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Chapter 08 - Market Segmentation, Targeting, and Positioning
d. This strategy consisted of:
e. In most segmentation situations:
• A single product does not fit into an exclusive market niche.
MARKETING MATTERS
Technology: Apple’s Segmentation Strategy—Camp Runamok No Longer
[Video 8-3: Apple’s 1984 Super Bowl Ad]
F. Market-Product Synergies: A Balancing Act
• Recognizing opportunities for key synergies—efficiencies—is vital to success in
selecting target market segments and making marketing decisions.
• Synergy analysis:
• Market-product grids illustrate where such synergies can be found.
• Marketing synergies.
a. Run horizontally across the market-product grid.
d. Often comes at the expense of product synergies because:
Chapter 08 - Market Segmentation, Targeting, and Positioning
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
8-22
e. The firm saves money on marketing but spends more in production.
• Product/R&D-manufacturing synergies.
a. Run vertically down the market-product grid.
b. Each column represents an opportunity for efficiency in product research and
development (R&D) and manufacturing or production.
c. If product synergies are emphasized, marketing:
• Marketing managers must balance both product and marketing synergies as they
seek to increase profits by:
LEARNING REVIEW
8-5. What factor is estimated or measured for each of the cells in a market-product
grid?
8-6. What are some criteria used to decide which segments to choose for targets?
8-7. How are marketing and product synergies different in a market-product grid?
Answer: Marketing synergies run horizontally across a market-product grid. Each row
represents an opportunity for efficiency in the marketing efforts to a market segment.
Chapter 08 - Market Segmentation, Targeting, and Positioning
8-23
III. POSITIONING THE PRODUCT [LO 8-5]
• Product positioning refers to the place a product occupies in consumers’ minds on
important attributes relative to competitive products.
[ICA 8-2: 3M Post-it® Flag + Highlighter:
Product Positioning for Consumers and Retailers]
• Product repositioning involves changing the place a product occupies in a
consumer’s mind relative to competitive products.
A. Two Approaches to Product Positioning
• Head-to-head positioning involves competing directly with competitors on similar
B. Writing a Positioning Statement
• Marketing managers often convert their positioning ideas for an offering or a
brand into a succinctly written positioning statement.
• The positioning statement is used:
C. Product Positioning Using Perceptual Maps
• A key to positioning a product or brand effectively is discovering the perceptions
of its potential customers.
• Companies take four steps to determine its positioning in the minds of customers:
d. Reposition the company’s product or brand in the minds of potential
customers.
Chapter 08 - Market Segmentation, Targeting, and Positioning
• A perceptual map:
a. Is a means of displaying in two dimensions the location of products or brands
D. A Perceptual Map to Reposition Chocolate Milk for Adults
• [Figure 8-8] Recently, U.S. dairies decided to reposition chocolate milk in the
minds of American adults.
• The four steps dairies used to reposition chocolate milk for American adults:
a. Identify the important attributes (or scales) for adult drinks. Research reveals
the key attributes adults use to judge various drinks are:
b. Discover how adults see various competing drinks.
c. Discover how potential customers see chocolate milk. Adults see chocolate
milk as:
d. Reposition chocolate milk to make it more appealing to adults. Issue:
Which of the circled letters (A-F) in Figure 8-G should the dairies try to move
chocolate milk to reach adults and increase sales?
• [Figure 8-9] These are the marketing actions dairies implemented:
a. Dairies sought to move chocolate milk to the location of the “star.”
b. Chocolate milk sales increased dramatically because of adult consumption.
Chapter 08 - Market Segmentation, Targeting, and Positioning
8-25
LEARNING REVIEW
8-8. What is the difference between product positioning and product repositioning?
Answer: Product positioning refers to the place a product occupies in consumers’ minds
8-9. Why do marketers use perceptual maps in product positioning decisions?
Answer: Perceptual maps are a means of displaying in two dimensions the location of
Chapter 08 - Market Segmentation, Targeting, and Positioning
8-26
APPLYING MARKETING KNOWLEDGE
1. What variables might be used to segment these consumer markets? (a) lawn mowers,
(b) frozen dinners, (c) dry breakfast cereals and (d) soft drinks?
Answers:
a. Lawn mowers. Type (nonpowered, powered; walking, sitting, robotic; gas, electric);
lawn (area—square footage; kind—yard, field); or location (city, suburban, rural).
2. What variables might be used to segment these industrial markets? (a) industrial
sweepers, (b) photocopiers, (c) computerized production control systems, and
(d) car rental agencies?
Answers:
a. Industrial sweepers. Amount of floor area to sweep; kind of refuse to collect (dust,
paper, metal shavings); or environment (factory, shopping mall).
3. In Figure 8-6, the dormitory market segment includes students living in college-owned
residence halls, sororities, and fraternities. What market needs are common to these
students that justify combining them into a single segment in studying the market for
your Wendy’s restaurant?
