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Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

Segmentation, Targeting, and Positioning:

Building the Right Relationships with the Right Customers


 


Previewing the Concepts—Chapter Objectives


1. Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

2. List and discuss the major bases for segmenting consumer and business markets.

3. Explain how companies identify attractive market segments and choose a target marketing strategy.

4. Discuss how companies position their products for maximum competitive advantage in the marketplace.



JUST THE BASICS



Chapter Overview


Market segmentation and target marketing are detailed in this chapter. An overview of consumer segmentation variables, including geographic, demographic, psychographic and behavioral characteristics, is explained, as is the use of multiple segmentation bases. Business market segmentation and international market segmentation are also described. The importance and reasons for segmentation are portrayed through several examples of companies who do it well, most notably Proctor & Gamble.


Segmentation outlines the company’s opportunities, but target marketing is where the marketing manager makes his or her money. Turning the segmentation opportunities into real markets is the focus of this part of the chapter. Methods of evaluating the market segments are discussed, as are the various levels of targeting: undifferentiated or mass marketing; differentiated marketing; concentrated marketing; and micromarketing. 


Choosing the target marketing strategy is described as dependent on many variables, such as company resources, how variable the product is, and the stage of the product life cycle. But while a company is targeting important segments, it must take care not to cause any controversy or concern. For instance, companies that have targeted their premium cereals primarily to children have been called to task for their practices, as have cigarette companies that seem to have targeted the youth market in their chosen advertising vehicles.


Finally, a company has to figure out the best way to position for competitive advantage. Positioning involves implanting the brand’s unique benefits and differentiation in customers’ minds. But how does the company do that effectively? This section of the chapter goes through the process of developing a positioning concept and statement, and describes the various ways to decide how to correctly position your product in the marketplace.



Chapter Outline


1. Introduction

a. Proctor & Gamble is one of the world’s premier consumer goods companies. They provide a good example of how smart marketers use segmentation, targeting, and positioning.

b. Proctor & Gamble sells eight brands of laundry detergent in the United States, six brands of hand soap, five brands of shampoo, four brands of dishwashing detergent, three brands of tissues and towels and deodorant, and two brands each of fabric softener, cosmetics, skin care potions, and disposable diapers.

c. The reason they do this is because different people want different mixes of benefits from the products they buy. There are groups—or segments—or laundry detergent buyers, for example, and each segment seeks a special combination of benefits.

d. By segmenting the market and having several different brands in each category, P&G has an attractive offering for consumers in all important preference groups.

e. Companies recognize that they cannot appeal to all buyers in the marketplace, or at least not to all buyers in the same way. So they must design strategies to build the right relationships with the right customers.

f. Most companies are being more choosy about the customers with whom they wish to build relationships. They have moved away from mass marketing and toward market segmentation and targeting—identifying market segments, selecting one or more of them, and developing products and marketing programs tailored to each.

g. The three steps in target marketing are shown in Figure 6-1. They are market segmentation, target marketing, and market positioning.



Use Key Term Target Market here.

Use Chapter Objectives 1 here.

Use Figure 6-1 here.



2. Market Segmentation

a. Markets consist of buyers. These buyers may differ in their wants, resources, locations, buying attitudes, and buying practices. Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more effectively with products and services that match their unique needs.


Use Key Term Market Segmentation here.

Use Chapter Objectives 2 here.



Segmenting Consumer Markets

b. There is no single way to segment a market. Marketers must try different segmentation variables, alone and in combination, to find the best way to view the market structure.

1. Geographic segmentation divides the market into different geo-graphical units, such as nations, regions, states, counties, cities, or even neighborhoods. A company may operate in one or a few geographic areas, or it may operate in all areas but pay attention to geographical differences in wants and needs.



Use Key Term Geographic Segmentation here.

Use Table 6-1 here.

Use Discussing the Issues 2 here.



2. Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Consumer wants, needs, and usage rates often vary with demographic variables. Demographic variables are also easier to measure than other variables.



Use Key Term Demographic Segmentation here.



3. Some companies use age and life-cycle segmentation because consumer needs and wants change with age. But marketers must be careful to guard against stereotypes when using this form of segmentation.

