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lecture enhancer 13-7
DEWALT IDENTIFIES ITS TARGET MARKET
By the late 1980s the DeWalt brand of power tools was failing. The production of the line was
halted, and the brand was shelved. Makita, a Japanese tool company, had taken over the market. It “had
eaten our lunch throughout the ’80s,” says Nola Archibald, CEO of Black & Decker, which owns the
DeWalt name. “So we started doing a bunch of research.” The findings were surprising. Consumers were
lukewarm about DeWalt tools, but professional tool users had a high regard for the brand. “The light went
on,” says Archibald. Black & Decker launched a line of portable electric power tools under the DeWalt
name in 1992, and then an innovative line of cordless tools two years later.
In a short time, the company has become one of Black & Decker’s most profitable divisions.
With $1 billion in annual sales, it commands a 35% share of the professional-tool market.
How did DeWalt fix itself? The company decided to market DeWalt primarily to professionals—
who make up 69% of U.S. tool sales. It followed up by making the tools more rugged and reliable. That
was important to people who use tools every day; it also allowed the company to charge a higher price.
Then the company got creative. An army of tool guys in bright-yellow trucks swarmed construc-
tion sites around the country to get workers to test and critique DeWalt tools on the spot. They camped
out in Home Depot and Lowe’s parking lots, inviting passersby to test their tools.
To reach Hispanics—who represent nearly 20% of DeWalt’s customers—DeWalt hired Ethnic
Marketing Group (EMG), a Los Angeles–based agency. DeWalt and EMG launched a contest to find the
most dedicated, respected Spanish-speaking construction worker in the Southeast. The contest has ex-
panded into other cities, from San Diego to Orlando, and Black & Decker has doubled DeWalt Hispanic
marketing budget along the way.
What DeWalt doesn’t do is just as interesting. It doesn’t do TV commercials, and it doesn’t sell at
Walmart. The strategy is all about controlling distribution and protecting the brand, and keeping its mar-
keting efforts directly focused on the correct target market—the professional user.vi
lecture enhancer 13-8
FAMILY LIFE CYCLE THEORY UPDATED
Age, population patterns, income, and regional differences are all market characteristics that af-
fect the marketing of goods and services. But some marketing experts feel that life cycle characteristics
are a stronger determinant of consumers’ buying habits than any of the other characteristics. For two dec-
ades, business schools have taught family life cycle theory to marketing students.
Life cycle theory assumes that people pass through a series of stages or family situations in their
lives. These stages, or cycles, are characterized by different interests, financial situations, and buying hab-
its. Regardless of their age, for instance, newly married couples will probably purchase kitchen applianc-
es, furniture, and life insurance. Young married couples with a small child will purchase toys, shoes, and
medical care. Life cycle theory also identifies groups that are the heaviest purchasers of individual prod-
ucts and allows marketers to target their marketing strategy to narrower target markets.
Early Family Life Cycle Theory
The first versions of life cycle theory identified five stages of life:
• Young, single, just starting out
• Childless couple, both working, in their late 20s
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• Two-income household with children in school
• Middle-aged working couple with no dependent children
• Elderly retired person
Updated Life Cycle Theory
Purchasing habits fluctuate over time with every generation. Because of increased access to new
technology and uncertainty due to world events, the consumer trends of generations have changed. The
current version of family life cycle theory uses the following categories.
Birth to 12 Years Old
It is no longer just colorful toys that attract this consumer segment, and it is no longer
possible to lump “subteens” together under the same marketing roof. Because of the changing
tastes of these subteens toward consumer electronics and fashion goodies, marketing for this age
group has now been split into four distinct under-13 segments:
• Newborns to 3-year-olds
• 3- to 5-year-olds
• 5- to 8-year-olds
• 8- to 12-year-olds
In the wake of the September 11, 2001, tragedy, children are leading more protected lives
that include more organized activities and closer parental supervision. Stores can market products
to children and parents at the same time by selling products that both can enjoy together.
