978-1337116800 Chapter 8 Solution Manual Part 2

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Chapter 8: Segmenting and Targeting Markets

Students Practice Making Market/Product Grids On Themselves

This in-class project has students use a segmentation scheme that they have already studied. This

could include the following:

• VALS

• Lifestyle

• Price sensitivity

• Quality sensitivity

• Attributes/features desired

• Involvement

• Demographics

• Geographic region

• Product usage (heavy vs. light users)

If students wish to use VALS, I instruct them ahead of time to get on the Internet and access the

VALS survey online so that they can determine their type.

On the day when we do this exercise, students form groups of five to eight persons. The group is

instructed to pick a product category. I recommend the following categories to them as items

they might be familiar with the following:

• Automobiles (cars, trucks, suvs, etc.)

• Athletic shoes

• Recreational products (sports equipment, hiking gear, etc.)

• Entertainment products (movies, CDs, etc.)

• Food (packaged, grocery, or restaurants)

• Computer software/hardware

• Clothing

Students then have to describe which market segments are represented in their group according

to the segmentation scheme(s) they chose to use. They must also develop a market/product grid

to describe how to target different products (within their chosen category) toward the different

market segments represented within their group. The product positions can be for existing

products or imagined products (especially if no existing product fits a position they want).

Students must discuss the general overall “position” of the product and, for fantasy products,

how they would accomplish that positioning. For example, if they want to position an athletic

shoe as a “performance” (overall position) shoe, they might show advertisements with sports

professionals using the shoe under demanding circumstances. To get credit on the exercise,

Chapter 8: Segmenting and Targeting Markets

students must write up a complete market/product grid with their accompanying notes. Some of

the groups present their solution to the class.

This exercise quickly shows students the limitations of using only demographics to describe their

customers and clarifies the process of segmentation and positioning for them.

Ethics Exercise

Tobacco companies are frequently criticized for targeting potential customers below the legal

age to purchase and use their products. Critics cite Joe Camel and the Marlboro man as images

meant to make smoking appealing to young people. If tobacco companies are actually following

this particular demographic targeting strategy, most would agree that it is unethical if not illegal.

1. Is marketing tobacco products to younger consumers unethical?

Students’ answers will vary. Marketing tobacco products to younger consumers is

2. Many are beginning to argue that fast-food companies, such as McDonald’s and

Burger King, are knowingly marketing unhealthy food to consumers. Is it unethical

for fast-food companies to market kids’ meals to children?

Students’ answers will vary. Marketing fast food to children is becoming an increasingly

3. What does the AMA Statement of Ethics have to say about marketing unhealthy or

harmful products to consumers, particularly children and young adults? Go to the

AMA website at http://www.marketingpower.com to review the statement. Write a

brief paragraph summarizing where the AMA stands on this important issue.

Students’ answers will vary. The first rule mentioned in the AMA Statement of Ethics is

this: The marketer must not knowingly do harm. Additionally, the statement says that in

the area of product development, the marketer must disclose all substantial risks associated

Chapter 8: Segmenting and Targeting Markets

with product or service usage. In the past, however, even providing specific operating

instructions or instructions for use and clearly marking the product with warning labels has

not been enough to indemnify some companies in various lawsuits. Furthermore,

“unhealthy” can be a question of degree. For example, if someone eats at McDonald’s once

a month, it probably won’t detrimentally affect the person’s overall health. If, however,

someone eats there once a day, the person will probably experience obesity, hypertension,

and other health problems related to high consumption of fatty foods. To further

complicate matters, some people may consider some products healthy that others do not.

For example, most people consider meat a healthy source of complex proteins for brain and

muscle development; vegetarians disagree, finding meat to be an unhealthy source of fats

and fatty acids that are difficult for the body to digest.

In the area of marketing to adults, the question remains: Who should be responsible for

regulating the behavior—the person consuming the cigarettes or the fast food, or an

external body such as the government or industry trade association? As for the aggressive

marketing of unhealthy products to children, the practice could definitely be considered

irresponsible and unethical. (Consider having students discuss this issue in detail, and

make a list of pros and cons on the board as students raise various arguments.)