4. Gender segmentation has long been used in clothing, cosmetics, toiletries, and magazines.

5. Income segmentation has been used by marketers for selling automobiles, boats, clothing, cosmetics, financial services, and travel. Many companies target affluent consumers with luxury goods. But other companies target lower-income consumers. Others still develop different products and sell them in different outlets based on income segmentation.

6. Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic makeups, and marketers often segment by common lifestyles.



Use Key Terms Age and Life-Cycle Segmentation, Gender Segmentation, Income Segmentation, Psychographic Segmentation here.

Use Marketing at Work 6-1 here.



Applying the concept

How might Ford utilize psychographic segmentation for its various automobile brands, such as Mustang, Explorer, and the luxury car Jaguar?



7. Behavioral segmentation divides buyers based on their knowledge, attitudes, uses, or responses to a product.

i. Occasion segmentation groups buyers according to occasions when they get the idea to buy, actually make the purchase, or use the purchased item.

ii. Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit.



Use Key Terms Benefit Segmentation, Occasion Segmentation here.



iii. User status groups buyers according to whether they are nonusers, ex-users, potential users, first-time users, or regular users of the product.

iv. Markets can also be segmented according to usage rate—light, medium, and heavy product users.

v. Loyalty status looks at the level of loyalty to brands, stores, and companies.



Use Key Term Behavioral Segmentation here.



c. Marketers rarely limit their segmentation to only one or a few variables. They are increasingly using multiple segmentation bases in an effort to identify smaller, better-defined target groups.

1. Geodemographic segmentation helps marketers link U.S. Census data with lifestyle patterns to better segment their markets down to zip codes, neighborhoods, and even city blocks.

Use Under the Hood/Focus on Technology here.



Segmenting Business Markets

d. Business marketers use many of the same variables to segment their markets. Business buyers can be segmented geographically, demo-graphically (industry, company size), or by benefits sought, user status, usage rate, and loyalty status.

e. Other characteristics are also used, however, including operating characteristics, purchasing approaches, situational factors, and personal characteristics.

f. Within a given target industry and customer size, the company can segment by purchase approaches and criteria. Many marketers believe that buying behavior and benefits provide the best basis for segmenting business markets, just as in consumer markets.



Let’s Discuss This

The Body Shop is a company that prides itself on buying basic ingredients from only companies that utilize sustainable technologies. Is that a purchasing approach, a situation factor, a personal characteristic, or a combination of all of them?



Segmenting International Markets

g. Different countries can vary greatly in their economic, cultural, and political makeup. International firms need to group their world markets into segments with distinct buying needs and behaviors.

h. Companies can segment international markets using one or a combination of several variables. They can segment by geographic location. This assumes that countries close to one another will have many common traits and behaviors.

i. World markets can also be grouped on the basis of economic factors, such as population income levels or by their overall level of economic development. 

j. Countries can also be segmented by political and legal factors, such as the type and stability of government, receptivity to foreign firms, monetary regulations, and the amount of bureaucracy.

k. Cultural factors can also be used, grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns.

l. Many companies use an approach called intermarket segmentation. Using this approach, they form segments of consumers who have similar needs and buying behavior even though they are located in different countries.



Use Key Term Intermarket Segmentation here.

Requirements for Effective Segmentation

m. Not all segmentations are effective. To be useful, segments must meet five criteria.

1. It must be measurable: The size, purchasing power, and profiles of the segments can be measured.

2. It must be accessible: The market segments can be effectively reached and served.

3. It must be substantial: The segments are large or profitable enough to serve. A segment should be the largest possible homogenous group worth pursuing with a tailored marketing strategy.

4. It must be differentiable: The segments are conceptually dis-tinguishable and respond differently to different marketing mix elements and programs.

5. It must be actionable: Effective programs can be designed for attracting and serving the segments.



Use Speed Bump: Linking the Concepts here.

Use Discussing the Issues 3 here.



3. Target Marketing

a. Segmentation reveals only the firm’s opportunities.  The firm now has to evaluate the various segments and decide how many and which segments it can best serve.



Use Key Term Target Marketing here.



