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Chapter 7Sharpening the Focus: Target Marketing Strategies and

Customer Relationship Management

GENERAL CONCEPT QUESTIONS

Multiple Choice

1. A condition of _____ exists today as a result of people’s diverse interests and backgrounds that divide them into numerous groups with distinct wants and needs.

a. market aggregationb. market similitudec. economic aggregationd. disintermediatione. market fragmentation

(e; easy; p. 197)

2. Which one of the following statements about the steps in the target marketing process is true?

a. The first step in the target marketing process is to set marketing objectives.b. There are four steps in the target marketing process.c. The second step in the target marketing process is the identification of all

segmentation variables.d. The final step in the target marketing process is positioning.e. all of the above

(d; moderate; p. 198)

3. _____ is the process of dividing a larger market into smaller pieces based on one or more meaningful shared characteristics.

a. Acculturationb. Segmentationc. Customerizationd. Market aggregatione. Positioning

(b; easy; p. 198)

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Part II: Understanding Consumers' Value Needs

4. Recognizing that some people eat cereal because of its nutritional value, that some people eat cereal because it is easy to prepare, and some eat cereal because it tastes good, is part of the _____ process.

a. acculturationb. segmentationc. customerizationd. market aggregatione. positioning

(b; easy; p. 198)

5. Age, ethnicity, geographical region, and lifestyle are all examples of _____. a. segmentation variablesb. positioning strategiesc. synergistic samplesd. homogenous populationse. sampling heuristics

(a; easy; p. 198)

6. Demographics _____.a. segments people on the basis of what they do with a productb. segments people on the basis of when they use a productc. uses qualitative data to explain why seemingly homogeneous consumers are notd. segments people on the basis of shared attitudes, opinions, and interestse. are measurable characteristics such as age and gender

(e; easy; p. 198)

7. A national retailer of uniforms targeted male nurses in a recent advertising campaign. It used _____ segmentation to define its target market.

a. lifestyleb. behavioralc. socioeconomicd. demographice. psychographic

(d; easy; p. 198)

8. Which of the following is NOT an example of a demographic segmentation variable?a. lifestyleb. income and social classc. race and ethnicityd. gendere. age

(a; easy; p. 198)

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Chapter 7: Sharpening the Focus: Target Marketing Strategies and Customer Relationship Management

9. The group of American consumers born between 1977 and 1994 are often called _____. a. baby bustersb. the silent majorityc. Generation Yd. tweense. Generation X

(c; easy; p. 199)

10. A retailer that wanted to target prospective grooms between the ages of 21 and 40 who are within six months of their marriage is using _____ segmentation to define its target market.


(d; easy; p. 199)

11. The group of American consumers born between 1965 and 1976 are called _____. a. baby boomersb. the silent majorityc. Generation Yd. tweense. Generation X

(e; easy; p. 199)

12. Baby boomers _____.a. were born between 1965 and 1976b. tend to view their homes as an expression of their individuality rather than

material successc. are important to marketers because of the size of the segmentd. are aged 65 or oldere. none of the above

(c; easy; p. 199)

13. The Hispanic American segment is important to marketers because _____.a. it is growing rapidlyb. Hispanics tend to be brand loyal especially to products made in their country of

originc. of the youthful composition of this market segmentd. of the size of the average Hispanic householde. all of the above

(e; easy; p. 203)

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14. The Asian American segment of the population _____.a. is the largest ethnically-based market segmentb. has been an economically important market segment for almost three decadesc. is not considered to be a significant market segmentd. is the fastest growing minority group in the United Statese. will never be attractive to target marketers

(d; easy; p. 203)

15. What is PRIZM?a. a method of removing heterogeneous variables from a target marketb. a method of data mining used by marketing managers to implement market

development strategiesc. a database that classified every U.S. zip code according to demographic and

lifestyle characteristicsd. a method of confirming that the chosen target market is representative of the ideal

market segmente. a positioning strategy used in the introduction of new consumer products

(c; moderate; p. 204)

16. _____ data is useful in understanding why some people who are over 65 lead active lives, take regular vacations, and eat a healthy diet although others in the same age segment do not exercise, eat and drink to excess, and refuse to walk more than 5 feet to pick up their mail.

a. Demographicb. Geoclusteringc. Ethnocentricd. Psychographice. Socioeconomic


17. _____ variables segments markets in terms of shared activities, interests, and opinions.a. Demographicb. Ethnographicc. Geodemographicd. Socioeconomice. Psychographic

(e; easy; p. 204)

18. Magazines targeted to people who love to in-line skate, to people who enjoy cooking, and to people who would prefer a simpler lifestyle use _____ segmentation variables.

a. demographicb. ethnographicc. geodemographicd. socioeconomice. pychographic

(e; moderate; p. 204)

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19. What is VALS?a. a system used for psychographic segmentationb. a database of people who have purchased similar productsc. a strategy used for implementing geodemographic segmentationd. a method of confirming that the chosen target market is representative of the ideal

market segmente. a method of removing heterogeneous variables from a target market

(a; moderate; p. 206)

20. The VALS system categorizes consumers as _____.a. risk takers or risk aversivesb. leaders or followersc. innovators, early adopters, late adopters, or laggardsd. principle-oriented, status-oriented, or action-orientede. technically-oriented, people-oriented, or task-motivated


21. _____ segmentation variables classifies consumers on the basis of how they act toward, feel about, or use a product.

a. Demographicb. Behavioralc. Geodemographicd. Socioeconomice. Psychographic

(b; easy; p. 207)

22. The 80/20 rule is most directly related to _____ segmentation. a. demographicb. behavioralc. geodemographicd. socioeconomice. psychographic

(b; moderate; p. 207)

23. The only time many people entertain is during November and December when their homes are decorated for the holidays. The increase in ads for prepared trays of food to be served at these functions is directly related to _____ segmentation.

a. socioculturalb. geodemographicc. geographicd. demographice. behavioral

(e; easy; p. 207)

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24. A viable target market should _____.a. have homogeneous wants and needs that differ from those of other segmentsb. be measurablec. be large enough to be profitable now and in the futured. be reachable through marketing communicationse. all of the above