Video Assignment: Numi Organic Tea

1. Jen Mullin, the vice president of Marketing for Numi Organic Tea, describes their typical

customer as a female, college-educated tea lover, possibly an “eco-mom.” What type of

market segmentation has she used to identify this customer group?

a. Geographic segmentation

b. Demographic segmentation

c. Ethnic segmentation

d. Psychographic segmentation

2. Another way Numi Organic Tea identifies potential customers is through what they want

from the product; they are looking for organic, fair-trade, premium quality tea, according

to the video. What type of market segmentation is used to identify customers in this way?

a. Geographic segmentation

b. Demographic segmentation

c. Benefit segmentation

d. Usage-rate segmentation

Chapter 8: Segmenting and Targeting Markets

3. True or False? Numi’s marketing plan includes providing opportunities for potential

customers to sample their teas rather than the more traditional print and television

advertising. Using this method, Numi wants to get samples of their tea to a wide variety of

different types of consumers, to attract new customers from many different groups.

4. Because Numi Organic Tea has identified more than one target market, for example, “eco–

moms,” college students, and family travelers, they should be particularly aware of the

_____, which helps explain how consumption patterns differ at different stages determined

by a combination of age, marital status, and the presence or absence of children.

a. family life cycle

b. 80/20 principle

c. undifferentiated targeting strategy

d. concentrated targeting strategy

5. True or False? When Jen Mullin explains that her company’s tea is sought after as a

product to include in gift bags and other promotional giveaways by companies and other

organizations, she is recognizing the companies who ask Numi to provide tea samples as

optimizers.

6. Mullin talks about _____ the Numi brand, developing a specific marketing mix that will

influence potential customers’ overall perception of the brand, by targeting natural health

Chapter 8: Segmenting and Targeting Markets

food stores, university coffee shops, and fine dining establishments.

a. segmenting

b. satisficing

c. optimizing

d. positioning

7. True or False? To graphically map the “channel conflict” between marketing Numi Tea to

premium spas, hotels, and restaurants and selling the same brand at mass market stores

such as Target, the company could employ perceptual mapping.

8. The demographic variable that Numi Tea marketers were examining when they recognized

that people who had discovered their product at a high-end spa or fine restaurant often

shopped for groceries at Costco was _____.

a. age

b. income

c. ethnicity

d. gender

9. Numi Tea uses premium ingredients to create a premium tea at an affordable price,

according to Jen Mullin. This is a form of _____ that the company uses to distinguish their

products from those of competitors.

a. perceptual mapping

b. one-to-one marketing

c. product differentiation

d. market segmentation

10. Which of the following is the least likely targeting strategy that Numi Tea would select to

market their products?

a. Undifferentiated targeting

b. Concentrated targeting

c. Multisegment targeting

d. Customized targeting

Case Assignment: CEC Entertainment, Inc (Chuck E. Cheese’s)

For more than 35 years, Chuck E. Cheese’s has been one of the nation’s go-to venues for

children’s birthday parties and rainy afternoon outings. Operating under the slogan “Where a kid

can be a kid,” there are more than 575 Chuck E. Cheese’s locations in 47 states and 10 foreign

countries or territories. Their goal is to provide a fun and safe environment for children to play

and families to create memories, but in 2015 Chuck E. Cheese’s made improvements not for the

children, but for the parents.

“Your average kid who comes to Chuck E. wants to come 11 times a year; they come three

times a year. The difference between that and the 11 times a year they want to come is the mom

and dad veto,” said Tom Leverton, CEO of CEC Entertainment, Inc. “What we’ve been doing

over the past couple of years especially is trying to address the mom and dad needs.”