Evaluating Market Segments

b. A firm must look at three factors to evaluate market segments: segment size and growth; segment structural attractiveness; and company objectives and resources



Use Chapter Objectives 3 here.

Use Discussing the Issues 4 here.



c. The company must first collect and analyze data on current segment sales, growth rates, and expected profitability for various segments. It will be interested in segments that have the right size and growth characteristics. But “right size and growth” is a relative matter.

d. There are several structural characteristics that affect long-run segment attractiveness.

1. The segment is less attractive if there are several strong, aggressive competitors.

2. The existence of many actual or potential substitute products may limit prices and the profits that can be earned.

3. The relative power of buyers also affects segment attractiveness.

4. A segment may be less attractive if it contains powerful suppliers who can control prices or reduce the quality or quantity of ordered goods and services.

e. The company must take into account its own objectives and resources in relation to the segment. If a segment does not mesh with the company’s long-run objectives, it can be dismissed. The company must take into consideration whether it has the skills and resources needed to succeed in the market. The company should enter only segments in which it can offer superior value and gain advantage over competitors.



Applying the Concept

A start-up company has a product that it developed for the luxury hotel and resort market. Business development is not going as well as they had hoped. Should they change focus and market it to discount motel chains?



Selecting Target Market Segments

f. A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

g. Target marketing can be carried out at several different levels. Figure 6-2 shows that companies can target very broadly, through undifferentiated marketing; very narrowly, in micromarketing; or somewhere in between, which is differentiated or concentrated marketing.

1. In undifferentiated marketing, also called mass marketing, a firm might decide to ignore market segment differences and target the whole market with one offer. This strategy focuses on what is common in the needs of consumers, rather than on what is different.

2. Using differentiated, or segmented, marketing, a firm decides to target several market segments and designs separate offers for each. Companies hope for higher sales and a stronger position within each market segment. This could yield more total sales than undifferentiated marketing across all segments. Differentiated marketing can also increase costs, however. So companies must weigh increased sales against increased costs when deciding on a differentiated marketing strategy.

3. Concentrated or niche marketing is especially appealing when a company has limited resources. Instead of going after a small share of a large market, the firm goes after a large share of one or a few segments or niches. Niches are smaller than segments and may attract only one or a few competitors. A company can market more effectively by fine-tuning its products, prices, and programs to the needs of carefully defined segments.



Use Key Terms Undifferentiated (or Mass) Marketing, Differentiated (or Segmented) Marketing, Concentrated (or Niche) Marketing here.

Use Figure 6-2 here.

Use Discussing the Issues 1 here.



4. Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. It includes local marketing and individual marketing.

i. Local marketing entails tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, and even specific stores. The drawbacks include that it can drive up manufacturing and marketing costs, and create logistics problems as companies try to meet the varied requirements of the different markets. A brand’s image may also be diluted and the message could vary too much. But local market does help a company market more effectively to different segments.

ii. Micromarketing becomes individual marketing in the extreme—tailoring products and marketing programs to the needs and preferences of individual customers. Mass customization is the process through which firms interact one-on-one with masses of customers to design products and services made specifically to individual needs.



Use Key Terms Micromarketing, Local Marketing, Individual Marketing here.

Use Marketing at Work 6-2 here.

Use Application Questions 1 here.



iii. Which strategy to employee depends on company resources. 

a. When the firm’s resources are limited, concentrated marketing makes sense.

b. Undifferentiated marketing makes sense when product variability is low, such as in steel.

c. The product’s life-cycle stage must also be considered. When a product is new, undifferentiated marketing might be best. In the mature stage, differentiated marketing could work better.

d. Product variability needs to be considered, as should competitors’ strategies.


Socially Responsible Target Marketing

h. Target marketing sometimes generates controversy and concern. Issues usually involve the targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products. Problems arise when marketing adult products to kids, whether intentionally or unintentionally.

i. The growth of the Internet and other carefully targeted direct media has raised concerns about potential targeting abuses.

j. The issue is not so much who is targeted, but how and for what. Controversies arise when marketers attempt to profit when they unfairly target vulnerable segments or target them with questionable products or tactics.

k. Socially responsible marketing calls for segmentation and targeting that serve not just the interests of the company, but also the interests of those targeted.



