Chapter 7: Sharpening the Focus: Target Marketing Strategies Andcustomer Relationship Management

Chapter 7: Sharpening the Focus: Target Marketing Strategies andCustomer Relationship Management

Chapter 7

Sharpening 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.
2. market aggregation
3. market similitude
4. economic aggregation
5. disintermediation
6. market fragmentation

(e; easy; p. 197)

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

1. The first step in the target marketing process is to set marketing objectives.
2. There are four steps in the target marketing process.
3. The second step in the target marketing process is the identification of all segmentation variables.
4. The final step in the target marketing process is positioning.
5. all of the above

(d; moderate; p. 198)

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

1. Acculturation
2. Segmentation
3. Customerization
4. Market aggregation
5. Positioning

(b; easy; p. 198)

1. 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.

1. acculturation
2. segmentation
3. customerization
4. market aggregation
5. positioning

(b; easy; p. 198)

1. Age, ethnicity, geographical region, and lifestyle are all examples of _____.

1. segmentation variables
2. positioning strategies
3. synergistic samples
4. homogenous populations
5. sampling heuristics

(a; easy; p. 198)

1. Demographics _____.

1. segments people on the basis of what they do with a product
2. segments people on the basis of when they use a product
3. uses qualitative data to explain why seemingly homogeneous consumers are not
4. segments people on the basis of shared attitudes, opinions, and interests
5. are measurable characteristics such as age and gender

(e; easy; p. 198)

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

1. lifestyle
2. behavioral
3. socioeconomic
4. demographic
5. psychographic

(d; easy; p. 198)

1. Which of the following is NOT an example of a demographic segmentation variable?

1. lifestyle
2. income and social class
3. race and ethnicity
4. gender
5. age

(a; easy; p. 198)

1. The group of American consumers born between 1977 and 1994 are often called _____.

1. baby busters
2. the silent majority
3. Generation Y
4. tweens
5. Generation X

(c; easy; p. 199)

1. 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.

1. lifestyle
2. behavioral
3. socioeconomic
4. demographic
5. psychographic

(d; easy; p. 199)

1. The group of American consumers born between 1965 and 1976 are called _____.

1. baby boomers
2. the silent majority
3. Generation Y
4. tweens
5. Generation X

(e; easy; p. 199)

1. Baby boomers _____.

1. were born between 1965 and 1976
2. tendto view their homes as an expression of their individuality rather than material success
3. are important to marketers because of the size of the segment
4. are aged 65 or older
5. none of the above

(c; easy; p. 199)

1. The Hispanic American segment is important to marketers because _____.

1. it is growing rapidly
2. Hispanics tend to be brand loyal especially to products made in their country of origin
3. of the youthful composition of this market segment
4. of the size of the average Hispanic household
5. all of the above

(e; easy; p. 203)

1. The Asian American segment of the population _____.

1. is the largest ethnically-based market segment
2. has been an economically important market segment for almost three decades
3. is not considered to be a significant market segment
4. is the fastest growing minority group in the United States
5. will never be attractive to target marketers

(d; easy; p. 203)

1. What is PRIZM?

1. a method of removing heterogeneous variables from a target market
2. a method of data mining used by marketing managers to implement market development strategies
3. a database that classified every U.S. zip code according to demographic and lifestyle characteristics
4. a method of confirming that the chosen target market is representative of the ideal market segment
5. a positioning strategy used in the introduction of new consumer products

(c; moderate; p. 204)

1. _____ 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.

1. Demographic
2. Geoclustering
3. Ethnocentric
4. Psychographic
5. Socioeconomic

(d; moderate; p. 204)

1. _____ variables segments markets in terms of shared activities, interests, and opinions.