To that end, Chuck E. Cheese’s expanded their menu to include items geared to more

advanced culinary tastes. Two new signature pizzas have been added to the lineup. The Cali

Alfredo pizza is made with Alfredo sauce, fresh spinach, freshly grated mozzarella, chicken,

sliced mushrooms, and sausage. The BBQ Chicken Pizza features a smoky BBQ sauce topped

with strips of roasted chicken breast, red onions, green peppers, and crispy onions. In a blind

taste test of 308 respondents, 59 percent preferred thin and crispy Chuck E. Cheese’s pizza to

Pizza Hut and Dominos combined.

The expanded menu also features Caesar and Club whole-wheat wraps, BBQ Chicken

Ciabatta sandwiches, BBQ and Sweet Chili boneless and bone-in chicken wings, soft parmesan

breadsticks, and Buffalo Chicken cheesy bread. Wraps and sandwiches are served with choice of

Chapter 8: Segmenting and Targeting Markets

fresh fruit, oven-baked French fries, or carrot slims with lite ranch dressing. They also added

dessert churros served with salted caramel and white chocolate icing.

TRUE/FALSE

Chapter 8: Segmenting and Targeting Markets

1. Parents with children under 10 are a market segment.

2. The purpose of market segmentation is to enable the marketer to tailor marketing mixes to

meet the needs of one or more specific segments.

3. Chuck E. Cheese’s new commercials are focused to a target market based on geographic

segmentation.

4. Chuck E. Cheese’s does not make an attempt to target people in certain parts of the FLC.

5. Chuck E. Cheese’s new BBQ Chicken pizza will cannibalize Domino’s BBQ Chicken pizza.

MULTIPLE CHOICE

1. Which of the following is NOT a demographic often used for segmentation?

a. age

b. income

c. ethnicity

d. gender

Chapter 8: Segmenting and Targeting Markets

e. All of these are demographics often used.

2. Chuck E. Cheese’s new commercial uses a(n) __________ targeting strategy.

a. concentrated

b. multisegment

c. undifferentiated

d. None of these

3. Which of the following is NOT a trend that will lead to continuing growth of CRM?

a. loyalty

b. standardization

c. time saving

d. technology

4. Chuck E. Cheese’s is __________ itself to compete with pizza chains popular among adults.

a. positioning

b. targeting

c. differentiating

d. concentrating

5. Which of the following was NOT one of the changes made by Chuck E. Cheese’s in an

attempt to target the segment with a low usage-rate?

a. updating their menu to include more adult-friendly options

b. introducing a lunchtime all-you-can-eat buffet

c. adding an “adult’s night” for 18+ customers who do not have children

d. testing half-priced games on Tuesday evenings

Chapter 8: Segmenting and Targeting Markets

PTS: 1 OBJ: LO: 8-4 TOP: AACSB: Reflective Thinking

KEY: CB&E Model: Strategy MSC: BLOOMS: Level I Knowledge

Great Ideas for Teaching Chapter 8

James S. Cleveland, Sage College of Albany

Discussion Board Topics to Encourage Participation

Discussion board questions provided to students to encourage them to engage in thinking and

writing about the content of the Principles of Marketing course usually take the form of a

provocative statement to which students are asked to respond. An example of this would be “All

PR is good PR.”

Discussion topics such as this one are abstract and often require that the instructor provide an

initial reply to show students what is expected of them in their own replies. For students with

limited work experience, this approach may be quite appropriate. For adult students with

extensive experience as employees and consumers, however, the abstract nature of such topics

can be frustrating.

I have developed, therefore, a series of discussion board questions to use with experienced, adult

students. These questions are designed to encourage them to use their experiences as employees

and consumers as doorways to better understand the course material, and to make their own

responses more interesting to themselves and to the other students in the class who will read and

comment on them.

Each question has three parts.

1. First, there is a sentence or two from the students’ textbooks introducing the topic. By

using the text author’s own words, students are enabled to locate relevant material in the

text more easily, the text content is reinforced, and confusion resulting from use of variant

terms or expressions is minimized.

2. Second, there is a reference to text pages the students should review before proceeding.

Since the goal of the exercise is for students to apply the course content to their own

experiences, reviewing the content first is important.

