120 Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning
CHAPTER QUIZ
1. Miller Brewing does not consider teenagers to be a part of the beer market because they lack the
___________ to buy beer.
a. money
b. desire
c. interest
d. authority
e. willingness
2. Soft Shave is a shaving cream aimed primarily at women. The activities and decisions involved in
developing and maintaining Soft Shave’s product concept in buyers’ minds are called
a. the product mix.
b. the product life cycle.
c. product positioning.
d. product promotion.
e. product development.
3. If a company markets its products to different countries, it is using a(n) ______ targeting strategy to
segment the total market.
4. Occupation, family size, and family life cycle are all ______ variables for segmenting consumer
markets.
a. behavioristic
b. demographic
c. geographic
d. psychographic
e. usage
Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning 121
ANSWERS TO DISCUSSION AND REVIEW QUESTIONS
1. What is a market? What are the requirements for a market?
A market is a group of people who, as individuals and/or organizations, have needs for products in a
2. In your local area, identify a group of people with unsatisfied product needs who represent a
market. Could this market be reached by a business organization? Why or why not?
3. Outline the five major steps in the target market selection process.
Although marketers may use various methods for selecting a target market, they commonly use a
five-step process. Step one is to identify the appropriate targeting strategy. The three basic strategies
4. What is an undifferentiated strategy? Under what conditions is it most useful? Describe a
present market situation in which a company is using an undifferentiated strategy. Is the
business successful? Why or why not?
When an organization designs a single marketing mix and directs it at the entire market for a
5. What is market segmentation? Describe the basic conditions required for effective
segmentation. Identify several firms which use market segmentation.
In market segmentation, a) the total market is divided into groups consisting of people with
122 Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning
6. List the differences between concentrated and differentiated strategies, and describe the
advantages and disadvantages of each.
The main difference between the concentrated strategy and the differentiated strategy of market
segmentation is that the concentrated strategy directs marketing efforts toward a single market
segment using one marketing mix, whereas the differentiated strategy directs marketing efforts at
7. Identify and describe four major categories of variables which can be used to segment
consumer markets. Give examples of product markets segmented by variables in each
category.
The four major categories of market segmentation variables are demographic, geographic,
psychographic, and behavioristic.
• Demographic variables include such items as gender, age, income, and marital status. These
types of variables are frequently used because they are measurable and closely related to
8. What dimensions are used to segment business markets?
Business markets may be segmented according to geography, type of organization, customer size,
and product use.
9. Define geodemographic segmentation. Identify several types of firms that might employ this
type of market segmentation, and explain why.
A type of demographic segmentation, geodemographic segmentation groups people in ZIP codes or
smaller neighborhood units based on income, education, occupation, type of housing, ethnicity,
Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning 123
10. What is a market segment profile? Why is it an important step in the target market selection
process?
A market segment profile describes similarities among potential customers within a segment and
11. Describe the important factors marketers should analyze to evaluate market segments.
After identifying several appropriate potential market segments, marketers further evaluate to
eliminate some from continued attention. Three factors marketers analyze for each segment are:
sales estimates, competition, and estimated costs. Potential sales can be estimated with respect to
12. Why is a marketer concerned about sales potential when trying to select a target market?
Sales potential is important to a marketer because the firm incurs a certain cost in developing and
13. Why is selecting appropriate target markets important to an organization that wants to adopt
the marketing concept philosophy?
According to the marketing concept philosophy, an organization should attempt to provide products
124 Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning
14. What is a sales forecast? Why is it important?
The sales forecast is the amount of a product a company expects to sell throughout a period at a
155. What are the two primary types of surveys a company might use to forecast sales? Why would
a company use an outside expert forecasting survey?
The two primary types of surveys a company might use to forecast sales are the customer
forecasting survey and the sales force forecasting survey. In the first type, marketers ask customers
166. Under what conditions are market tests useful for sales forecasting? What are the advantages
and disadvantages of market tests?