1. Demographic
2. Ethnographic
3. Geodemographic
4. Socioeconomic
5. Psychographic

(e; easy; p. 204)

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

1. demographic
2. ethnographic
3. geodemographic
4. socioeconomic
5. pychographic

(e; moderate; p. 204)

1. What is VALS?

1. a system used for psychographic segmentation
2. a database of people who have purchased similar products
3. a strategy used for implementing geodemographic segmentation
4. a method of confirming that the chosen target market is representative of the ideal market segment
5. a method of removing heterogeneous variables from a target market

(a; moderate; p. 206)

1. The VALS system categorizes consumers as _____.

1. risk takers or risk aversives
2. leaders or followers
3. innovators, early adopters, late adopters, or laggards
4. principle-oriented, status-oriented, or action-oriented
5. technically-oriented, people-oriented, or task-motivated

(d; moderate; p. 206)

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

1. Demographic
2. Behavioral
3. Geodemographic
4. Socioeconomic
5. Psychographic

(b; easy; p. 207)

1. The 80/20 rule is most directly related to _____ segmentation.

1. demographic
2. behavioral
3. geodemographic
4. socioeconomic
5. psychographic

(b; moderate; p. 207)

1. 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.

1. sociocultural
2. geodemographic
3. geographic
4. demographic
5. behavioral

(e; easy; p. 207)

1. A viable target market should _____.

1. have homogeneous wants and needs that differ from those of other segments
2. be measurable
3. be large enough to be profitable now and in the future
4. be reachable through marketing communications
5. all of the above

(e; moderate; p. 209)

1. A viable target market should _____.

1. have needs that can adequately be served by the marketer
2. not be reachable by other organizations
3. have the same needs as similar sized groups
4. have enough growth potential to become profitable sometime in the future.
5. all of the above

(a; easy; p. 210)

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

1. value analysis
2. customer potential assessment
3. segment profile
4. internal market audit
5. customer guide

(c; easy; p. 210)

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

1. fragmented
2. undifferentiated
3. concentrated
4. differentiated
5. customized

(b; easy; p. 210)

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

1. to more efficiently focus on its CRM strategy
2. to remove the need for disintermediation
3. to move a product to the next stage of its product life cycle
4. to take advantage of economies of scale
5. all of the above

(d; moderate; p. 210)

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

1. fragmented
2. heterogeneous
3. concentrated
4. differentiated
5. customized

(e; easy; p. 212)

1. 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;

1. fragmented
2. heterogeneous
3. concentrated
4. differentiated
5. customized

(e; easy; p. 212)

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

1. Concentrated targeting
2. Positioning
3. Benefit segmentation
4. Mass customization
5. Customerization

(b; moderate; p. 212)

1. The first step in developing a positioning strategy is to _____.

1. set the marketing communications budget
2. identify segmentation variables
3. analyze the competitors’ position in the marketplace
4. create a product with a competitive advantage
5. create target markets

(c; moderate; p. 212)

1. Once a _____ is set, marketers must finalize the marketing mix by putting all the pieces into place.
2. segmentation variable
3. positioning strategy
4. target marketing strategy
5. undifferentiated targeting strategy
6. concentrated targeting strategy

(b; moderate; p. 213)

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

1. FAB profile
2. target market
3. brand personality
4. segment profile
5. trade promotion

(c; moderate; p. 213)

1. 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’ _____.

1. FAB profiles
2. target markets
3. brand personalities
4. segment profiles
5. trade promotions

(c; moderate; p. 213)

1. A perceptual map is used to _____.

1. identify psychographic segments such as people who cheat on their income taxes or steal from their employers
2. create consumer cross-tabulations for marketing research
3. locate consumers within a primary metropolitan statistical area (PMSA)
4. determine how consumers position products in relation to each other
5. identify at which stage of the targeting process the marketer needs to be

(d; moderate; p. 214)

1. Perceptual maps _____.

1. are created as one stage of the new product development process
2. are often used to predict product success
3. identify consumer shopping preferences in terms of retail and nonretail locations
4. cannot be used in industries where there are oligopolies
5. cannot be created without consumer research

(e; moderate; p. 214)

1. CRM stands for _____.
2. consumer relationship marketing
3. consumer relationship management
4. customer relationship management
5. customer relationship marketing
6. customer relations marketing

(c; easy; p. 215)

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

1. target market strategy
2. segmentation variables
3. perceptual map
4. geodemography
5. marketing mix

(e; moderate; p. 216)

1. The first step in customer relationship management (CRM) for a company is to _____.

1. rank its customers in terms of sales volume
2. train its employees in CRM methodology
3. identify types of transactions and determine which will be abandoned
4. identify customers and get to know them in as much detail as possible
5. determine which aspect of the product will be customized to meet the individual needs of its customers

(d; moderate; p. 216)

1. 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.

