States - NONE - DISC: Individual Dynamics - Individual Dynamics
CB&C Model Product
86. What is the goal in analyzing and engaging in the development of market segments?
ANSWER: By analyzing and engaging in the development of market segments, a marketer can
develop products and services specifically tailored to that group's needs that also closely
match the capabilities of the organization, thus maximizing the chances of profit and
success. Thus, segments offer marketers the ability to target more effectively and/or
efficiently. Ultimately, the goal is to increase the finn's profitability.
POINTS: 10
CB&C Model Customer
CB&C Model Product
87. What are the key assumptions that underlie market segmentation?
ANSWER: Two key assumptions underlie market segmentation. First, consumer preferences vary.
Some consumers prefer a car that gets good gas mileage, whereas others are more
concerned about cargo space and towing features. Although this may seem obvious, if all
consumer preferences were universal, there would be few advantages to market
segmentation. Second, by tailoring a product or service to a segment's specific needs,
marketers can make the offering so appealing that the members of the segment are willing
to pay a price that offsets the costs associated with catering to the specialized needs of the
segment.
POINTS: 10

CB&C Model Product
88. What are the factors that influence, and how do they influence, market segmentation strategy?
ANSWER: There are four main factors that influence market segmentation strategy:
(1) Customer preference heterogeneity which is the extent to which tastes and
preferences differ among consumers. As preference heterogeneity increases, the case
for segmentation increases. Moreover, the greater the variability, the more potential
profits provided by individual segments. When consumers' preferences vary, it is
important to analyze how these preferences are distributed.
(2) Majority Fallacy which is the tendency to assume that size of the potential market
segment and focus exclusively on large average segments, where the majority of
customer preferences lie, and neglect smaller less typical segments. The largest
segment, where competition tends to be most intense, is not always the most profitable.
Smaller segments can actually be more profitable when there is less competition.
(3) The Sales-cost trade-off which recognizes that, as market segmentation
increases, sales increase because a ftnn's offerings align more closely to consumers'
preferences. But at the same time, costs also increase because a multi-product
strategy costs more to implement than a one-product strategy.
(4) Risk of Cannibalization which occurs when products offered by the same firm are
so similar that they compete among themselves, thus creating a case of
oversegmentation. Sharing manufacturing and marketing costs across product offerings
is important when cannibalization is a potential issue. Thus, a company must strike a
delicate balance between effective market coverage and too many offerings.
POINTS: 10
CB&C Model Customer
CB&C Model Product
CB&C Model Strategy
89. Identify and describe 3 examples of segmentation based on demographics.
ANSWER: Student answers here will vary. However, for example,

(I) TheAARP Magazine segments the market on age and targets seniors over 50
years of age.
(2) The Gillette brand is segmented on gender, offering the Fusion razor for men and
the Venus razor for women.
(3) Hallmark offers a line of cards targeted to African Americans with their Mahogany
line.
POINTS: 10
AACSB Multicultural and Diversity Understanding
CB&C Model Customer
CB&C Model Product
NOTES: Bloom's: Comprehension
90. Cindy, Bob, and Tina are all college students.
Cindy is a music major. While she enjoys composing and playing her own music, she doesn't have strong ambitions
toward having a career. Ideally, she would like to find a nice guy (but not a business major), get married, move out to the
country so she can have a garden and maybe even a horse, and teach piano lessons out of her horne.
Bob is currently a frnance major, after recently changing from management. (He has also been a political science major
and an engineering major- they all seem cool, but none of the majors seem to be able to hold his interest.) Besides
changing majors, Bob loves to play club sports, really enjoys going to bars and socializing with his fraternity brothers,
and considers himself to be fairly "hip" and "cool."
Tina is an education major. Like Cindy, she eventually wants to settle down, get married, and have children, although
she wants to work with children as a school teacher. Ideally, she would like to move back to her small-town horne,
where the rest of her family lives. She often goes horne on the weekends because her strong Christian religion doesn't
condone drinking and "partying."
Based on the descriptions provided above and according to the VALS segments, which student most likely belongs
to the "makers" segment?
ANSWER: Cindy is most likely the maker because she is motivated by self-expression. She clearly
likes hands-on constructive activities. Makers are also more likely to have gardens and
pets.
POINTS: 10
AACSB Multicultural and Diversity Understanding
CB&C Model Customer
91. What is psychographies and how are markets segmented using psychographies?
ANSWER: Psychographies is lifestyle, often combined with measures of attitudes, beliefs, and
personalities. Psychographic segmentation focuses on why people buy based on
lifestyle. Lifestyle, which is simply how we live, is traditionally defined in terms of a
person's activities (how they spend their time doing things such as volunteer work,
vacationing, and exercising), interests (what they consider important or value in life
such as horne, recreation, and family), and opinions (how they feel about the world
around them such political, religious, and social beliefs).
POINTS: 10
CB&C Model Customer
CB&C Model Product

92. Describe what gaps in a perceptual map might represent.
ANSWER: Gaps typically indicate:

(I) A true opportunity in the market that a company might be able to pursue.
(2) A combination of attributes that nobody actually needs or wants, which is why
there is no competitor there.
(3) A combination of attributes that is impossible to deliver to the consumer without the
development of new technology.
POINTS: 10
CB&C Model Customer
CB&C Model Product
93. Imagine you work for Jonesville, Inc., a mid-sized company specializing in the manufacturing and marketing of high-
end, high-performance mountain bikes. Jonesville, Inc. recently hired an outside market research firm to assess its
positioning strategy and make recommendations about future positioning strategies. The research firm submitted a
perceptual map. The map's x-axis (abscissa) reflects higher quality when moving to the right, and they-axis (ordinate)
reflects higher price when moving up and positioned Jonesville in the upper right-hand quadrant. The research firm
recommends that Jonesville position another line of high-end mountain bikes in the lower right hand quadrant where
there are no competitors and there appears to be a gap in the market.
a. Your boss doesn't really understand the map. Explain to your boss what the map means.
b. Evaluate the research firm's logic for the new positioning location (i.e., identify the logic's flaw).
ANSWER: a. The map shows how consumer's position a given brand, in the consumers' mind
relative to the competition, along known brand attributes, in this case quality and price,
and whether or not we are meeting our goals in terms of this positioning strategy. The
map also shows market gaps.
b. Although the research firm accurately identified a gap in the market, the flaw in the
logic is that the gap is created by the combination of attributes of high quality/low price.
This recommendation is not realistic since it calls for high quality at a low price. Odds
are we could not make a profit with this combination. The recommendation should be
rejected.
POINTS: 10
AACSB Use oflnformation Technology
CB&C Model Customer
CB&C Model Strategy

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12. Market aggregation is the opposite of market segmentation.

15. A market segment must have more than one person.

26. Demographic based segmentation is the most popular segmentation base.

31. Geo-dernographic segmentation is sometimes called zip-code marketing.

32. PRIZM is a segmentation tool that uses psychographies.

40. Most pioneer brands position themselves as "standards of comparison."

62. Which of the following is not a demographic characteristic?

64. An exurb refers to:

78. Which of the following about positioning is false?

ANSWER: -- Match strengths with opportunities

CB&C Model Marketing Plan

ANSWER: Student answers here will vary. However, for example,

CB&C Model Product

92. Describe what gaps in a perceptual map might represent.

ANSWER: Gaps typically indicate:

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