25. A viable target market should _____.a. have needs that can adequately be served by the marketerb. not be reachable by other organizationsc. have the same needs as similar sized groupsd. have enough growth potential to become profitable sometime in the future.e. all of the above

(a; easy; p. 210)

26. A(n) _____ would probably include customer demographics, location, lifestyle information, and a description of how frequently the customer buys the product.

a. value analysisb. customer potential assessmentc. segment profiled. internal market audite. customer guide

(c; easy; p. 210)

27. A company that uses a(n) _____ targeting strategy is appealing to a broad spectrum of people.

a. fragmentedb. undifferentiatedc. concentratedd. differentiatede. customized

(b; easy; p. 210)

28. Why would a company adopt an undifferentiated targeting strategy when there is so much evidence of the benefits of a differentiated strategy?

a. to more efficiently focus on its CRM strategyb. to remove the need for disintermediationc. to move a product to the next stage of its product life cycled. to take advantage of economies of scalee. all of the above


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29. With a _____ marketing strategy, products and the messages about them are tailored to the individual customer.

a. fragmentedb. heterogeneousc. concentratedd. differentiatede. customized

(e; easy; p. 212)

30. A former top manager at Mazda was quoted as saying, "Customers want to express their individuality with the products they buy." His statement reflects a belief that companies need to develop a _____ marketing strategy;

a. fragmentedb. heterogeneousc. concentratedd. differentiatede. customized

(e; easy; p. 212)

31. _____ means developing a marketing strategy aimed at influencing how a particular market segment perceives a good or service in comparison to the competition.

a. Concentrated targetingb. Positioningc. Benefit segmentationd. Mass customizatione. Customerization


32. The first step in developing a positioning strategy is to _____.a. set the marketing communications budgetb. identify segmentation variablesc. analyze the competitors’ position in the marketplaced. create a product with a competitive advantagee. create target markets


33. Once a _____ is set, marketers must finalize the marketing mix by putting all the pieces into place.

a. segmentation variableb. positioning strategyc. target marketing strategyd. undifferentiated targeting strategye. concentrated targeting strategy


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34. Positioning strategies often try to create a _____ for a good or service, a distinct image that captures its character and benefits.

a. FAB profileb. target marketc. brand personalityd. segment profilee. trade promotion


35. If someone described Coca-Cola as an all-American, Pepsi-Cola as a young daredevil, and Dr. Pepper as a nonconformist, s/he would be describing the sodas’ _____.

a. FAB profilesb. target marketsc. brand personalitiesd. segment profilese. trade promotions


36. A perceptual map is used to _____.a. identify psychographic segments such as people who cheat on their income taxes

or steal from their employersb. create consumer cross-tabulations for marketing researchc. locate consumers within a primary metropolitan statistical area (PMSA)d. determine how consumers position products in relation to each othere. identify at which stage of the targeting process the marketer needs to be


37. Perceptual maps _____.a. are created as one stage of the new product development processb. are often used to predict product successc. identify consumer shopping preferences in terms of retail and nonretail

locationsd. cannot be used in industries where there are oligopoliese. cannot be created without consumer research


38. CRM stands for _____.a. consumer relationship marketingb. consumer relationship managementc. customer relationship managementd. customer relationship marketinge. customer relations marketing

(c; easy; p. 215)

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39. Customer relationship management (CRM) deals with how each customer reacts to elements of the _____.

a. target market strategyb. segmentation variablesc. perceptual mapd. geodemographye. marketing mix


40. The first step in customer relationship management (CRM) for a company is to _____.a. rank its customers in terms of sales volumeb. train its employees in CRM methodologyc. identify types of transactions and determine which will be abandonedd. identify customers and get to know them in as much detail as possiblee. determine which aspect of the product will be customized to meet the individual

needs of its customers(d; moderate; p. 216)

41. Many marketing experts advocate _____ programs that allow companies to talk to individual customers and adjust elements of the marketing mix to satisfy the specific needs of each customer.

a. customer relationship management (CRM)b. interactive communicationsc. transactional managementd. B2B marketinge. management information system (MIS)


42. Customer relationship management (CRM) programs are also called _____.a. transactional marketing programsb. market segmentation strategiesc. one-to-one marketingd. marketing with a product-orientatione. undifferentiated marketing

(c; easy; p. 216)

43. According to the writings of Don Peppers and Martha Rogers, there is/are _____ step(s) in one-to-one marketing.

a. oneb. twoc. threed. foure. five


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44. After a marketer has identified customers and gets to know them in as much detail as possible, then the marketer _____.

a. must interact with the customers and find ways to improve cost efficiencyb. must strive toward effectiveness of the interactions with the customersc. needs to differentiate these customers in terms of both their needs and their value

to the companyd. needs to customize some aspects of the products or services they offer to each

customere. needs to differentiate these customers in terms of only their value to the company

(c; moderate, p. 216)

45. A _____ strategy allows a company to identify its best customers, stay on top of their needs, and increase their satisfaction.

a. CRMb. target marketingc. undifferentiated targetingd. concentrated targetinge. differentiated targeting


46. Which of the following statements about customer relationship management (CRM) programs is true?

a. The success of a CRM program relies on its use of mass communication channels.b. CRM programs include any communication channel that allows the customer to

communicate directly with a company.c. Internet technology is viewed as a barrier to the implementation of CRM

programs.d. To succeed, all companies should engage in CRM every time they interact with a

customer.e. Only consumer marketers can benefit from the use of CRM programs.