1. customer relationship management (CRM)
2. interactive communications
3. transactional management
4. B2B marketing
5. management information system (MIS)

(a; moderate; p. 216)

1. Customer relationship management (CRM) programs are also called _____.

1. transactional marketing programs
2. market segmentation strategies
3. one-to-one marketing
4. marketing with a product-orientation
5. undifferentiated marketing

(c; easy; p. 216)

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

1. one
2. two
3. three
4. four
5. five

(d; moderate; p. 216)

1. After a marketer has identified customers and gets to know them in as much detail as possible, then the marketer _____.
2. must interact with the customers and find ways to improve cost efficiency
3. must strive toward effectiveness of the interactions with the customers
4. needs to differentiate these customers in terms of both their needs and their value to the company
5. needs to customize some aspects of the products or services they offer to each customer
6. needs to differentiate these customers in terms of only their value to the company

(c; moderate, p. 216)

1. A _____ strategy allows a company to identify its best customers, stay on top of their needs, and increase their satisfaction.
2. CRM
3. target marketing
4. undifferentiated targeting
5. concentrated targeting
6. differentiated targeting

(a; moderate; p. 216)

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

1. The success of a CRM program relies on its use of mass communication channels.
2. CRM programs include any communication channel that allows the customer to communicate directly with a company.
3. Internet technology is viewed as a barrier to the implementation of CRM programs.
4. To succeed, all companies should engage in CRM every time they interact with a customer.
5. Only consumer marketers can benefit from the use of CRM programs.

(b; moderate; p. 217)

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

1. A customer talks to a service representative about an error in billing.
2. A new computer user calls the computer manufacturer’s hot line at midnight to see if he needs to buy a printer cable.
3. A dentist sends a postcard to her customers reminding them of their upcoming appointments.
4. A retailer calls a customer to tell her that the spring line of sandals has arrived at the store.
5. all of the above

(e; moderate. p. 217)

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

1. the Tennessee Department of Motor Vehicles where drivers’ licenses are issued
2. a veterinarian’s office
3. a department store
4. a construction company
5. all of the above

(e; easy; p. 217)

1. The dentist office calling to remind you of your scheduled appointment for the next day is an example of _____.
2. CRM
3. target marketing
4. undifferentiated targeting
5. concentrated targeting
6. differentiated targeting

(a; moderate; p. 217)

1. Successful one-to-one marketing is dependent on _____.
2. geodemography
3. segmentation
4. positioning
5. CRM
6. repositioning

(d; easy; p. 217)

1. A CRM strategy allows a company to _____.
2. identify its best customers
3. stay on top of their customers needs
4. increase their customers satisfaction
5. A and B
6. A, B, and C

(e; easy; p. 217)

1. In a nutshell, _____ helps firms communicate with and serve customers by better understanding their needs.
2. CRM
3. target marketing
4. undifferentiated targeting
5. concentrated targeting
6. differentiated targeting

(a; easy; p. 217)

1. _____ is an effective way to serve new customers who may have been overlooked by prior marketing efforts.
2. Consumer relationship marketing
3. Consumer relationship management
4. Customer relationship management
5. Customer relationship marketing
6. Customer relations marketing

(c; easy; p. 218)

1. The most important aspect of customer relationship management (CRM) is that it _____.

1. can be implemented using any form of mass communication channel
2. requires organizations to look at customers as partners
3. allows marketers to create consumer wants and needs
4. requires organizations to view their customers as adversaries
5. creates clear win-lose situations

