END OF CHAPTER MATERIAL
Discussion and Critical Thinking
Discussion Questions
6.1. Name and briefly describe the four major steps in designing a customer value-driven
marketing strategy. (AACSB: Communication)
Answer:
Figure 6.1 shows the four major steps in designing a customer value-driven marketing
strategy. In the first two steps, the company selects the customers that it will serve. Market
segmentation involves dividing a market into distinct groups of buyers who have different
6.2. How can marketers use behavioral segmentation in consumer markets? Give an example
for each method of behavioral segmentation. (AACSB: Communication; Reflective
Thinking)
Answer:
Behavioral segmentation divides buyers into segments based on their knowledge, attitudes,
uses, or responses concerning a product. Many marketers believe that behavior variables are
the best starting point for building market segments. Behavioral segmentation uses the
following to segment consumers:
Occasion segmentation: Buyers can be grouped according to occasions when they get
Benefit segmentation: requires finding the major benefits people look for in a
User Status: Markets can be segmented into nonusers, ex-users, potential users,
Usage Rate: Markets can also be segmented into light, medium, and heavy product
Loyalty Status: Some consumers are completely loyal—they buy one brand all the
6.3. Discuss the three factors firms consider when evaluating market segments. Which is most
important? (AACSB: Communication; Reflective Thinking)
Answer:
In evaluating different market segments, a firm must look at three factors: segment size and
growth, segment structural attractiveness, and company objectives and resources. First, a
The company also needs to examine major structural factors that affect long-run segment
attractiveness. For example, a segment is less attractive if it already contains many strong and
Even if a segment has the right size and growth and is structurally attractive, the company
must consider its own objectives and resources. Some attractive segments can be dismissed
6.4. How can a company gain competitive advantage through differentiation? Describe an
example of a company that illustrates each type of differentiation discussed in the
chapter. (AACSB: Communication)
Answer:
If a company positions its product as offering the best quality and service, it must actually
differentiate the product so that it delivers the promised quality and service. It can
6.5. Discuss the criteria that should be evaluated in determining which differences a company
should promote in its products. (AACSB: Communication)
Answer:
A difference is worth establishing to the extent that it satisfies the following criteria:
•Important: The difference delivers a highly valued benefit to target buyers.
•Distinctive: Competitors do not offer the difference, or the company can offer it in a more
distinctive way.
Critical Thinking Exercises
6.6. The chapter describes many companies’ individual marketing efforts that customize
products for individual customers, such as M&Ms, PUMA, and Harley-Davidson. Find
and describe another example and discuss whether the cost of customizing is worth the
value provided to consumers. (AACSB: Communication; Reflective Thinking)
Answer:
Student’s examples will vary. One example is Shoes of Prey where women can design all
sorts of shoes (www.shoesofprey.com/). Other examples include Laudi Vidni Custom
6.7. “Manfluencers” is a term that describes a new marketing trend. To what does this refer?
Describe two examples of how marketers have responded to the “manfluencers” trend?
(AACSB: Communication; Reflective Thinking)
Answer:
“Manfluencers” is a term that describes the almost 50 percent of men who now do most of
the grocery shopping and cooking at home. See John Johnson, “New Marketing Trend: Meet
the ‘Manfluencers’” USAToday, October 27, 2013, at
www.usatoday.com/story/news/nation/2013/10/27/newser-marketing-men/3280773/. Another
For more examples see Sarah Halzack, “Major Food Brands Go After a Once-Ignored
Customer: Men,” The Washington Post, September 25, 2014, at
6.8. In a small group, create an idea for a new business. Using the steps described in the
chapter, develop a customer-value driven marketing strategy. Describe your strategy and
conclude with a positioning statement for this business. (AACSB: Communication;
Reflective Thinking)
Answer:
Figure 6.1 shows the four major steps in designing a customer-value driven marketing
strategy. Students should identify the target market for their business and identify the
Minicases and Applications
Online, Mobile, and Social Media Marketing: SoLoMo (social+local+mobile)
Imagine walking into a retail store that has very little merchandise on display. Technology
company Hointer is allowing retailers to do just that. For example, the company’s store in Seattle
has only one of every style of clothing hanging on display, seemingly floating in the air. With the
store app, customers simply scan the tag to get information about each product, read reviews by
others, access media clips, and request that the product be added to their fitting room. Once in
the fitting room, customers can request other sizes or styling advice via a tablet on the wall or
through the mobile app on their phones. Customers return products they don’t want through one
chute and another size is delivered through another chute in about thirty seconds. With one click,
customers can check out on a mobile device or at the sales counter, and they can share their
purchases with others on Instagram, Facebook, or Twitter. Sales associates still exist, but they are
likely using the associate’s tools to monitor customers’ choices and suggest matching items of
clothing and accessories. All this is possible with Hointer’s suite of SoLoMo tools for retailers—
eTag, Digital Connections, Omnicart, Associate Tools, and Whoosh Fitting Room.
6.9. Search the Internet to find other examples of retailers using SoLoMo to target and engage
potential customers, or describe how you have used a retailer’s app in this manner.