3. Third, there is a request for the students to think about or remember some specific situation

in their experience to which they can apply the text material, and a question or questions

for them to address in their replies.

Here are additional similar discussion board questions developed for Chapter 8 of MKTG11.

Each is written to fit the same text cited above but could easily be rewritten and revised to fit

Chapter 8: Segmenting and Targeting Markets

another text.

Series A

1. Marketers use segmentation bases, or variables, which are characteristics of individuals,

groups, or organizations, to divide a total market into segments.

2. Review the five general segmentation bases in section 8-4 of your text.

3. Then describe what base or bases your employer uses to segment its market. Be as specific

as you can. For example, a company selling women’s clothes is obviously segmented by

gender, but it probably also segments by age or profession as well.

Series B

1. The development of any marketing mix depends on positioning, a process that influences

potential customers’ overall perception of a brand, product line, or organization in general.

Position is the place a product, brand, or group of products occupies in consumers’ minds

relative to competing offering.

2. Review positioning in section 8-9 of your text.

3. Then describe the position of the products marketed by your employer. Do you think this is

a good position? Why, or why not?

Barbara Coleman, Augusta College

Unity in Diversity

Whenever I teach a unit on multiculturalism, I begin with the following exercise. Sometimes it

uncovers interesting differences based on gender or ethnicity, but just as often it identifies

common values and lifestyle characteristics.

Note your race, ethnic group, or country of origin:

_____Male

_____Female

What is your favorite

television program:

radio station:

leisure activity:

food:

drink:

restaurant:

Chapter 8: Segmenting and Targeting Markets

What do you see yourself doing five years from now?

What is your attitude toward marriage and children?

After this form is completed, students discuss it in class. You may also use small group

discussions first and then general class presentations or discussions.

Marcel L. Berard, Community College of Rhode Island

Marketing Starts with Segmenting, Targeting, and Positioning (STP)

This project should be started at the beginning of the semester so as to provide students

immediately with a target date for oral and written completion. It is highly recommended that

this project start early and finish toward the end of the semester utilizing a team approach. Team

members should not exceed five students to each group—two, three, or four are preferred. A

professor may want to choose and assign students in particular groups, or students may choose

members. Also, professors might provide class or library research time to complete the project,

although most work will be completed out of class. A final note to the professor: Contingent on

semester duration, the required marketing strategy project outline can be lengthened or shortened

with no loss of importance to the marketing plan.

Students’ Product Instructions and Outline

(Students must choose only one topic below!)

Marketing Strategy Project STP choice topics:

#1—New Musical Group

#2—New Feature Movie

#3—New Television Show

Note to Students: Conduct a “Brainstorming” session in which your group chooses a topic from

those listed above. In your session, you should answer all statements and questions in all three

sections of the Marketing Strategy Project outline below. Good luck!

Marketing Strategy Project Outline

Section #1. Segmenting Your Product Market

a. Current product identification and information (name, location, size logo, symbols,

insignias, models, etc.)

b. Product’s philosophy, climate, and culture (mission statement)

Chapter 8: Segmenting and Targeting Markets

c. Short- and long-term goals

d. Demographics (age, sex, income, occupation, lifestyle factors, activities, interest, values,

etc.)

e. Present market size (Where are your customers—percentage of market you want to

capture—and why?)

f. How to increase market share (describe your market growth potential)

Section #2. Targeting Your Product Market

a. Primary target market (main consuming group)

b. Secondary target market (additional sales potential)

c. Product life cycle (changes through the stages)

d. Supply five different and potential promotional vehicles.

e. Advertising detail schedules

f. How are you going to generate publicity?

Section #3. Positioning Your Product Market

a. What is special about this product?

b. List and describe its features and benefits.

c. Explain the image and character you would like your customer to see.

d. Describe and provide your three closest competitors’ activities.

e. Analyze your product’s opportunities and threats in the market.

Reminder: Marketing strategy starts with “STP”!