47. Which of the following is an example of how customer relationship management (CRM) programs are used?

a. A customer talks to a service representative about an error in billing.b. A new computer user calls the computer manufacturer’s hot line at

midnight to see if he needs to buy a printer cable.c. A dentist sends a postcard to her customers reminding them of their

upcoming appointments.d. A retailer calls a customer to tell her that the spring line of sandals has

arrived at the store.e. all of the above

(e; moderate. p. 217)

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48. Which of the following organizations could benefit from the use of customer relationship management (CRM) programs?

a. the Tennessee Department of Motor Vehicles where drivers’ licenses are issuedb. a veterinarian’s officec. a department stored. a construction companye. all of the above

(e; easy; p. 217)

49. The dentist office calling to remind you of your scheduled appointment for the next day is an example of _____.



50. Successful one-to-one marketing is dependent on _____.a. geodemographyb. segmentationc. positioningd. CRMe. repositioning

(d; easy; p. 217)

51. A CRM strategy allows a company to _____.a. identify its best customersb. stay on top of their customers needsc. increase their customers satisfactiond. A and Be. A, B, and C

(e; easy; p. 217)

52. In a nutshell, _____ helps firms communicate with and serve customers by better understanding their needs.


(a; easy; p. 217)

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53. _____ is an effective way to serve new customers who may have been overlooked by prior marketing efforts.

a. Consumer relationship marketingb. Consumer relationship managementc. Customer relationship managementd. Customer relationship marketinge. Customer relations marketing

(c; easy; p. 218)

54. The most important aspect of customer relationship management (CRM) is that it _____. a. can be implemented using any form of mass communication channelb. requires organizations to look at customers as partnersc. allows marketers to create consumer wants and needsd. requires organizations to view their customers as adversariese. creates clear win-lose situations


55. Some areas of focus relating to customer relationship management (CRM) are _____.a. marketing metricsb. share of customerc. lifetime value of the customerd. customer equitye. all of the above

(e; easy; p. 219)

56. The most important aspect of _____ is that it presents a new way of looking at how to effectively compete in the marketplace.

a. consumer relationship marketingb. consumer relationship managementc. customer relationship managementd. customer relationship marketinge. customer relations marketing

(c; easy; p. 219)

57. Successful firms have learned a way to compete is by _____.a. establishing relationships with individual customers on a one-to-one basisb. communicating through dialoguec. listening to customer feedbackd. B and Ce. A, B, and C

(e; easy; p. 219)

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58. CRM is used to strengthen relationships between firms and _____.a. consumersb. other businessesc. government agenciesd. not-for-profit organizationse. all of the above

(e; easy; p. 219)

59. Companies that successfully practice customer relationship management (CRM) measure success by looking at _____.

a. share of market and net present value of customer over a period of years

b. business potential and industry potentialc. share of customer and lifetime value of the customerd. a perceptual map and share of voicee. current future value of the customer and share of market


60. CRM marketers look at _____.a. their share of the customersb. the lifetime value of a customerc. customer equityd. focusing on high-value customerse. all of the above

(e; easy; p. 219)

61. Companies that successfully practice _____ have different goals, use different measures of success, and look at customers in some different ways.

a. consumer relationship marketingb. consumer relationship managementc. customer relationship managementd. customer relationship marketinge. customer relations marketing

(c; easy; p. 219)

62. CRM firms focus on increasing their _____, not share of the market.a. mass customizationb. perceptual mapc. segment profiled. usage occasionse. share of customers

(e; easy; p. 219)

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63. CRM firms focus on increasing their share of customer because _____.a. it is easier and less expensive to keep an existing customer than to get a new

customerb. it is harder but less expensive to keep an existing customer than to get a new

customerc. it is usually easier but more expensive to keep an existing customer than to get a

new customerd. it is always hard and expensive to get new customerse. customers come and go so quickly

(a; easy; p. 219)

64. Loyal customers _____.a. are more likely to deliver a greater financial return to the companyb. tend to pay higher prices for the same products and servicesc. engage in more positive word of mouth about the companyd. A and Be. A, B, and C

(e; easy; p. 220)

65. The _____ is/are the potential profit(s) generated by a single customer’s purchase of a firm’s products over the customer’s lifetime.

a. lifetime value of a customerb. VALSc. mass customizationd. share of the customere. usage occasions

(a; easy; p. 220)

66. With CRM, a customer’s lifetime value is(are) _____.a. identifiedb. the true goalc. not an individual transactiond. A and Ce. A, B, and C

(e; easy; p. 220)

67. Using a customer database a firm can identify its "best customers" in determining _____.a. how long it has been since the customer last placed an orderb. how often this customer buys a product/servicec. the amount a customer spends on a typical transactiond. A and Be. A, B, and C

(d; easy; p. 220)

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68. One of the goals of customer relationship management (CRM) programs is to _____. a. increase market shareb. develop appropriate responses in transactional marketing situationsc. reduce total communications costsd. reduce share of customere. increase the total profit generated by a customer over his or her lifetime


69. Which of the following statements about the lifetime value of a customer is true? a. CRM helps companies identify their customer’s lifetime value.b. All customers have the same lifetime value.c. A customer’s lifetime value is easy to calculate.d. A company can either increase customer share or a customer’s lifetime value but

not both.e. all of the above

(a; easy; p. 220)

70. Which of the following statements about customer equity is true?a. With customer equity, a company would put just as much effort in serving

unprofitable customers as it does for profitable ones.b. Customer equity is an efficient way to reach new customers who may have been

overlooked by prior marketing efforts.c. With customer equity, all customers are considered equal.d. Customization is not necessary for successful customer equity.e. all of the above


71. _____ is the financial value of customer relationships through the lifetime of the relationships.

a. Target marketb. VALSc. Brand personalityd. Customer equitye. 80/20 rule

(d; easy; p. 220)

72. An increasing number of companies are considering their relationships with customers as financial assets. Such firms measure success by calculating the value of their _____.

a. target marketb. VALSc. brand personalityd. customer equitye. positioning


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73. A goal of CRM is to reap a high return on the investments made in customer relationships and maximize the value of a firm’s _____.

a. target marketb. VALSc. brand personalityd. customer equitye. positioning


74. To determine _____, firms compare the investments they make in acquiring customers, retaining customers, and relationship enhancement with the financial return on those investments.

a. segmentationb. VALSc. brand personalityd. customer equitye. positioning


75. To determine customer equity, firms _____.a. analyze the investments they make in acquiring customersb. analyze the investments they make to retain customersc. compare relationship enhancements with the financial returns on those

investmentsd. A and Be. A, B, and C


True/False

76. The direct cause of market fragmentation is the large number of new products introduced annually.(F; easy; p. 197)

77. Age, usage rate, love of the outdoors, and political opinions are all examples of segmentation variables.(T; easy; p. 197)

