978-0130387752 Chapter 5 Marketing Performance Tools and Application Exercises

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Marketing Performance Tools and Application Exercises

5.1 Needs-Based Segmentation: This marketing performance tool is used with Figure 5-3in addressing items A

(below) and B (next page).

A. Using the laptop product-price configuration provided, create a needs-based segment for laptop users

who have home businesses and work on their laptops 4 to 6 hours a day, including while on out-of-town

business trips.

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Teaching Note: The home-business segment customers have a great need for speed, capacity, and an

B. Next, using the laptop product-price configuration provided, create a needs-based segment for a high

school student with a limited budget who wants to buy a laptop for school assignments, e-mail, and

entertainment.

Teaching Note:Customers in the high school student segment make more limited use of their

computers. They mainly use computers for e-mail, Internet access, and doing their assignments. These

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5.2 Segment Identification: Using the needs-based segments created in 5.1, this marketing performance tool can

be used to create a segment profile for each segment, as in Figure 5-9.

A. For the home business segment, edit the consumer profile characteristics and indicate which consumer

demographics, lifestyle, and usage behaviors make this type of potential customer identifiable.

B. For the high school student segment, edit the consumer profile characteristics and indicate which

consumer demographics, lifestyle activities , and usage behaviors make this type of potential customer

identifiable.

C. What are the most important characteristics that differentiate one segment from the other? How would

knowing those characteristics help a business develop its marketing communications strategy?

Teaching Note

A. The home-business segment is young to middle age with most having a college

education. They are less likely to watch a lot of TV but dine out two or three times per

B. The high school student has di”erent needs as well as di“erent demographic and

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C. In this example, almost every variable used in identifying the two segments is

meaningfully di”erent. You might extend the discussion to di”erentiate the

5.3 Segment Profitability: This marketing performance tool is used to answer questions A (next page) and B (page

64).

A. For the price segment, what would be the profit impact of a 10 percent decrease in price if market share

could be increased from 2 to 3 percent?

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Teaching Note: As shown, this price strategy would improve sales for the price segment to $67.5

million, an increase of $17.5 million. But the price decrease lowers the margin from 20 percent to 11.1

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B. For the quality segment, what would be the profit impact of a strategy to increase the marketing budget

from 10 to 15 percent of sales in an effort to increase market share from 2 to 3 percent?

Teaching Note: As shown in the screen printout, this marketing and sales investment strategy

increases both sales and the net marketing contribution for the quality segment. It looks like a good

strategy, but we should test the risk associated with the 3 percent share goal by varying the market

5.4 The “Acid Test” for Segment Strategies: This marketing performance tool is used with Figure 5-5 in

addressing items A through C.

A. For the “worrier” segment, create a storyboard similar to the ones in Figure 5-13. If possible, add a

picture from a magazine that represents the customer identity of this segment.

B. Do the same for the “sociable” segment.

C. Create a third storyboard with no segment identity, average product features, and a mid-range price.

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Our family brushes often and uses the best toothpaste for total hygiene.We will pay more for Toothpaste A because it offers the best total hygiene.

I want a toothpaste that makes me want to smile.I will pay more for Toothpaste B because it helps me look good.

I like a well-known brand of toothpaste that gets the job done.I buy Toothpaste C because it is a reliable brand.

Teaching Note: In creating their storyboards, students establish the product positioning and price for

5.5 Customer Relationship Marketing: This marketing performance tool is used in addressingitems A (next page)

and B (page 68).

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A. Using the data provided, estimate how customer profitability and lifetime value change for the

mass-personalization program if the customer retention dropped from 67 to 60 percent.

Teaching Note: A reduction in customer retention from 67 to 60 percent in the mass-personalization

program would produce a negative lifetime value of $45.72. At 67 percent retention, the lifetime value

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B. At what level of percent margin would the mass-customization program no longer produce a positive

customer profit?

Teaching Note— As shown above, when the percent margin drops to 16.7 percent, there is a customer

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