(AACSB: Communication; Use of IT; Reflective Thinking)
Answer:
Students’ examples will vary. A few examples are provided below:
Walmart uses its store app to allow shoppers to switch from online to store mode and receive
Blenz Coffee in Vancouver, British Columbia, used Twitter Search activity to locate people
Shane Gibson, “Three Tools for Hyper-local Social Media Marketing,” Entrepreneur,
Aeropostale installed in-store iPad kiosks and launched a store app (see Rimma Kats,
“Aeropostale Amplifies M-Commerce Efforts with New App, In-Store iPad Kiosk
6.10. Do manufacturers use SoLoMo? Find examples of or make suggestions as to how
manufacturers can use this type of targeting. (AACSB: Communication; Reflective
Thinking)
Answer:
Students’ answers will vary. An interesting infographic is available at Irfan Ahmad, “How
Non-Sexy Businesses Rock On Social Media,” socialmedia today, March 2, 2014, available
at:
Marketing Ethics: Unrealistic Bodies
With more than a third of American children and adolescents overweight, you would think that
Mattel’s slender Barbie doll would be a good role model for little girls. Not so, according to
some critics. If Barbie was a real woman, she would have less than 17 percent body fat, a neck
too thin to hold her head up, a waist too small to house a full liver and intestines, and ankles and
feet too tiny to walk. One group of researchers estimated the likelihood of a woman having
Barbie’s body at one in 100,000. Yet some women strive for impossible bodies, with more than
20 million suffering from eating disorders such as anorexia and bulimia. Other research has
shown that forty to sixty percent of preadolescent girls are concerned about their weight, and
almost 70 percent of elementary-aged girls who read magazines say the pictures of thin models
influence their perceptions of an ideal weight. Statistics like these cause consumer advocacy
groups such as the Campaign for a Commercial-Free Childhood (CCFC) to call for action,
especially when targeting young girls. For example, the CCFC is concerned about Mattel’s
Barbie Be Anything, Do Everything partnership with the Girl Scouts, in which Daisy and
Brownie scouts (that is, kindergarten through third-graders) can play an interactive game on the
Girl Scouts’ Web site and earn Barbie participation badges to wear on their uniforms.
6.11. Do you think it is wrong for Mattel and other doll manufacturers to market dolls with
unrealistic body proportions to young girls? Explain why you think that way. Discuss
other examples of marketers targeting females with unrealistic body concepts. (AACSB:
Communication; Ethical Reasoning)
Answer:
6.12. Give an example of a company that is countering this trend by offering more realistic
dolls for young girls. (AACSB: Communication; Reflective Thinking)
Answer:
One example that stands out is the American Girl company (www.americangirl.com), also a
Mattel brand. This company offers several dolls for girls 8-12 years old that are
Another example is Lammily, which is being touted as the “Normal Barbie.” Lammily’s
body is patterned after a typical 5 foot, 4 inch 19-year-old girl with a 33 inch waist. See
Marketing by the Numbers: USAA
USAA is a financial services company formed in 1922 by twenty-five Army officers who came
together to insure each other’s automobiles because they were deemed too high-risk to insure.
USAA now has almost 25,000 employees and more than 9 million member customers. It
consistently ranks in the top ten automobile insurance companies and offers other types of
insurance as well as banking, investment, retirement, and financial planning services. USAA
practices a niche marketing strategy—it targets only active and former military personnel and
their immediate families. Members earn the right to be customers by serving in the military and
can pass that on to their spouses and children. The company was originally even more restrictive,
targeting only military officers. However, in 1996, eligibility was extended to enlisted personnel
and is now extended to anyone who served and was honorably discharged from the military and
their immediate family members. The potential market represents all active duty military
members, all veterans, and their families. According to the United States Department of Defense,
as of December 31, 2014 there were 1,361,755 active duty personnel in all armed services. The
veteran population totaled 21 million at the end of 2014.
6.13. Assuming the average cost of life insurance is $700 per year and that potential customers
purchase one policy per year, use the chain ratio method described in Appendix 3:
Marketing By The Numbers to calculate the market potential for life insurance in the
military market.
Answer:
The chain-ratio method described in Appendix 3 for estimating total market demand uses
three variables:
a) number of prospective buyers
Market demand can be determined as follows:
Q = n q p
where
Q = total market demand
n = number of buyers in the market
q = quantity purchased by an average buyer per year
p = price of an average unit
The potential buyers represent all active duty military members plus all veterans and their
families. However, just using the number of active duty and veterans as the number of buyers,
the market potential is calculated as follows:
Thus, using the total number of active military and veterans, the market potential for life
insurance is almost $16 billion per year. The market potential is even larger if family members,
such as spouses, are counted in the total number of potential buyers.
6.14. Discuss the factors used to evaluate the usefulness of the military segment. (AACSB:
Communication; Reflective Thinking)
Answer:
To be useful, market segments must be:
Measurable: The size, purchasing power, and profiles of the segments can be measured.
The number of activity duty military members and veterans is measured and can be
obtained through public information such as the Bureau of Labor Statistics and the
Veterans Administration.