Today, children within this market segment also differ from their predecessors in that
they are technically empowered. They have grown up in a world with ready access to multifunc-
tional gaming consoles and Internet connections. Due to this empowerment at such an early age,
they could well evolve into the most progressive and/or demanding generation of consumers.
Marketing aimed at this consumer segment should focus on these new media preferences. Prod-
ucts and marketing campaigns that are fun are also a priority, as they are still children.
13 to 17 Years Old
The image of the typical teenager has changed from that of a lazy underachiever to an op-
timistic, ambitious, self-assured person with a more confident and positive outlook on life. This
age group is much more accustomed to being the targets of sales pitches and is sometimes critical
of their motives. Because teenagers are accustomed to multitasking, products need to be present-
ed in a way that will catch the attention of the consumer. Community involvement and global
awareness have become more important due to the widespread use of the Internet, so products
that are “earth and community friendly” may be more appealing.
18 to 34 Years Old
This market segment, also referred to as the “bling generation,” includes those who were
raised on TV images of the Vietnam War on one end and those who grew up watching MTV on
the other. Another result of this uncertainty is the increased demand for luxury products. Tech-
nology and luxury seem to be two things this generation clearly desires. Social responsibility
plays an important role in selling products to this age group. Because people in this age group are
so diverse, they can be difficult to market to as a whole. Appealing to this generation requires a
product with good design; good value, preferably luxury; at least the appearance of some social
responsibility; and an advertising campaign that sells with the consumers, not at them.
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35 to 54 Years Old
This generation, called the “trailing boomers,” is characterized by spending a lot but
spending carefully. This segment has three primary characteristics: (1) They are quite sophisticat-
ed in the use of technology to get information; (2) they have the money to buy things, and they
are still in the householder life stage, many raising teens; and (3) they want to spend more—they
need to indulge themselves a bit. This market segment wants to get a deal but not sacrifice quali-
ty. A good marketing strategy for this group is product segmentation. If a product works well for
a specific consumer, price will not be a major issue; but different products will appeal to different
consumers. This age group also values fitness and well-being. To reach this group the marketing
approach should be based on state of health and ability to get out and do things instead of on age.
55+ Years Old
Today, this generation is looking toward retirement characterized by youthful vigor,
prosperity, and personal fulfillment. They define themselves based on their values and attitudes,
giving marketers opportunities in the areas of financial, hospitality, and wellness products and
services.
In order for businesses to appeal to these consumers, they need to understand what the buying
habits are, how they have changed, and what techniques can be used to reach this life stage.
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critical
thinking exercises
Name: ___________________________
Date: ___________________________
critical thinking exercise 13-1
FIND A NEED AND FILL IT
The text emphasizes that marketing is not a matter of taking a product and selling it, but of find-
ing a need and filling it. Look around you—around your campus, your home, or your job: Do you see a
need that is unfilled? If you’re having trouble finding a need, try to remember the times you’ve said,
“Somebody ought to do_____,” or “Somebody ought to make______.” That somebody is going to be
you!
Fill the need you have identified by following the steps listed below. Write down what you would
do at each step.
Steps in the Marketing Process
1. Find a need:
2. Design a product or service:
3. Test your concept:
4. Make up a prototype and test market your product or service:
5. Design packaging, think of a name, and set a price:
6. Decide how to distribute the product to consumers:
7. Develop a promotional strategy:
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notes for critical thinking exercise 13–1
This is an excellent exercise for getting students to begin looking for market opportunities and
hearing other students do the same. If more than one student sees the same opportunity, that may be a
good business to pursue. Just thinking their way through the marketing process is a great way to remem-
ber the concepts later.
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Name: ___________________________
Date: ___________________________
critical thinking exercise 13-2
GOOD TO THE LAST DROP
“Good to the last drop” was Coca–Cola’s slogan long before it was used in Maxwell House Cof-
fee ads. Coke used it way back in 1900. Other Coke slogans included “Thirst knows no season” (1922);
“It had to be good to get where it is” (1925); “Around the corner from everywhere” (1927); “Coke Is It,”
“Life Tastes Good,” and “Have a Coke and a Smile”—Coca-Cola spent $700 million in advertising dur-
ing its first 90 years. Today, that figure is probably in the billions.