Use Speed Bump: Linking the Concepts here.

Use Focus on Ethics here.



4. Positioning for Competitive Advantage

a. A product’s position is the way the product is defined by the consumers on important attributes; it is the place the product occupies in consumers’ minds relative to competing products. It involves implanting the brand’s unique benefits and differentiation in customers’ minds.

b. To simplify the buying process, consumers organize products, services, and companies into categories and “position” them in their minds. A product’s position is a complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products.

c. Consumers will position products with or without the help of marketers. So marketers must plan positions that will give their products the greatest advantage in selected target markets, and then must design marketing mixes to create these planned positions.



Use Key Terms Competitive Advantage, Market Positioning here.

Use Chapter Objectives 4 here.



Positioning Maps

d. Perceptual positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions. Figure 6-3 shows a positioning map for the U.S. large luxury sport utility vehicle market.



Use Figure 6-3 here.



Choosing a Positioning Strategy

e. Each firm must differentiate its offer by building a unique bundle of benefits that appeals to a substantial group within the segment.

f. The positioning task has three steps: identifying a set of possible competitive advantages; choosing the right competitive advantages; and selecting an overall positioning strategy. The company then needs to communicate and deliver the chosen position to the market.

1. Positioning begins with actually differentiating the company’s marketing offer so that it will give consumers more value than competitors’ offers do. A company or market offer can be differ-entiated by product, services, channels, people, or image.

i. Product differentiation takes place along a continuum. At one extreme are products that vary little, while at the other extreme they are highly differentiated on features, per-formance, or style and design.

ii. Services differentiation can be done through speedy, convenient, or careful delivery. Installation can also differentiate a company, as can repair services. Other possibilities include training service or consulting services.

iii. Channel differentiation can help a company gain com-petitive advantage through coverage, expertise, and per-formance.

iv. A company can differentiate on people—hiring and training people better than their competitors do.

v. A company can also differentiate on image. The chosen symbols, characters, and other image elements must be communicated through advertising that conveys the com-pany’s or brand’s personality.



Use Discussing the Issues 5 here.



Let’s Discuss This

What sort of differentiation does Jiffy Lube use? A major accounting firm, such as Ernst & Young? 

 

2. The company must decide how many differences to promote and which ones.

i. Some marketers believe that the best strategy is to promote only one unique advantage, which can be called the unique selling proposition.

ii. Other marketers believe that companies should position themselves on more than one attribute, particularly if one or more companies are claiming to be best on the same attribute.

iii. Not all brand preferences are meaningful or worthwhile. The company must carefully select which differences are worth promoting.

a. It should be important and deliver a highly valued benefit to target buyers.

b. It should be distinctive such that competitors do not offer the difference.

c. It should be superior, so that consumers cannot obtain the benefit elsewhere.

d. It should be communicable and visible to buyers.

e. It should be preemptive, so that competitors cannot easily copy it.

f. It should be affordable.

g. It should be profitable.

iv. Consumers typically choose products and services that give them the greatest value. The full positioning of a brand is called the brand’s value proposition—the full mix of benefits upon which the brand is positioned.



Use Key Terms Value Proposition, Product Position here.

Use Application Questions 2 and 3 here.



v. Figure 6-4 shows possible value propositions with which a company might position its products.

a. “More for more” positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs.

b. “More for the same” positioning introduces a brand offering comparable quality but at a lower price.

c. “The same for less” offers good deals to customers.

d. “Less for much less” positioning involves meeting consumers’ lower performance or quality require-ments at a much lower price.

e. “More for less” is often claimed by companies, and in the short run, companies can often make this work. But in the long run, offering more usually costs more, so it is difficult to deliver on this promise.



Use Figure 6-4 here.

Use Marketing at Work 6-3 here.

Use Discussing the Issues 6 here.



vi. Company and brand positioning should be summed up in a positioning statement. This statement should follow the form of “To (target segment and need) our (brand) is (concept) that (point of difference).” The statement first puts the product in a category and then shows the point of difference from other members in the category.



Use Key Term Positioning Statement here.