78. The members of Generation Y were born between 1965 and 1976.(F; easy; p. 199)

79. When Apple decided to market color-coordinated computer monitors to women, it thought it had discovered an important demographic segmentation variable.(T; easy; p. 199)

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80. A consumer’s national origin cannot be relied on to predict his or her preferences for specific television shows, foods, apparel, and choice of leisure activities.(F; moderate; p. 202)

81. Hispanics tend to be brand-loyal, especially to products made in their country of origin.(T; moderate; p. 203)

82. Hispanic Americans are the fastest-growing minority group in the United States.(F; moderate; p. 203)

83. A basic assumption of geodemography is that a rolling stone gathers no moss.(F; moderate; p. 204)

84. Psychographic segments market in terms of shared activities, interests, and opinions.(T; easy; p. 204)

85. The VALS system is a crucial part of geodemographic segmentation.(F; moderate; p. 206)

86. The 80/20 rule has a powerful influence on behavioral segmentation.(T; moderate; p. 207)

87. The target market for movies classified as "chick flicks" is women.(T; easy; p. 208)

88. A target market is not viable unless the segment is large enough to be profitable now and in the future.(T; moderate; p. 210)

89. A manufacturer that sold nothing but tempered glass to car manufacturers and to companies that produce glass shower enclosures would use an undifferentiated targeting strategy.(F; moderate; p. 210)

90. Perceptual maps are a tool for implementing positioning strategies.(T; easy; p. 214)

91. Customer relationship management (CRM) programs are often called interactive marketing programs.(F; moderate; p. 215)

92. Customer relationship management (CRM) programs view customers as partners, not as adversaries.(T; easy; p. 216)

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93. Customer relationship management (CRM) programs are an efficient way to reach new customers who may have been overlooked by prior marketing efforts.(T; easy; p. 218)

94. Marketing experts can see an advantage to the adoption of customer relationship management (CRM) programs.(T; easy; p. 218)

95. There are five steps in one-on-one marketing as presented in the writing of Don Peppers and Martha Rogers.(F; moderate; p. 216)

96. During the interact stage of one-to-one marketing, companies will initiate more dialogue with its most valuable customers.(T; moderate; p. 217)

97. A CRM strategy allows a company to identify its best customers, stay on top of their needs, and increase their satisfaction.(T; easy; p. 217)

98. The final stage of customer relationship management (CRM) programs is to identify customers in terms of both their needs and their value to the company.(F; moderate; p. 219)

99. The CRM strategy was designed to work only with business-to-business companies with a very large database of customers.(F; easy; p. 219)

100. CRM is about communicating with customers and about customers being able to communicate with a company one to one.(T; easy; p. 219)

101. The Federal Express Web site tracking a lost package is an example of CRM.(T; easy; p. 219)

102. Historically, markets have measured success in a product category by their share of the market.(T; easy; p. 219)

103. The lifetime value of a customer is the total profit generated by the revenue stream produced by that customer.(T; moderate; p. 220)

104. The term share of customer is synonymous with share of market.(F; moderate; p. 220)

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105. Using a CRM approach, customers must be prioritized and communication customized accordingly.(T; easy; p. 220)

Essay

106. What is market fragmentation? Give an example of how it has influenced your life.

Answer: Market fragmentation refers to how society today has divided people into groups with diverse interests and diverse backgrounds. Each group has distinctive wants and needs. Because of this diversity, the same good or service will not appeal to everyone. The proliferation of cable TV is probably the best example a student can give although there are certainly others.(easy; p. 197)

107. You work for a travel agency. Business has been slow, and you have suggested some promotions targeted to specific market segments. What three demographic segmentation variables would you recommend using?

Answer: Students’ answers will vary. Their answers must identify specific demographic-based segments. Most students will list age, gender, income and social class, race and ethnicity, and stage of family cycle. Better students will list singles, Generation X members, divorced, newlyweds, grandparents, Hispanic Americans, etc.(easy; p. 197)

108. Some marketing texts define generational marketing as the use of marketing programs designed for the distinct attitudes and consumer behavior of the various generations of components of the marketplace. How do you think this text would have explained generalization marketing? Explain your answer.

Answer:Students should see age as one important demographic segmentation variable. Some will discuss various aspects of the differences among Generation X, Generation Y, and baby boomers. Better students should note that it is virtually impossible to separate age from other behavioral, psychographic, and demographic variables. Therefore, generational marketing is a theory that would be difficult to use in real world situations.(moderate; p. 198)

109. How have marketers reacted to the concept that "birds of a feather flock together"?

Answer: Marketers have developed geodemography—a segmentation technique that combines demographics and regional marketing. Through geodemography, marketers have proven

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that people who live near one another share similar characteristics. They can construct segments including a number of households with a common pattern of preferences and know more precisely who will be interested in special offerings.(moderate; p. 204)

110. You work for a travel agency. Business has been slow, and you have suggested some promotions targeted to specific market segments. What three psychographic segmentation variables would you recommend using?

Answer:Students’ answers will vary. Their answers must be qualitative. Many students will list shared opinions, interests, and attitudes. Better students will include segments like people who enjoy fishing, people who like to look at wildlife, vegetarians, people who are interested in improving their minds, etc.(moderate; p. 204)

111. What are the four steps in customer relationship management (CRM)?

Answer: (1) Identify—the first step is to identify customers and get to know them in as much detail as possible. (2) Differentiate—marketers need to differentiate these customers in terms of both their needs and the value to the company. (3) Interact—CRM marketers must interact with customers and find ways to improve cost efficiency and the effectiveness of the interaction. (4) Customize—marketers need to customize some aspect of the products they offer to each customer.(moderate; p. 217)

112. Why has CRM caused marketers to change their focus from share of market to share of customer? Explain your answer.

Answer:Historically, marketers have measured success in a product category by their share of market. As it is easier and less expensive to keep an existing customer than to get a new customer, CRM firms focus on increasing their share of customer. (easy; p. 219)

113. What information would a firm maintain in its database to be able to identify its "best customers"? Explain your answer.