Market tests are especially useful for testing new products because no previous sales history is
available for those products. In addition, market tests are useful if the test areas represent the entire
177. Under what conditions might a firm use multiple forecasting methods?
Most organizations use multiple sales forecasting methods. While all forecasting methods have
value, none are without drawbacks. Executive judgment is not necessarily objective. Customer
Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning 125
ANSWERS TO APPLICATION QUESTIONS
1. Cable channels such as Lifetime and Spike TV each target a specific market segment. Identify
another product marketed to a distinct target market. Describe the target market, and explain
how the marketing mix appeals specifically to that group.
2. Generally, marketers use one of three basic targeting strategies to focus on a target market:
undifferentiated, concentrated, or differentiated. Locate an article that discusses the target
market for a specific product. Describe the target market, and explain the targeting strategy
used to reach that target market.
article.
3. The car market may be segmented according to income and age. Discuss two ways the market
for each of the following products might be segmented.
a. Candy bars
4. If you were using a time series analysis to forecast sales for your company for the next year,
how would you use the following sets of sales figures?
a. The sales figures could be used for a trend analysis.
5. A new watch company has identified 5 main segments, using a combination of demographic,
psychographic, and behavioristic variables. Using the profiles in the textbook, develop a rating
scale of 1-5, with one as the best market segment and five as the least desirable. If you decided
to market a watch that was under $100 and would compete against lower-priced Swatch or
Timex watches, rate the attractiveness of each market based on these criteria. What will be the
unique features that will give your watch a competitive advantage?
Student answers will vary, but they should base their ratings on whether or not they plan to compete
126 Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning
ANSWERS TO INTERNET EXERCISE
iExplore
iExplore is an Internet company that offers a variety of travel and adventure products. Learn more about
its goods, services, and travel advice through its website at www.iexplore.com.
a. Based on the information provided at the website, what are some of iExplore’s basic products?
iExplore offers Travel Guides, Activity Guides, Travel Experiences, Lodging, and Travel Deals. The
b. What market segments does iExplore appear to be targeting with its website? What
segmentation variables is the company using to segment these markets?
c. How does iExplore appeal to comparison shoppers?
The company offers travel deals for shoppers looking to save money. The site also prominently
Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning 127
ANSWERS TO DEVELOPING YOUR MARKETING PLAN
The decisions and discussions of these dimensions should help you to answer some of the questions that
are a part of the online Interactive Marketing Plan exercise at www.cengagebrain.com.
1. What type of targeting strategy is being used for your product? Should a different
targeting strategy be employed?
At this point, students should feel prepared to become more targeted in their approach to their
2. Select and justify the segmentation variables that are most appropriate for segmenting the
market for your product. If your product is a consumer product, use Figure 6.3 for ideas
regarding the most appropriate segmentation variables. If your marketing plan focuses on a
business product, review the information in the section entitled “Variables for Segmenting
Business Markets.”
Students should then consider segmentation variables (that is, if the market is not totally
3. Discuss how your product should be positioned in the minds of customers in the target market
relative to the product positions of competitors.
128 Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning
COMMENTS ON THE CASES
VIDEO CASE 6.1: RALEIGH WHEELS OUT STEEL BICYCLE
MARKETING
Summary
This case discusses bicycle company Raleigh’s long history and its transition from being a company
known for its sturdy, high-quality product to a global brand catering to bicycle messengers and
commuters. Raleigh noted that many of its customers do not don special gear to go riding, but rather wear
their street clothes. In order to familiarize new markets with its bicycles, Raleigh brings samples to cities
around the world and lets people ride the bikes. Raleigh takes great strides to remain in touch with its
target market and to provide the products that customers want. It has even started to use high-technology
in marketing through maintaining a blog and a Twitter account.
Questions for Discussion
1. Of the four categories of variables, which is most important to Raleigh’s segmentation strategy,
and why?
