MP - 003 Pretest

A market is composed of potential customers who have

• homes in the area.

• money to spend.

• incomes over $20,000.

• college educations.

Answer explanation

Money to spend. A market is a customer or potential customer who has an unfulfilled desire and is financially able and willing to satisfy that desire. Home ownership, incomes over $20,000, and college educations could be factors to consider when identifying and segmenting the market, depending on the product being sold.

The identification and selection of markets for a business or for a product is known as

• target marketing.

• mass marketing.

• an industrial market.

• a consumer market.

Answer explanation

Target marketing. In order for businesses to satisfy their customers, they need to determine who the market is for their products. Businesses, therefore, use target marketing in order to plan effective marketing activities. Mass marketing is designing products and directing marketing activities in order to appeal to the whole market. A consumer market is composed of individuals who purchase goods or services to satisfy their personal desires. An industrial market is composed of businesses that purchase items for use in the operation of the business, for resale, or for making other goods.

Companies that produce goods and services most people buy and use are likely to use

• mass marketing.

• demographic segmentation.

• psychographic segmentation.

• segmented marketing.

Answer explanation

Mass marketing. Mass marketing is designing products and directing marketing activities in order to appeal to the whole market. It is appropriate for goods and services most people buy and use. Market segmentation is the division of a total market into smaller, more specific groups. Psychographic segmentation is the division of a market on the basis of consumers' lifestyles and personalities. Demographic segmentation is the division of a market on the basis of characteristics people have in common that affect their purchasing power.

Which of the following is an example of an item that would be marketed to a specific market:

• Bath soap

• Bread

• Fruit

• Baby food

Answer explanation

Baby food. Baby food would be marketed specifically to parents and others responsible for the care of infants. This is an example of market segmentation, or dividing the total market into smaller, more specific groups. The other alternatives have broad appeal and would be offered to the general population.

The process of dividing the total consumer market into smaller groups of potential customers is known as

• market segmentation.

• mass marketing.

• loyalty response.

• division of labor.

Answer explanation

Market segmentation. Markets can be segmented according to the demographic, geographic, psychographic, or behavioral characteristics of the customers or potential customers. Mass marketing is designing products and directing marketing activities in order to appeal to the whole market. Loyalty response is exhibited by consumers who favor a particular brand over all others. The process of dividing large work efforts into smaller units is called division of labor.

Which of the following markets would be most likely to be targeted by producers of major kitchen appliances:

• Young adults

• Senior citizens

• Teenagers

• College students

Answer explanation

Young adults. The young-adult market (ages 20-40) would be most likely to be interested in major kitchen appliances because they are involved with setting up households. Teenagers, senior citizens, and college students would be less likely to be looking for major appliances.

Customers in cold climates who need warm clothes are an example of which of the following market segments:

• Geographic

• Occupational

• Behavioral

• Psychographic

Answer explanation

Geographic. Geographic segmentation groups people by the area in which they are located. This includes customers in cold climates. Occupations are a basis for demographic segmentation. Psychographic segmentation groups people by lifestyles and personalities. Behavioral segmentation groups people by their response to a product.

Businesses that identify customers on the basis of their personalities, interests, and activities are using __________ segmentation.

• geographic

• psychographic

• demographic

• behavioral

Answer explanation

Psychographic. Psychographic segmentation is based on consumers' lifestyles and personalities, which includes their interests, values, activities, and individual qualities. Behavioral segmentation is based on consumers' response to a product. Geographic segmentation is based on where the market is located. Demographic segmentation is based on characteristics people have in common that affect their purchasing power.

A large store directed its advertising to the majority of its customers who have been loyal to the store and its merchandise for many years. The store segmented the market based on

• geographics

• psychographics

• demographics

• behavior

Answer explanation

Behavior. Behavior is the division of a market based on consumers' responses to a product. A type of behavioral segmentation is the loyalty response, which involves those customers who purchase from one business regardless of price or availability of other products. Demographics is the division of a market based on its physical and social characteristics. Psychographics is the division of a market based on consumers' lifestyles and personalities. Geographics is the division of a market based on where the consumers are located.

A restaurant that groups its market into people who frequently, seldom, or never visit the restaurant is basing its segmentation on

• rate of use.

• life stage.

• educational level.

• occupation.

Answer explanation

Rate of use. Classifying consumers as heavy, moderate, light, or nonusers of a product is a type of behavioral market segmentation: dividing consumers into groups according to their response to a product. Educational level, life stage, and occupation are bases for demographic segmentation.