Answer:One approach a firm may utilize to identify its "best customers" would be keeping a database of information pertaining to each customer. Using such a database the firm can perform analyses to determine the value of each customer. Information analyzed would be the frequency of each purchase, the calendar time between each purchase, and the financial amount of the purchase. In analyzing this information the firm would have a

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basis to compare all customers to then be able to identify the classification of those groups as "best customers."(moderate; p. 220)

114. What does the term lifetime value of a customer mean?

Answer:The lifetime value of a customer is the potential profit generated by a single customer’s purchase of a firm’s products over the customer’s lifetime. A firm’s profitability and long-term success are going to be far greater if it develops long-term relationships with its customers so that those customers buy from the firm again and again. Costs to the firm will be higher and profits lower if each customer purchase is a first-time sale. (easy; p. 220)

115. What does the term customer equity mean?

Answer:Customer equity is the financial value of a customer to a firm. This financial value is based on purchases throughout the lifetime of the relationship between the firm and the customer. (easy; p. 220)

APPLICATION QUESTIONS

Multiple Choice

116. Some beer drinkers choose their beer because of its great taste. Others like to drink beers to relax but don’t like the bloated feeling beer sometimes gives them. An ad campaign for a beer that showed the beer had both a great taste and was less filling would be one way to overcome problems associated with _____.



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117. Some people want healthy cereal that will help them lose weight or possibly prevent certain kinds of cancer. Some want presweetened cereal. Some want fruits and nuts in their cereal. Some people want whole-wheat cereal while others want a rice cereal. There are some who like hot cereal and others who like to eat their cereal right of the box. The diversity of consumers for cereal is an example of _____.



118. Weekly Reader is a newspaper designed to keep school children informed of what is going on in their country and their world. It has 16 different formats geared to the reading capabilities of children from pre-kindergarten through high school. It uses _____ segmentation to define its target markets.


(d; easy; p. 198)

119. When many men in the baby boomer segment started getting gray hair, they were reluctant to use hair dyes made for women even though men were just as eager as women to fight the aging process. As a result, hair care product manufacturers introduced hair dying systems for men to use on their head and their facial hair. The hair care product manufacturers used _____ segmentation to define its target markets.


(d; easy; p. 198)

120. If a company wanted to send e-mail to African American professional managers and business owners to promote its new employment service, it could buy a list of e-mail addresses of people who have visited BlackEnterprise.com and who have given permission for the marketing of their names and e-mail addresses. This company would be using _____ segmentation variables.

a. psychographicb. demographicc. geodemographicd. ethnocentrice. behavioral

(b; easy; p.198)

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121. Campbell’s found its canned nacho cheese sauce was too hot for Americans in the East and not hot enough for those in the West and the Southwest. As a result, Campbell’s plants in Texas and California produce a hotter nacho cheese sauce than that produced in its other plants. Campbell’s is using _____ segmentation to satisfy these different markets.

a. geographicb. consumeristc. psychographicd. lifestylee. usage

(a; easy; p. 203)

122. To market Suave shampoo, Unilever used PRIZM to identify neighborhoods with high concentrations of young working women. These women responded best to advertising messages that Suave is inexpensive, yet will make their hair "look like they spend a fortune on it." What segmentation tool did Unilever use in this example?

a. psychographicsb. geodemographyc. the hierarchy of needsd. projective techniquese. ethnography


123. People who are regular visitors to SciFi.com (a Web site maintained by the science fiction cable network) and those who are regular visitors to BHG.com (a Web site maintained by the producers of BHG-TV and the publishers of Better Homes and Gardens magazine) belong to different _____ segments.

a. demographicb. ethnographicc. geodemographicd. socioeconomice. psychographic

(e; easy; p. 204)

124. Airlines have developed frequent-flyer programs to encourage passengers to use the same airlines repeatedly. These programs and other similar ones use _____ segmentation to target their markets.

a. demographicb. behavioralc. geodemographicd. socioeconomice. psychographic

(b; easy; p. 207)

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125. Starting in February and ending sometime in late April, department stores promote the fact they stock a wide range of formal attire to wear to high school proms. The dresses and tuxedoes are available year-round, but because most proms are held in the spring that is when the heaviest promotion of these products occur. This spring promotion to high school students is based on usage occasion and uses both _____ segmentation.

a. socioeconomic and psychographicb. psychographic and demographicc. geodemographic and socioculturald. demographic and behaviorale. geographic and demographic


126. The Wright Bros. Collection is a catalog retailer that sells clothing and collectibles to aviation enthusiasts. Its _____ might be men and women between the ages of 25 and 55 who are risk takers. They belong to organizations like the American Legion, the VFW, and the National Rifle Association of America. They are either pilots themselves or have close ties to a pilot. They prefer camping to taking a luxury cruise. They annually spend $900 on items purchased from nonstore retailers.

a. value analysisb. customer potential assessmentc. segment profiled. internal market audite. customer guide


127. Recently engaged couples who visit the De Beer’s Web site can choose from a variety of diamonds and settings to create their own individualized ring. All questions are answered at the Web site as the couple selects a ring that is uniquely theirs and within their budget. De Beer uses a(n) _____ program and hopes that the next time users of the site are interested in buying jewelry, they will return to the De Beer’s Web site.

a. customer relationship management (CRM)b. intersituational communicationsc. transactional managementd. B2B marketinge. management information system (MIS)

(a; easy; p. 215)

128. Writers Don Pepper and Martha Rogers redefined the term customer relationship management (CRM) to _____.

a. consumer relationship marketingb. consumer relationship managementc. managing customer marketingd. customer relationship marketinge. managing customer relationships


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129. The airline industry can benefit from the implementation of CRM by _____.a. automating crucial informationb. reducing phone call volumec. identifying flying patternsd. identifying favored destinationse. all of the above

(e; easy; p. 218)

130. Which of the following would NOT be a benefit to the Dow Company in its efforts to implement CRM strategies using a newly developed Web-based interface, MyAccount@Dow, within its business-to-business practices?

a. Customers have the ability to enter new orders.b. Customers have the ability to be harassed by unhappy Dow employees.c. Customers have the ability to check on the status of old orders.d. Customers have the ability to pay invoices electronically.e. Customers have the ability to collaborate with others throughout the system.

