978-0134292663 Chapter 7 Solution Manual

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Chapter 7: Segmentation, Target Marketing, and Positioning

IV. END-OF-CHAPTER ANSWER GUIDE

Chapter Questions and Activities

CONCEPTS: TEST YOUR KNOWLEDGE

7-1 What is market fragmentation, and what are its consequences for marketers?

7-2 What is a target marketing strategy?

7-3 What is market segmentation, and why is it an important strategy in today’s marketplace?

Market segmentation is a process whereby marketers divide a large customer group into

7-4 List and explain the major demographic characteristics frequently used in segmenting

consumer markets.

Chapter 7: Segmentation, Target Marketing, and Positioning

Income and social class: the distribution of wealth has great interest to marketers

Race and ethnicity: membership in the various racial and ethnic groups within our

Geography: though not as dynamic as the other categories, geography does affect

7-5 Explain the process of consumer psychographic segmentation.

7-6 What is behavioral segmentation?

7-7 What are some of the ways marketers segment B2B markets?

7-8 List the criteria marketers use to determine whether a segment may be a good candidate for

targeting.

Chapter 7: Segmentation, Target Marketing, and Positioning

7-9 Explain the differences between undifferentiated, differentiated, concentrated, and customized

marketing strategies. What is mass customization?

Strategies include:

Undifferentiated marketing strategy: a marketing strategy that (1) assumes the majority

7-10 What is product positioning?

7-11 What do marketers mean by creating a brand personality? What examples can you come up

with of uses of brand anthropomorphism?

7-12 How do marketers use perceptual maps to help them develop effective positioning strategies?

 ACTIVITIES: APPLY WHAT YOU’VE LEARNED

Chapter 7: Segmentation, Target Marketing, and Positioning

7-13 Creative Homework/Short Project You are an entrepreneur who is designing a new line of

boutique hotels located along Florida’s coastlines. Each of the 75 guest rooms in each hotel

will offer upscale decor, Wi-Fi, and iPod docks for a nightly rate of $299. The hotels will

have a spa, an on-site restaurant and a separate full-service bar that features local musicians.

Describe in detail the demographics—age, gender, family life cycle, income and social class,

ethnicity, and place of residence—of your target customer.

. MyMarketingLab for answers to Assisted Graded Questions

7-14 Creative Homework/Short Project As the marketing director for a company that is planning

to enter the B2B market for photocopy machines, you are attempting to develop an overall

marketing strategy. You have considered the possibility of using mass-marketing,

concentrated marketing, differentiated marketing, and custom marketing strategies.

7-15 In Class, 10–25 Minutes for Teams To better market the university to potential students, you

and your classmates have been asked to create a segment profile of the typical college

student at your school. Write up a descriptive segment profile, or “persona,” of the targeted

consumer. Share your description with the class.

7-16 In Class, 10–25 Minutes for Teams As an account executive for a marketing consulting firm,

your newest client is a university—your university. You have been asked to develop a

positioning strategy for the university. With your team, develop an outline of your ideas,

including the following:

a. Who are your competitors?

b. What are the competitors’ positions?

c. What target markets are most attractive to the university?

d. How will you position the university for those segments relative to the

competition?

Chapter 7: Segmentation, Target Marketing, and Positioning

7-17 For Further Research (Individual): A geographic information system (GIS) combines a

geographic map with digitally stored data about the consumers in a particular geographic

area. Using the web, find an example or case study of a business or nonprofit that is using a

GIS such as Google Earth to generate market information by location. Write a short summary

of this example or case study and present this summary to your class.

7-18 For Further Research (Individual) Select any consumer packaged goods company’s

product has been around for at least two decades and find at least five print advertisements from

throughout that time frame. From the marketing communication content, how has the product’s

target customers and positioning changed over time and why do you believe these changes have

occurred? If the product’s target customers or positioning have not changed, what might explain

the product’s ability remains the same in its targeting and positioning?

7-19 Creative Homework/Short Project Imagine you are the marketing director for a new soft

drink brand called Verve and that you have been charged with determining what kind of brand

personality the product should have in order for it to have broad appeal with members of

Generation Z. Describe the desired brand personality and identify specific elements of the

marketing mix (product, place, price, promotion) that should be implemented to assist in

establishing the desired brand personality.

 APPLYING MARKETING METRICS

When it comes to metrics, good data about the characteristics of the various consumer

segments that you may wish to ultimately target is critical because target marketing is

ultimately a strategic investment of resources in the segments that appear to have the best

return on investment. In this chapter, you learned that VALSTM is a well-known approach to

psychographic segmentation.