Of course, Pepsi has spent its share of advertising dollars. In fact, Pepsi probably created the most
famous jingle of all. The company was about to go bankrupt during the Depression. Even though it was
selling six-ounce bottles for only five cents, Coke was beating Pepsi in the market. So the company de-
cided to sell twice as much for the same price. Here is the jingle it used to introduce the new size:
“Pepsi-Cola hits the spot.
Twelve full ounces, that’s a lot.
Twice as much for a nickel, too.
Pepsi-Cola’s the drink for you.”
How important are these jingles and slogans? Needless to say, the market responded to the Pepsi
jingle, saving Pepsi from bankruptcy. Why do people buy particular colas? Is it because of the taste? Or
does the advertising play a larger role in their cola brand preference?
Let’s do a little tasty marketing research ourselves. Many of us drink colas, and more than a few
of us have our favorite cola. Let’s see if your friends can pick out their favorite from three other colas.
You may want to do this project as a class or at least in groups—colas don’t sell for a nickel anymore and
the cost can add up!
When you have finished gathering your data using the following method instructions and record-
ing sheets, answer these questions:
1. How many of your tasters could identify their favorite cola?
2. How many correctly identified the other colas?
3. How did the responses given when the brands were unknown compare with the responses given
when the brands were known?
4. What do your results tell you about the power of advertising?
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critical thinking exercise 13–2 (continued)
Method
1. Cool bottles or cans of four colas to the same temperature. Don’t use some colas in bottles and
others in cans because the packaging process could affect taste. Be sure to include Coca-Cola to
test those Coke loyalists. It’s also interesting to include a diet cola and an “off” brand.
2. Ask 10 people to sample the colas. Test each person individually. Don’t let the others watch the
test to avoid influencing their own decisions.
3. Each person will be tested in two rounds. In the first round, don’t tell the person what he or she is
tasting. Refer to each cola as A, B, C, or D. Pour a little in each of four cups (be careful not to get
them mixed up). After each cup, ask the taster to describe the flavor, carbonation, and aftertaste.
Record the responses on the following record sheet by circling the appropriate response. (You
will need one sheet for each taster.) Let each taster take a bite of bread between each cola to clean
his or her palate.
4. On the second round, tell the taster which brands he or she is drinking. Don’t offer them in the
same order as the first round to avoid a simple repetition of responses. Record the responses on
the record sheet. It may help you compare responses if you use different colors to record each
round. (Don’t forget the bread!)
5. Rearrange the order of the colas between tasters. You need to do this for two reasons: (1) Over-
heard comments can influence your other tasters; and (2) many people will choose C if there is
any doubt about an answer.
6. Compile your results and answer the questions.
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critical thinking exercise 13–2 (continued)
TASTER NUMBER:______ What’s your favorite cola?________________________
Do you think you could identify the brand in a taste test? YES NO
COLA A:
Flavor: Good • • Fair • • Bad
Carbonation: Heavy • • Fair • • Light
Aftertaste: Strong • • Fair • • Light
What’s your overall opinion of the cola? ______________________________________
What brand is it? ______________________ Would buy it? YES NO
COLA B:
Flavor: Good • • Fair • • Bad
Carbonation: Heavy • • Fair • • Light
Aftertaste: Strong • • Fair • • Light
What’s your overall opinion of the cola? ______________________________________
What brand is it? ______________________ Would buy it? YES NO
COLA C:
Flavor: Good • • Fair • • Bad
Carbonation: Heavy • • Fair • • Light
Aftertaste: Strong • • Fair • • Light
What’s your overall opinion of the cola? ______________________________________
What brand is it? ______________________ Would buy it? YES NO
COLA D:
Flavor: Good • • Fair • • Bad
Carbonation: Heavy • • Fair • • Light
Aftertaste: Strong • • Fair • • Light
What’s your overall opinion of the cola? ______________________________________
What brand is it? ______________________ Would buy it? YES NO
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notes for critical thinking exercise 13–2
If the results of the students’ research are similar to the dozens of similar projects conducted in
our classrooms, they should indicate that individuals usually cannot identify their favorite colas on blind
taste tests. However, when they are told the brands they are tasting, these same individuals will usually
select their favorite as the “best” of those offered.