Communicating and Delivering the Chosen Position 

g. When a company has chosen a position, it must take strong steps to deliver and communicate the desired position to target consumers.

h. All the company’s marketing mix efforts must support the positioning strategy.

i. Designing the marketing mix—product, place, price, and promotion—involves working out the tactical details of the positioning strategy.

j. Companies often find it easier to come up with a good positioning strategy than to implement it. Establishing a position or changing one usually takes a long time. However, positions that took years to build can be lost easily. A company must take care to maintain the position through consistent performance and communication.



Travel Log


Discussing the Issues

1. What are the differences between mass marketing, segment marketing, niche marketing, and micromarketing?  Discuss actual products that use each of these market segmentation levels.


In mass marketing, a firm ignores market segment differences and targets the whole market with one offer. In segmented marketing, a firm targets several market segments and designs separate offers for each. In niche marketing, instead of going after a small share of a large market, the firm goes after a large share of one or a few segments or niches. Niches are smaller and may attract only one or a few competitors. Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.


2. For each of these three products—DVD player, shoes, and salsa—consider each of the segmentation variables listed in Table 6-1 and assess the degree to which it is useful to segment the market for the product based on that variable.


Student responses will vary for this question. Instructors can use this question as an opportunity to highlight the large number of ways a market can be segmented, as well as how some segmentation variables make more sense than others depending upon the product being sold.


3. Describe the student market segments for your university. To what extent are these segments measurable, accessible, substantial, differentiable, and actionable?


Students may come up with a variety of responses based on class rank (freshman, sophomore, etc.), housing status (on-campus, off-campus, fraternity house, etc.), nationality, race, and gender. This question can also be extended to have students think about potential students for their school (i.e., promoting the school to those graduating from high school and other less traditional students).


4. The George Foreman Grill is a compact cooking appliance with a double-sided cooking surface that is angled to allow fat to drip off the food and out of the grill. Describe a likely target market for this product. How does this target market rate with respect to size, growth, and structural attractiveness. 


Student responses will vary but may include markets described in terms of segmentation variables linked to a desire for convenience and more healthy food. Students may be reluctant to estimate the size and other characteristics of the market. As such, instructors may choose to have them discuss how they would acquire such information instead.


5. Discuss how Mountain Dew has differentiated itself from other soft drink brands on the basis of product, services, channels, people, and image differentiation.


Student responses to this question will vary. Instructors can use this question to highlight points of differentiation through the customer’s entire experience with the company’s product or service. Extend this question by having students consider the sustainability of each point of differentiation.


6. Study Figure 6-4. Give examples of a hotel chain that falls into each of the five value propositions. What does each hotel you selected do on the benefits dimension to offer more, the same, or less than competitors?


Instructors may choose to build on this question by having students consider the market each hotel chain is targeting with its offer and what a hotel would need to do in terms of the marketing mix variables in order to change to a new position on the figure.


Application Questions

1. One direction Levi’s has gone in personalizing the shopping experience is to allow the use of a virtual model to try on clothing at the company’s website (www.levi.com). Visitors can even customize the model to look more like themselves (or what they wish they looked like) and save this representation for future visits. Visit the company website and virtually try on some of the clothing in the “fitting room.” What do you think of this experience? How does this feature fit with the notion of individual marketing? Do you feel that the virtual fitting room differentiates the Levi brand from other clothing companies?


Student responses will vary based on their own attitudes toward this feature. Instructors can use this variability to set up a debate about why this is a good tool for Levi versus why it is not important. Instructors might have students consider the factors that make some people like this and others dislike it or be ambivalent toward it.


2. Pick five different brands of deodorant. Based on your own perception, rate each one on the attributes of scent, price, and odor protection (use a 1 to 10 scale with 1 being low and 10 being high). Pick two of the attributes and plot your ratings of each brand. How are the brands different and similar to each other? Are there any areas on the graph that are void of competitors? Do these represent an opportunity for a deodorant manufacturer? 


Instructors may desire to provide an example of a two-dimensional product positioning map prior to this question being assigned. Voids on the map can indicate market opportunities, but also areas where no consumer demand exists or areas that are not technologically feasible. 