(b; easy; p. 219)

131. The average collectors of Thomas Kinkade collectible miniatures will buy four new ones each year. The collectibles are available at a number of different retail locations and from several different catalog retailers. To ensure she gets a greater ______, the owner of The Pine Door Gift Shop sends her customers, who are Thomas Kinkade collectors, a postcard every time the store adds a new one to her store’s inventory.

a. share of communicationb. synergistic feedbackc. customer allocationd. share of customere. economic share


132. The average collectors of Thomas Kinkade collectible miniatures will buy four new ones each year. The collectibles are available at a number of different retail locations and from several different catalog retailers. As part of her _____ program, the owner of The Pine Door Gift Shop sends her customers, who are Thomas Kinkade collectors, a postcard every time the store adds a new one to her store’s inventory.

a. transactional marketing programsb. product fragmentation strategyc. customer equityd. marketing with a product-orientatione. undifferentiated marketing


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mailto:MyAccount@Dow


133. The owner of a pet grooming salon is striving to determine the customer equity of a customer relating to the purchase of pet products and services offered by the salon. Which of the following would be a step the owner of this pet grooming salon would complete to determine this information?

a. Compare investments made by the salon owner in acquiring the customer to the total amount of all financial sales made by the customer.

b. Compare investments made by the salon owner to retain this customer to the total amount of taxes the salon owner pays.

c. Ask the customer if s/he is planning on getting any new pets.d. Investigate how many other pet grooming salons are within five miles of this

salon to determine the likelihood of this pet owner returning to this salon.e. Determine the age of the pet to estimate how much longer this customer may need

the services of the salon.(a; easy; p. 220)

134. A bank utilizing CRM systems is generating customer profiles to determine its high-value customers. Which of the following aspects of the probability of each customer would the bank consider valuable information to assess its high-volume customers?

a. the risk of losing this customerb. the interest each customer may have in buying new financial productsc. the current value of this customer to the bankd. a and be. a, b, and c


135. A building supply company has many high-volume as well as low-volume customers. Which of the following would be an inefficient cost means of communication for this supply company to implement regarding its low-volume customers?

a. Every November, send each customer a new calendar that has the phone number of the building supply company printed on the cover.

b. Once or twice a year, mail a new product catalog to each customer.c. Every few months, have a customer service representative from the building

supply company call each customer.d. Have a sales representative make a personal one-on-one appointment with each

and every low-volume customer at least twice a month.e. Give each low-volume customer the company Web address so this customer can

check building supply products being sold by this company.(d; easy; p. 220)

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Short Answer

136. A new family just moved into the old house on the corner. Three generations of family members are sharing this big house. Different styles of music can be heard coming from the windows of this house. The neighbors can always tell which generation member is enjoying his/her music. What is market fragmentation, and how it is being implemented?

Answer:Market fragmentation occurs when people’s diverse interests and backgrounds divide them into numerous different groups with distinct needs and wants. Because of this diversity, the same good or service will not appeal to everyone. Within this family, members of different age groups may be more familiar with one style or sound of music than someone from another age group.(moderate; p. 197)

137. How would you relate ordering a pizza pie, half all cheese and the other half extra cheese with mushroom to market segmentation? Explain your answer.

Answer:Market segmentation is the process of dividing a larger market into smaller pieces based on one or more meaningful, shared characteristics. Marketers can take one product and make changes to it to please different customers. Many people like to eat pizza. Some people may like different toppings on their piece of pizza. Therefore, the big pizza can be topped with more than one ingredient. (moderate; p. 197)

138. A store selling ice cream offers more than thirty different flavors of their product. If a customer so wishes, different flavors of ice cream can be mixed on one cone. How has this ice cream store implemented marketing segmentation? Explain your answer.

Answer:This store is selling ice cream in a variety of flavors. The choices of flavors may be favorites of different customers. Therefore the store will have such flavors as vanilla, chocolate and strawberry, etc. to be able to meet the desired taste choices of each customer. The store has segmented its supply of ice cream to meet the different wants and needs of ice cream shoppers.(easy. p. 197)

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139. A new family just moved into the old house on the corner. Three generations of family members are sharing this big house. Different styles of music can be heard coming from the windows of this house. The neighbors can always tell which generation member is enjoying his/her music. Explain demographics, and how the style of music being heard by the neighbors could be an indication as to which family member is enjoying his/her favorite recordings.

Answer:Demographics are measurable characteristics such as gender and age. Within this family, the gender of the family member may not be distinguishable by the sound or style of music being heard by the neighbors, but the age of the family member may be detectable if the neighbors themselves are familiar with what style of music is generally appealing to different age groups.(easy; p. 198)

140. Ads for IBMs VoiceType software, which allows users to control the PC by voice, featured Curtis Mayfield, who was a Grammy Award winning soul singer and a quadriplegic. What demographic dimensions marketers were utilizing within this ad? Explain your answer.

Answer:The demographic dimensions that marketers usually look at are age, gender, family structure, income and social class, race and ethnicity, and geography. Within this ad demographics noted are: gender and race. Physical abilities could also be segmented.(easy; p. 198)

141. A marketer is mentioning buzz words such as Generation X, Generation Y, and baby boomers, what marketing segmentation is the focus of this marketer’s thoughts? Explain your answer.

Answer:The buzz words Generation X, Generation Y and baby boomers relate to the calendar years that people were born. Generation X groups people born between 1965 and 1976. Generation Y members were born between 1977 and 1994. Baby boomers were born between 1946 and 1964. The marketer is focusing on the age segmentation.(easy; p. 199)

142. You see a former high school classmate. This person is so excited to show you pictures of his/her new twin babies. The picture shows two babies each wearing identical outfits, except one outfit is pink and the other outfit is blue. Without being told, how can you tell the gender of these two babies? Explain your answer.

Answer:Gender segmentation is common with some products. Segmenting by sex starts at an early age with the generalization that baby boys wear blue and baby girls wear pink. (easy; p. 200)

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143. A famous vacation resort started marketing new commercials. Within the ads a variety of activities were seen. For example, swimming pools appropriate for babies, swimmer and divers, one restaurant specializing in fast food and another catering to individuals preferring a gourmet menu. This resort wants the entire family to feel comfortable vacationing at this location. How are the marketers addressing family structure segmentation? Explain your response.