According to the case, psychographic variables such as lifestyles are most important to Raleigh’s
2. How would you describe Raleigh’s positioning for its steel-frame bicycles?
In general, Raleigh seems to be positioning its steel-frame bicycles as sturdy, light, speedy, and fun to
3. Raleigh sells exclusively through retail dealers, not directly to consumers. How does this affect
its ability to segment the bicycle market using geographic variables?
Raleigh can select dealers in the geographic areas where consumers in its target market live or travel
Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning 129
CASE 6.2: IS THERE A TREK BICYCLE FOR EVERYBODY?
Summary
This case discusses a much younger bicycle company, Trek, which caters to world-class racing cyclists,
mountain bikers, and other serious bicyclists. Because it is a smaller brand, Trek focuses on the serious
and high-end market, turning out the very best products for the most serious athletes. Trek offers two
lines of bikes for people looking for a different ride feel, and it also has a line of bikes specifically fit for
Questions for Discussion
1. Is Trek using an undifferentiated, concentrated, or differentiated strategy for targeting?
How do you know?
Trek is using a differentiated strategy for targeting, because it has created a separate marketing
2. Identify the segmentation variables that Trek is applying to consumer markets. What
additional variables would you suggest that it apply, and why?
The two main variables that Trek applies to segment consumer markets are psychographic (such as
3. If marketers at Trek were trying to determine anticipated sales for a specific period, what
method of forecasting would they be using?
Trek would likely use a sales force forecasting survey, in which the firm’s salespeople estimate
130 Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning
STRATEGIC CASE 3: MARRIOTT GETTING DOWN TO BUSINESS
WITH BUSINESS TRAVELERS
Summary
This case discusses the challenges that Marriott faces in its mission to be a world leader amongst
hotels for business travelers. There are numerous Marriott brands, each of which serves a particular
market and has its own marketing position. Marriott employs extensive market research to determine
what it is customers want and to provide it for them. Marriott’s marketers have targeted a group they
dub “achievers,” who are businesspeople who seek to get a lot done in little time. Marriott has geared
its advertising around this group. Marriott also targets other groups, such as organizations that hold
conferences and large meetings, and green travelers. In order to gather and sort all of its research on
different types of customers, Marriott has a large database that captures details on its guests.
Questions for Discussion
1. How is Marriott segmenting the market for hotel services?
Marriott is segmenting the hotel–services market based on geographic variables (country location,
2. Which of the three targeting strategies is Marriott using? Explain your answer.
Marriott appears to be using a differentiated targeting strategy. It is targeting a number of
3. As Marriott builds more green hotels, should it reposition its hotel brands as being
environmentally friendly? Why or why not?
Students who believe that Marriott should reposition its hotel brands with an emphasis on
4. What specific types of data should Marriott have in its customer database for segmentation
purposes?
Marriott should have each customer’s name, e-mail address, gender, and company affiliation (if
Chapter 6: Target Markets: Segmentation, Evaluation, and Positioning 131
INSTRUCTIONS FOR ROLE-PLAY TEAM CASE
ROLE-PLAY TEAM CASE EXERCISE 3: SEASCAPE
COMMUNICATIONS
This role-play team case exercise is designed to simulate actual marketing decision making in the real
world. Students take on assigned roles and then participate in a team discussion of the case.
Preparation
Break the class into teams of 5. The entire team should read the Background section.
Each student will take on a role of a particular employee within the organization. Even though all of the
roles are printed in the textbook, each student should focus on only his/her assigned role and represent
Team Meeting
Students should try to accurately represent the motivations and interests of their individual roles during a
team discussion (15-45 minutes depending on class activities). Teams should discuss each of the issues in
the case and complete any activities mentioned in the Background section.
The issues for Seascape Communications include:
• Seascape is facing increased competition from other smartphone companies, and t he Wave
This case will require students to complete the following activities:
• Use early findings from exploratory research to determine how to improve marketing
strategies.
Class Discussion (optional)
After the team meetings, instructors may choose to have teams discuss their findings and solutions
with the class. Students may also want to talk about some of the interpersonal dynamics in their
teams and their experiences as they worked toward a solution.