3. Cable television news organizations have become more popular in recent years as consumers have started to expect and demand news coverage 24 hours a day, seven days a week. Spend some time watching CNN, MSNBC, and Fox News. List the ways each news program tries to differentiate itself from the others. Evaluate the worthiness of their differentiation strategies using the following criteria: important, distinctive, communicable, preemptive, affordable, and profitable.


This project can make an interesting group exercise where groups perform the task and then present it to the class. Each group will be responsible for the same task, yet their insights and the things they pick up on as differentiating features will vary. Discussion can then occur in class as to how the points of differentiation should be rated on the criteria.

Under the Hood/Focus on Technology


Birds of a feather flock together. This is the philosophy behind Claritas’s Prizm lifestyle segmentation system. Operating under the presumption that people with similar lifestyles tend to live near each other, Claritas has classified neighborhoods into one of 62 categories based on census data, consumer surveys, and other public and private sources of demographic and consumer information. Companies use this geodemographic infor-mation to understand and target customers better, to develop the content for adver-tisements, to decide the specific media in which to place ads, to help decide where to put new stores, and to decide what kind of merchandise should go in those stores. 

Claritas offers a limited version of the Prizm segmentation on their website at www.yawyl.claritas.com. Visit this website and respond to the following questions.

1. Enter your zip code into the Prizm website and read about the descriptions of the different customer segments. Do you think it accurately describes your area? 


Responses will vary for this question. Students might also be asked to assess the category they belong to. 


2. What are some products that might be successfully targeted at the most popular market segment in your area?


This question encourages students to think practically about the uses companies might have for geodemographic information. Students can be asked what other information they would want before proceeding to target particular segments.


3. How might a business selling Caribbean cruises be able to use the Claritas PRIZM segmentation tool?


A business might develop a profile of cruisers and then use PRIZM to send promotional material to the geographic areas that have heavy concentrations of people with that profile. Alternatively, they may have a particular geographic area in mind and use PRIZM to understand the types of consumers in the area and design promotional materials appropriate for those groups.



Focus on Ethics


Many companies consider children an attractive market segment due to their spending power. A strategy in some middle schools and high schools is to develop exclusive “pouring rights” contracts with soft drink companies, which allow the company to be the exclusive soft drink sold on campus in exchange for payments equaling hundreds of thousands of dollars. Pepsi and Coca-Cola have led this charge in recent years, encouraged by school districts in desperate need of additional funding. However, some parents feel that soft drinks are an unhealthy beverage alternative and have lobbied to have soft drinks removed from campuses. Indeed, the nation’s two largest school districts—New York and Los Angeles—have banned soft-drink sales. 


1. Why do you think soft drink companies would pay such large sums for exclusive access to middle school and high school campuses? How might the controversy damage the image of the soft drink manufacturers?


Student opinions will vary on this issue. Negative media coverage over pouring right controversies may damage the image of soft drink manufacturers.


2. In your mind, are there any ethical issues associated with this practice?


Students should be encouraged to think about other products (e.g., candy, potato chips, etc.) that might also be sold exclusively on high school campuses and where they would draw the line on the selling of such products. 


3. What sort of compromise might be worked out between supporters and opponents to this practice?


Currently, some soft drink machines are available only limited hours on campuses. In others, a certain number of “slots” are reserved for juice and water products (to offer a healthier alternative to soda).



GREAT IDEAS



Barriers to Effective Learning


1. Understanding the concept of a market segment can be very difficult for students. Working through breaking down a market, such as for their own university, into separate groups can help tremendously, as can drawing a big box on the board, and then breaking the box down into separate sections to represent pieces of a larger market.

2. Also difficult to understand is the concept that there is no one, single way to segment a market. Students will often point out that companies segment on a single variable frequently, not understanding that the concept is much broader than that. Using a simple pen as an example, you can point out the various segmentation variables, such as income, occasion (such as graduations), and lifestyle that a pen manufacturer could study to determine effective segments. While Mont Blanc might segment based on income and occasion factors, Bic could very well look at lifestyle or even age.

3. Segmenting business markets could also pose some problems, particularly in the discussion of operating characteristics and purchasing styles. Contrasting large corporations with small, local enterprises could help here, as can asking the students about their parents’ business lives and any responsibility they might have in purchasing goods and services for the firms they work for.