If taste isn’t the criterion for cola selection, why are we loyal to certain brands above others? This
should lead to an interesting class discussion.
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Name: ___________________________
Date: ___________________________
critical thinking exercise 13-3
IDENTIFYING THE TARGET MARKET
For each of the products below, identify the target market. Be specific. For example, the target
market for Just For Men hair color could be broadly defined as “men.” However, by analyzing the poten-
tial users and characteristics, a narrower market segment can be defined—men, over 40, involved in a
romantic relationship, with some amount of disposable income, who care about looking younger.
Product/Service
Target Market
1. Lipitor prescription drug
2. Zebco spinning reel (for fish-
ing)
3. Luvs disposable diaper
4. Avon cosmetics
5. Cesar gourmet canned dog
food
6. First-class airline ticket to
London
7. Set of twin-sized bed linens
8. Sterling silver flatware, one
setting
9. Hummer automobile
10. Romantic novel from Amazon
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notes for critical thinking exercise 13–3
Product/Service
Target Market
1. Lipitor prescription drug
Two separate target markets. One is consumers who are
aware that they have high cholesterol who seek medical
help. However, there is a more important target market: the
physicians who prescribe the drug. This is an example of a
product for which there are separate decision-makers and
buyers.
2. Zebco spinning reel (for fish-
ing)
Broadly, the target market for a fishing reel would be sport
fisherpeople. If you have students who regularly fish, they
may be able to more specifically identify a market. Zebco
reels are entry-level items, bought by first-time fisherpeople
or as gifts for children.
3. Luvs disposable diaper
The temptation is to say “babies,” but this is incorrect. A
baby doesn’t decide which product to buy; his or her parent
(or caregiver) does. Marketing should target parents of chil-
dren less than two years old.
4. Avon cosmetics
First, broadly, the target market is women. However, this
market can be narrowed to women in the appropriate age
range—not toddlers, not nursing home patients. The market
could also be narrowed by income. Very low–income con-
sumers would be more likely to shop for lower-priced cos-
metics at discount stores. Very high-income buyers can af-
ford the pricey cosmetics sold in high-end boutique stores.
5. Cesar gourmet canned dog
food
The target market here is owners of small dogs who have the
financial resources to pamper their pets with gourmet pet
food. Small cans of food would be impractical for large
breeds of dog or working dogs.
6. First-class airline ticket to
London
The target market is what used to be referred to as “jet set-
ters,” well-off individuals who love to travel and value luxu-
ry and comfort. The average tourist could probably not af-
ford the first-class ticket, and only top-level businesspeople
would have the expense account to pay for premium travel.
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7. Set of twin-sized bed linens
The target market for twin-sized bed linens is harder to nar-
rowly segment. Parents of young children would be one
market. First-year college students are another. Perhaps
newly single adults who are downsizing are a third market.
8. Sterling silver flatware, one
setting
This is easy—friends and family of couples about to marry,
or newly marrieds.
9. Hummer automobile
Adults with high disposable income who value status, safe-
ty, and “muscle” would be the target market. You could
probably eliminate customers who live in densely populated
cities such as New York City, sports car enthusiasts, and
nondrivers.
10. Romantic novel from Amazon
The typical buyer of a romance novel is a woman who en-
joys reading. In addition, the buyer (who could be male)
would need to own or have access to a computer, have some
Internet experience, use a credit card, and feel safe buying
online.