(b; moderate; p. 218)

1. Some areas of focus relating to customer relationship management (CRM) are _____.
2. marketing metrics
3. share of customer
4. lifetime value of the customer
5. customer equity
6. all of the above

(e; easy; p. 219)

1. The most important aspect of _____ is that it presents a new way of looking at how to effectively compete in the marketplace.
2. consumer relationship marketing
3. consumer relationship management
4. customer relationship management
5. customer relationship marketing
6. customer relations marketing

(c; easy; p. 219)

1. Successful firms have learned a way to compete is by _____.
2. establishing relationships with individual customers on a one-to-one basis
3. communicating through dialogue
4. listening to customer feedback
5. B and C
6. A, B, and C

(e; easy; p. 219)

1. CRM is used to strengthen relationships between firms and _____.
2. consumers
3. other businesses
4. government agencies
5. not-for-profit organizations
6. all of the above

(e; easy; p. 219)

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

1. share of market and net present value of customer over a period of years
2. business potential and industry potential
3. share of customer and lifetime value of the customer
4. a perceptual map and share of voice
5. current future value of the customer and share of market

(c; moderate; p. 219)

1. CRM marketers look at _____.
2. their share of the customers
3. the lifetime value of a customer
4. customer equity
5. focusing on high-value customers
6. all of the above

(e; easy; p. 219)

1. Companies that successfully practice _____ have different goals, use different measures of success, and look at customers in some different ways.
2. consumer relationship marketing
3. consumer relationship management
4. customer relationship management
5. customer relationship marketing
6. customer relations marketing

(c; easy; p. 219)

1. CRM firms focus on increasing their _____, not share of the market.
2. mass customization
3. perceptual map
4. segment profile
5. usage occasions
6. share of customers

(e; easy; p. 219)

1. CRM firms focus on increasing their share of customer because _____.
2. it is easier and less expensive to keep an existing customer than to get a new customer
3. it is harder but less expensive to keep an existing customer than to get a new customer
4. it is usually easier but more expensive to keep an existing customer than to get a new customer
5. it is always hard and expensive to get new customers
6. customers come and go so quickly

(a; easy; p. 219)

1. Loyal customers _____.
2. are more likely to deliver a greater financial return to the company
3. tend to pay higher prices for the same products and services
4. engage in more positive word of mouth about the company
5. A and B
6. A, B, and C

(e; easy; p. 220)

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

1. lifetime value of a customer
2. VALS
3. mass customization
4. share of the customer
5. usage occasions

(a; easy; p. 220)

1. With CRM, a customer’s lifetime value is(are) _____.
2. identified
3. the true goal
4. not an individual transaction
5. A and C
6. A, B, and C

(e; easy; p. 220)

1. Using a customer database a firm can identify its "best customers" in determining _____.
2. how long it has been since the customer last placed an order
3. how often this customer buys a product/service
4. the amount a customer spends on a typical transaction
5. A and B
6. A, B, and C

(d; easy; p. 220)

1. One of the goals of customer relationship management (CRM) programs is to _____.

1. increase market share
2. develop appropriate responses in transactional marketing situations
3. reduce total communications costs
4. reduce share of customer
5. increase the total profit generated by a customer over his or her lifetime

(e; moderate; p. 220)

1. Which of the following statements about the lifetime value of a customer is true?

1. CRM helps companies identify their customer’s lifetime value.
2. All customers have the same lifetime value.
3. A customer’s lifetime value is easy to calculate.
4. A company can either increase customer share or a customer’s lifetime value but not both.
5. all of the above

(a; easy; p. 220)

1. Which of the following statements about customer equity is true?

1. With customer equity, a company would put just as much effort in serving unprofitable customers as it does for profitable ones.
2. Customer equity is an efficient way to reach new customers who may have been overlooked by prior marketing efforts.
3. With customer equity, all customers are considered equal.
4. Customization is not necessary for successful customer equity.
5. all of the above

(b; moderate; p. 220)