Chapter 7: Segmentation, Target Marketing, and Positioning

7-20 To make the power of the psychographic technique and resulting information for decision

making come alive, let’s find out your own VALSTM category.

a. Go to the VALSTM website (either Google it or go directly to

www.strategicbusinessinsights.com

b. Click on “Take the VALSTM Survey.” Complete all the questions and click

SUBMIT to view your results.

c. What is your VALSTM type? Review the information on the website that describes

it (found under the tabs About VALSTM/VALSTM Types) along with the other

VALSTM types.

d. What is your reaction to learning your own VALSTM type? Are you surprised with

the result or was it what consistent with what you would have expected? Why or

why not?

e. What insights does the knowledge of your VALSTM type provide relative to your

own consumer behavior?

MyMarketingLab for answers to Assisted Graded Questions

CHOICES: WHAT DO YOU THINK?

7-21 Ethics Some critics of marketing have suggested that market segmentation and target

marketing lead to an unnecessary proliferation of product choices that wastes valuable

resources. These critics suggest that if marketers didn’t create so many different product

choices, there would be more resources to feed the hungry and house the homeless and

provide for the needs of people around the globe. Are the results of segmentation and target

marketing harmful or beneficial to society as a whole? Should firms be concerned about

these criticisms? Why or why not?

7-22 Critical Thinking One of the criteria for a usable market segment is its size. This chapter

suggested that to be usable, a segment must be large enough to be profitable now and in the

future and that some very small segments get ignored because they can never be profitable. So

how large should a segment be? How do you think a firm should go about determining if a

segment is profitable? Have technological advances made it possible for smaller segments to

be profitable? Do firms ever have a moral or ethical obligation to develop products for small,

unprofitable segments? When?

Chapter 7: Segmentation, Target Marketing, and Positioning

7-23 Ethics Marketers are in business to make a profit, but they also have an ethical obligation not

to take advantage of consumers, especially disadvantaged consumers like those at the bottom

of the pyramid. Would you consider it ethical to sell mosquito nets in Africa to prevent the

spread of malaria? Would you consider it ethical to sell Coca-Cola or Pepsi to consumers in

rural India? Why or why not? Is there a line between what is ethical to sell and what is not?

How would you describe that line?

7-24 Critical Thinking Sometimes marketers will develop strategies to target multiple social

class segments with the same product by offering it at different prices. What are some examples

of products or brands that use this strategy and how do they accomplish it? Are there any

potential risks to taking this approach with specific products or brands and what might make

some products or brands more susceptible to these kinds of risks?

7-25 Critical Thinking In this chapter, you learned about the use of geotargeting and its

capability to more precisely provide consumers with benefits such as promotions that are

especially relevant and impactful to a particular group. Could geotargetting backfire for a

company? What might be some examples where geotargetting has negative reactions or

onsequences and what might be the impact on the company’s image?

7-26 Critical Thinking A few years ago, Anheuser-Busch Inc. created a new division dedicated to

marketing to Hispanics and announced it would boost its ad spending in Hispanic media by

two-thirds to more than $60 million, while Miller Brewing Co. signed a $100 million,

Chapter 7: Segmentation, Target Marketing, and Positioning

three-year ad package with Spanish-language broadcaster Univision. But Hispanic activists

immediately raised public health concerns about the beer ad blitz on the grounds that it

targets a population that skews young and is disproportionately likely to abuse alcohol.

Surveys of Hispanic youth show that they are much more likely to drink alcohol, get drunk,

and engage in binge drinking than their white or black peers. A senior executive at

Anheuser-Busch responded, “We would disagree with anyone who suggests beer billboards

increase abuse among Latino or other minority communities. It would be poor business for us

in today’s world to ignore what is the fastest-growing segment of our population.”

a. Manufacturers of alcohol and tobacco products have been criticized for targeting

unwholesome products to certain segments of the market—the aged, ethnic minorities,

the disabled, and others. Do you view this as a problem? Should a firm use different

criteria in targeting such groups? Should the government oversee and control such

marketing activities?

7-27 Ethics Gamification was discussed in Chapter 6. For specific segments of a market, a

gamification approach might help elicit a desired behavior from consumers, and of course in

many cases the desired behavior is an increase in consumption of the related product. When a

product is generally associated with potential health problems if consumed in large quantities

(e.g., alcohol, sugar), should a marketer be allowed to engage the consumer in gamification

activities or similar “fun” approaches that encourage or induce excessive consumption of the

product?

7-28 Critical Thinking Marketers commonly ask celebrities to endorse products, but tying a

brand to a celebrity can come with risks if that celebrity falls out of favor with the public as the

result of a something they do or say that is perceived negatively. How would you determine if the

signing of a celebrity to an endorsement deal is worth the risk? What would you want to know to

make that determination and reduce the risk potential? Students can engage in a lively debate on

the pros and cons of tying celebrities to a brand.