Answer:Family needs change over time. As family members age and move into new life stages, different product categories ascend and descend in importance. A couple with very young children may be drawn to the baby pool so their children can be safe in the pool and play with other children within their age group. A couple with no children may like to swim and dive, and have no need or wants to be near the baby pool at this resort. The culinary tastes and desires of the family with children may be perfect for the fast food restaurant. The childless couple may like to spend hours enjoying a gourmet meal. (moderate; p. 201)

144. A recent fashion trend featured clothing made with real gold, including pinstriped suits selling from $10,000 to $20,000. At the same time discount stores such as Target have a large and prosperous clothing line. What segmentation are these marketers addressing? Explain your answer.

Answer:These marketers are addressing the income level of consumers. Each income level segmentation of consumers determines its financial buying power. (easy; p. 201)

145. A new marketing segmentation buzzword is "metrosexual." What are some characteristics of someone who could be classified within this segmentation?

Answer:A metrosexual is a man who is heterosexual, sensitive, educated, and an urban dweller who is in touch with his feminine side. Metrosexuals may have a standing appointment for a weekly manicure, have their hair done by a stylist instead of a barber, love to shop, like jewelry, and have a bathroom counter filled with male-targeted grooming products such as moisturizers.(moderate; p. 201)

146. In the Middle East, rules about the mixing of the sexes and the consumption of alcohol are quite strict. Chili’s Grill & Bar is known simply as Chili’s, and the chain offers a midnight buffet during Ramadan season, when Muslims are required to fast from dawn to dusk. How would you identify and explain the marketing segmentation?.

Answer:Responses from students may vary with this question. The rationale for the question is to determine if students understand that each segmentation is important, and can be mixed

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as a need to know by marketers. For example, within this question scenario, gender, social culture, race and ethnicity, and geographic location could be mentioned by students within their responses.(moderate; p. 202)

147. Tropicana Essentials Healthy Heart targets consumers who like orange juice and who also want extra vitamins and no sodium. What is the concept of behavioral segmentation, and then explain what categories may be addressed with this product by Tropicana?

Answer:Behavioral segmentation categorizes consumers on the basis of how they act toward, feel about, or use a product. Tropicana Essentials Healthy Heart targets consumers who want the healthy benefits of added vitamins and no sodium added to their OJ. These consumers want the juice and feel better knowing that the juice itself is good and good for them. And knowing there is no added sodium, which is something that these consumers do not want, especially in their orange juice.(moderate; p. 207)

148. A large chain amusement park sells tickets at its main gate for guests who are visiting the park for just that one day. The park also sells tickets that can be reused several times, however only on weekdays during the recreation season while the park is open. What market segmentation is being implemented by the amusement park in selling the two different types of tickets?

Answer:The amusement park is categorizing its guests into two potential groups. The first group consists of guests who will only be attending the park for one specific day. This being the day the ticket is purchased. The second group consists of guests who will be visiting the park on more than one occasion and the specific day of these visits may not be known at the time of the purchase of this ticket. However, each guest can only use these tickets on weekdays, never a weekend. The segmentation being implemented by the amusement park is usage occasions. (moderate; p. 207)

149. The cosmetics giant L’Oreal has the resources to offer several product lines at a variety of prices. It targets the luxury market with their brand Helena Rubinstein, while less expensive offerings such as Elseve is targeted to large department stores and discounters. Is this practice by this cosmetic company a differentiated targeting strategy or an undifferentiated targeting strategy? Explain your answer.

Answer:This company is implementing a differentiated targeting strategy. This practice is when one or more products are offered for each of several customer groupings with different product needs. A differentiated strategy is called for when consumers choose among brands that are well known in which each has a distinctive image in the marketplace and in which it is possible to identify one or more segments that do have distinct needs for

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these different types of products. This company is not following the undifferentiated targeting strategy, meaning the company would develop products that would be marketed to all groups no matter what their specific needs may be.(moderate; p. 210)

150. How does the computer company Dell use mass customization to meet the needs of their customers? Explain the concept.

Answer:Mass customization is when a company modifies its products or services to meet the needs of its customers. The computer company Dell does this by offering customized computer products over the Internet. Users can create their own computers, everything from personal computers to networking systems. (moderate, p. 212)

151. Over time a firm may find it needs to change which segment it targets or even redo a product’s position to respond to marketplace changes. This makeover strategy is called repositioning. Select any major, well-known firm. How has it repositioned its products or services in response to marketplace changes? Explain your answer.

Answer:Responses from each student will vary with this question. The rationale for this question is to require each student to be tested on the understanding of the repositioning concept and then be able to apply this practice to a product or business.(moderate; p. 213)

152. Explain the philosophy of customer relationship management (CRM). What is an example of one company that has implemented this style of business? Explain your answer.

Answer:Customer relationship management (CRM) are programs that allow companies to talk to individual customers and adjust elements of their marketing programs in light of how each customer reacts to elements of the marketing mix. Student responses identifying a company that has implemented this practice will vary. The key factors that should be presented within each example given is in the explanation as to how the company has really implemented and is enforcing the concept of CRM.(moderate; p. 215)

153. What is the dependency of the success of one-to-one marketing on CRM?

Answer:One-on-one marketing is the concept of the company identifying and then addressing the specific needs and demands of its customers. The key to doing this is the implementation of CRM, customer relationship management. (easy; p. 216)

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154. What is the rationale for the financial services firms Salomon Smith Barney and Fidelity Investments to implement the marketing strategy CRM? Explain your answer.

Answer:CRM is customer relationship management. This concept deals with the interaction of a firm with its customers. The two mentioned financial services firms are in contact with customers. Each customer may have different reasons for dealing with these companies. In the implementation of CRM the firms are able to identify and then address the needs and demands of the customers. (easy; p. 217)

155. What are two ways that the airline industry can benefit from the implementation of CRM systems? Explain your answer.