4. If anyone knows anything about target marketing before coming to class, they will think of it as simply selling to one type of customer. But most students will never have heard this concept, either. Use the “box” principle in #1 on the previous page; showing how a company could choose one or more of the sections to address will help in students’ understanding. This can also be expanded to show how companies might move from focusing on one target segment to moving along to another when penetration of the first has been accomplished, even though this goes beyond the scope of this textbook.

5. Development of a positioning statement is also a difficult concept. It requires students to boil down a company’s strategy into one sentence, which can be quite tricky. Going through the examples in the book, and then applying them to something within the students’ sphere of knowledge (books, soft drinks, breakfast foods, coffee, etc.) can enrich the explanations in the text.



Student Projects


1. There are many ways to segment a market. Using the four segmentation variables shown in Table 6-1, discuss which variables would be most important for segmenting (a) Internet users, (b) drivers of a proposed new sports car, and (c) the adult student who returns to college to get an undergraduate degree. Explain your choices.

2. Collect advertisements that demonstrate the positioning of different automobile brands. Sort the various brands into categories of brands with similar positions.

3. How might a medium-sized bank determine the major market targets it serves?

4. Develop a positioning statement for your university.



Classroom Exercise/Homework Assignment


Need help with your financial planning? Software maker Intuit (see www.intuit.com) probably has a product just for you. The company’s Quicken (financial planning software) and TurboTax (the number-one income tax preparation software) have given Intuit a strong position in the rapidly growing financial planning and services market. Assuming that the company would like to expand, which of the market-coverage strategies shown in Figure 6-2 would you suggest? Explain how the strategy you’ve chosen would help the company to meet strong competitive challenges from Microsoft and other software makers. 


The three market coverage strategies described in the text are undifferentiated marketing, differentiated marketing, and concentrated marketing. This question is designed to get the student to apply information provided by the text. Students should be encouraged to examine contemporary business magazines for illus-trations of how these strategies may or may not be applied to Intuit or other competitive organizations.


Because this is an action-oriented project, students may pursue any one of the three market-coverage strategies. However, some prompting by the instructor is encouraged. If the instructor believes this project to be too lengthy, but still wants to examine the three market-coverage strategies, try using any of the other examples provided. Note, most students will probably pick the concentrated strategy form, however, with probing, the other two may also be applicable. 


 An additional example to use for the undifferentiated marketing strategy might be Morton’s Salt. Examples in this category are difficult to find because few firms use this strategy alone. The best examples that students will probably find are something close—like Morton’s Salt or Hershey’s (even though they do not exactly fit). 


Examples of companies that follow the differentiated marketing strategy abound. Most students can refer to athletic shoe companies, jeans companies, computer companies, or automobile companies. Be sure to ask them how they differentiate their products. It might also be a useful exercise to have the students go to their selected companies’ websites and explore the differentiation that might be present on these sites.


Examples of companies that follow the concentrated marketing strategy are also common. Most students can refer to fast-food businesses, certain breweries, wine producers, and cosmetic companies. Be sure to ask students how they can determine whether a company is using the concentrated versus the differentiated approach. Ask students to bring advertisements to class that would demonstrate these directions and differences.



Classroom Management Strategies


Most students will still be thinking, even at this point in the semester, that marketing is all about getting everyone to buy your product. This chapter will set them straight. It uses three sections to discuss the three important topics of segmentation, targeting, and positioning.


1. Divide this chapter up equally. Spend about 20 minutes on market segmentation, with the majority of that time spent on segmenting consumer markets. Students will understand geographic and demographic segmentation fairly quickly, but benefit and occasion segmentation will take a little more time. Business and international markets can be covered fairly quickly.

2. Target marketing should also take about 20 minutes. It is important for the students to grasp that once they’ve divided the market, they then need to decide which of those segments to address. Evaluating and selecting segments to target should be the primary topics in this section.

3. Finally, positioning should take the remainder of the class. Discussing a brand you are especially loyal to, and so can speak about it emotionally, often helps the students realize the importance of positioning, and also how dependent positioning is on the responses of the consumer to the product itself as well as the messaging about the product.


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