MINIPROJECT: LEARN BY DOING

This miniproject will help you to develop a better understanding of how firms make target

marketing decisions. The project focuses on the market for men’s athletic shoes.

a. Gather ideas about different dimensions useful for segmenting the men’s athletic shoes

market. You may use your own ideas, but you probably will also want to examine advertising

and other marketing communications developed by different athletic shoe brands.

Chapter 7: Segmentation, Target Marketing, and Positioning

b. Based on the dimensions for market segmentation that you have identified, develop a

questionnaire and conduct a survey of consumers. You will have to decide which questions

should be asked and which consumers should be surveyed.

c. Analyze the data from your research and identify the different potential segments.

d. Develop segment profiles that describe each potential segment.

e. Generate several ideas for how the marketing strategy might be different for each segment

based on the profiles.

f. Define your competitive advantage.

7-29 Develop a presentation (or write a report) outlining your ideas, your research, your findings, and

your marketing strategy recommendations.

There are five specific questions individuals or marketing teams are asked to review: 1.

Different dimensions of segmenting the athletic shoes market: 2. Develop a questionnaire and

conduct a survey of consumers 3. Analyze data and identify potential segments 4. Develop

segment profiles that describe each potential segment, 5. Generate ideas on how marketing

strategy might be applied to each segment based on profiles.

Students (or student teams) should research this industry carefully before proceeding with the

mini-project. Before conducting any human subject research, students or teams should

familiarize themselves with the rules for interviewing and conducting research (see any

appropriate university or college guidelines).

Instructors may wish to extend the deadline for this assignment so students have many

opportunities to conduct the research and report the findings.

V. MARKETING IN ACTION CASE: REAL CHOICES AT

SPRIG

Summary of Case

Sprig is an on-demand delivery restaurant that offers balanced meals which are fully prepared

and delivered in 15 to 20 minutes. The company focuses on using the freshest ingredients to

create innovatively delicious food that supports a healthy lifestyle. Sprig gives the

health-conscious consumer better choices without compromising speed or convenience.

The on-demand delivery segment of the restaurant industry is developing. Munchery delivers

fresh, food entrees, sides, desserts, drinks, and kids’ meals in San Francisco, New York, Los

Angeles, and Seattle, delivered with directions on how to successfully complete a dish.

Postmates operates a network of local couriers to deliver meals through a service called Pop that

delivers in 15 minutes. Even Uber is in the market with Ubereats, its own on-demand meal

delivery service

So what’s next for Sprig? Are they on the right track targeting only the smaller health-conscious

segment of on-demand delivery? The on-demand delivery market is expected to experience a

shake-out among competitors with only a few competitors remaining. How does Sprig become

one of those few that survives?

Suggestions for Presentation

This case could be assigned for various out-of-class or in-class discussion activities.

Out-of-Class

Research Sprig via their website. Identify their current positioning and describe how they have

implemented the strategy.

Chapter 7: Segmentation, Target Marketing, and Positioning

Evaluate if there are expansion opportunities for the on-demand delivery segment of the healthy

food restaurant industry.

In-Class

Companies with competing interests in this market include Uber, Munchery, and Postmates.

Evaluate each of their strengths and weaknesses.

Discuss how targeted marketing can help identify the market segment that would be interested in

this market.

Conduct a brainstorming session to identify the key characteristics of potential customers that

would seek Sprig’s products.

You Make the Call

7-30 What is the decision facing Sprig?

Students may come up with a number of different decisions that Sprig might make such as:

7-31 What factors are important in understanding this decision situation?

The following factors are important in understand this decision situation:

What customer development strategies should Sprig use in increase market share?

Should Sprig use geotargeting to identify potential customers?

7-32 What are the alternatives?

Students might recommend a variety of different marketing strategies. Some possibilities are:

Conduct research to evaluate how Sprig is positioned against other competitors in the

on-demand restaurant industry.

7-33 What decision(s) do you recommend?

7-34 What are some ways to implement your recommendations?

 MYMARKETINGLAB

Chapter 7: Segmentation, Target Marketing, and Positioning

www.mymktlab.com for Auto-graded writing questions as well as the following assisted-graded

writing questions:

7-35 Creative Homework/Short Project Assume that a small regional microbrewery has hired you

to help them with their target marketing. They are pretty unsophisticated about marketing—you

will need to explain some things to them and provide ideas for their future. In the past, the

microbrewery has simply produced and sold a single beer brand to the entire market—a

mass-marketing strategy. As you begin work, you come to believe that the firm could be more

successful if it developed a target marketing strategy. Write a memo to the owner outlining the

following:

a. The basic reasons for doing target marketing in the first place

b. The specific advantages of a target marketing strategy for the microbrewery

c. An initial “short list” of possible target segment profiles

7-36 Creative Homework/Short Project You have been a contributing author to several

marketing newsletters, and you have been asked to submit a one-page article on market