Answer:The responses from students will vary. The rationale for this question is to test the understanding each student has to the variety of ways a firm can implement CRM. The textbook addresses the airline industry usage of CRM as follows: The airline industry, rocked by financial problems the past few years, is also concerned about customer relations and has invested heavily in CRM systems. These systems help flyers by automating crucial information and reducing phone call volume. CRM also helps identify flying patterns, favored destinations, and loyal users so that extra perks can be implemented.(moderate; p. 218)

156. Mail order catalog companies send their catalogs to many homes across the country. How would you relate the concept of CRM along with repositioning these companies concerning the fact that the average Hispanic household gets 20 pieces of direct mail annually compared to the 300 pieces for non-Hispanic households? Explain your answer.

Answer:CRM programs allow companies to interact with customers and adjust elements of their marketing programs in light of how each customer reacts to elements of the marketing mix. Repositioning occurs when a firm may change a segment it targets or even may redo a product’s position to respond to marketplace changes. Mail order catalog companies may redo their product, the catalog position may start to mail more catalogs to Hispanic households as is being done with non-Hispanic households.(moderate; p. 219)

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157. The Dow Company created a company-wide technology based system called MyAccount@Dow. This system lets Dow customers enter new orders, check on the status of old orders, pay invoices electronically, and collaborate with others throughout the system. How have the actions of Dow interacted with an aspect of CRM and the concept of business-to-business?

Answer:The Dow Company is strengthening its business-to-business relations with its customers by offering its customers the ability to be able to electronically place new orders, check on the status of old orders, pay invoices electronically, and collaborate with others throughout the system. Dow has given each customer the ability to address their individual wants and needs with this company. Dow with its database of information can address these customers’ wants and needs.(moderate; p. 219)

158. The Dow Company created a company-wide technology based system called MyAccount@Dow. This system lets Dow customers enter new orders, check on the status of old orders, pay invoices electronically, and collaborate with others throughout the system. How can Dow use the information obtained from all transactions mentioned to determine the business-to-business customers Dow categorizes as "best customers"? Explain your answer.

Answer:The system MyAccount@Dow lets Dow customers enter new orders, check on the status of old orders, pay invoices electronically, and collaborate with others throughout the system. Information obtained via these transactions will allow Dow to track the recency of each purchase, the frequency of each purchase, and the monetary value of each purchase concerning each customer. This information will allow Dow to then determine its "best customers."(moderate; p. 219)

159. Your local town has four different video stores all renting movies and computer games. One of these video stores is implementing the CRM philosophy of focusing on its share of customer. What strategy might you suggest that will help to sway all residents of the town to rent items from only this one store? Explain your answer.

Answer:It is easier and less expensive for a company to keep an existing customer than to get a new customer. An aspect of CRM focuses on increasing the share of customer, meaning that this customer utilizes only one company or product instead of several. Suggestions as to how the store may implement this strategy will vary. The rationale for this question is to test the understanding of working with each customer to build loyalty. The example given within the text to implement this strategy by a store is to offer a discount in the purchase of more than one item.(moderate; p. 219)

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160. With CRM, a customer’s lifetime value is identified and is the true goal, not an individual transaction. Identify any business. How does this business meet this rationale in relation to its customers? Explain your answer.

Answer:The business identified by each student will vary. The rationale for this question is to test the understanding of how a loyal customer can be financially profitable for a company. The textbook elaborates in the following way addressing this theory: A firm’s profitability and long-term success will be far greater if it develops long-term relationships with its customers so that those customers buy from this firm again and again. Costs will be far higher and profits lower if each customer purchase is a first-time sale. (moderate, p. 220)

161. Identify any product or service. How can a marketer calculate the lifetime value of a customer relating to the purchase of this product or service? Explain your answer.

Answer:The product or service mentioned by each student will vary. The rationale for this question is to test the understanding of the steps involved in the determination of the lifetime value of a customer. The textbook presents the following: A firm must first estimate a customer’s future purchases across all products from the firm over the next calendar years. The goal is to try to figure out what profit the company could make from the customer in the future. The lifetime value of the customer would be the total profit generated from purchases from this customer.(moderate; p. 220)

162. Identify any product or service. How can a marketer calculate the customer equity of a customer relating to the purchase of this product or service? Explain your answer.

Answer:The product or service mentioned by each student will vary. The rationale for this question is to test the understanding of the steps involved in the determination of the customer equity of a customer. The textbook presents the following: Determining customer equity is calculating the financial value of customer relationships throughout the lifetime of the relationship between the customer and the firm’s product/service. To do this, firms compare the investments they make in acquiring customers, retaining customers, and relationship enhancement with the financial return on those investments.(moderate; p.220)

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163. Banks utilizing CRM systems generate a profile of each customer based on factors such as value, risk, attrition, and interest in buying new financial products. What aspect of the CRM system are banks implementing in completing these profiles? Explain your answer.

Answer:Information analyzed by banks in implementing a CRM system for each customer to determine the value, risk, attrition, and interest each customer may have in buying new financial products will enable the banks to focus on high-value customers.(moderate; p. 220)

164. A dentist has two new patients. One patient is single and has no children. The other patient is a parent with six children. All children are between the ages of 5 and 12. What factors can the dentist utilize from the demographics mentioned to determine the value of each customer? Explain your answer.

Answer:A profile for each customer to determine the value, risk, attrition, and interest each customer may have in utilizing the services of the dentist will enable the dentist to determine the value of each customer. The demographics of the two new patients would lead the dentist to believe that he may have more customers with the parent who has many children who may all need dental work. However, this does not necessarily mean that the parent and six children will utilize the services of the dentist as often as the patient who is single.(moderate; p. 220)

165. A firm has categorized its customers into two groups. Each customer has been identified as being either a high-volume customer or a low-volume customer. Why would a firm want to implement different styles of communication for each group of customers? Identify one means of communication that would be best suited to be utilized by a firm for each of these customer groups. Explain your answer.

Answer:A firm should look at the cost and time factors involved in the communication with customers within each group. The high-volume customers may require, for example, a personal sales representative to be in constant contact with the customer. This may be an expensive means of communication that can have an effect upon the overall profits generated by this customer. However, without such communication the firm may lose the customer to a competitor. The low-volume customer may be adequately serviced by mailed literature or occasional verbal communication via the telephone. (moderate; p. 220)

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