Answer: Market needs common to students in college-owned residence halls, sororities,
Chapter 08 - Market Segmentation, Targeting, and Positioning
8-27
4. You may disagree with the estimates of market size given for the rows in the market-
product grid in Figure 8-6. Estimate the market size, and give a brief justification for
these market segments: (a) dormitory students, (b) day commuters, and (c) people
who work in the area.
Answers:
a. Dormitory students. Probably have a meal contract for breakfast, lunch, and/or dinner.
5. Suppose you want to increase revenues for your fast-food restaurant even further.
Referring to Figure 8-7, what advertising actions might you take to increase revenues
from (a) dormitory students, (b) dinners, and (c) after-dinner snacks from night
commuters?
Answers:
a. Dormitory students. Coupons under dorm doors promoting 50 cents off meals at
6. Locate these drinks on the perceptual map in Figure 8-8: (a) cappuccino, (b) beer, and
(c) soy milk?
Answers:
a. Cappuccino. Cappuccino is a frothy blend of coffee and milk. Given that coffee is
Chapter 08 - Market Segmentation, Targeting, and Positioning
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
8-28
Chapter 08 - Market Segmentation, Targeting, and Positioning
BUILDING YOUR MARKETING PLAN
Your marketing plan needs a market-product grid to (a) focus your marketing
efforts and (b) help you create a forecast of sales for the company. Use these steps:
1. Define the market segments (the rows in your grid) using the bases of segmentation
used to segment consumer and organizational markets.
2. Define the groupings of related products (the columns in your grid).
3. Form your grid and estimate the size of market in each market-product cell.
4. Select the target market segments on which to focus your efforts with your marketing
program.
5. Use the information and the lost-horse forecasting technique to make a sales forecast
(company forecast).
6. Draft your positioning statement.
Answers:
Market segments and product groupings. What do we sell to whom? This is one of the
most fundamental questions every business must answer. In the market-product grid
Market size and target market selection. Estimating the market size in each cell of the
grid may be on a “3-2-1-0” (large, medium, small, none) basis like what is done for the
Helping with Common Student Problems
Developing the market product grid and sales forecast are probably the two most difficult
tasks students face in writing their marketing plans. Yet they are among the most important
Chapter 08 - Market Segmentation, Targeting, and Positioning
8-30
TEACHING NOTE FOR VIDEO CASE VC-8
Prince Sports, Inc.: Tennis Racquets for Every Segment
Synopsis
As described in its website, New Jersey-based Prince Sports “is a company of racquet
sports enthusiasts whose goal is to create cutting edge, functional, and technically advanced
Prince Sports wants to exploit a favorable trend—the dramatic growth in tennis
participation. For example, a recent study by the Sporting Good Manufacturers Association notes
that tennis participation in the U.S. was up 43 percent from 2000 to 2008—the fastest growing
traditional individual sport in the country.
Teaching Suggestions
This Prince Sports video case may be used to introduce a variety of marketing topics,
such as an overview of marketing and the marketing process (Chapters 1 and 2), the changing
marketing environment (Chapter 3), and market segmentation (Chapter 8). Because many
college students play tennis, the instructor may want to ask students the following questions to
lead off the discussion of the video case:
1. How many of you play tennis and own your own racquet? This question identifies the
Chapter 08 - Market Segmentation, Targeting, and Positioning
4. For all tennis racquet owners: What features made you choose the brand you own? This
question gets students thinking about the points of difference that they considered when
Answers to Questions
1. In the 21st century, what trends in the environmental forces (social, economic,
technological, competitive, and regulatory) (a) work for and (b) work against success
for Prince Sports in the tennis industry?
Answers:
Environmental
Force
(a) Trends Working
For Growth
(b) Trends Working
Against Growth
Social
• Tennis is becoming a mainstream
recreational sport for both young
and old people.
• Tennis provides a fun and exciting
way to socialize and work out with
family and friends.
• Tennis is a healthy fitness activity.
• Tennis is often perceived to be
difficult to learn.
• Tennis participation may be a
temporary fad whose attractiveness
will decrease in light of
competition from other traditional
recreational sports.
Economic
• Tennis is still an affordable
sporting activity. Relatively low
cost to participate, especially
compared to golf.
• An increasing number of private
health and tennis clubs and public
tennis courts are available.
• The historic profitability of the
tennis industry provides an
opportunity for powerful
competitors to enter the market.
• Cost of buying tennis racquets,
shoes, etc. is a concern in
recessionary times.
Technological
• Several dozen Prince Sports patents
provide some protection from
competition.
• Innovations may not be fully
understood or appreciated by target
consumers.
Competitive
• Prince Sports is still the industry
leader, setting technological and
quality standards.
• Competition exists from other
tennis racquet marketers.
• Competition exists from
mainstream recreational sports.
Regulatory
• Prince Sports aggressively seeks to
protect its brand and patents from
patent infringement.
• There is danger to Prince Sports
brands and innovations from patent
infringement.
Chapter 08 - Market Segmentation, Targeting, and Positioning
2. Because sales of Prince Sports in tennis-related products depends heavily on growth
of the tennis industry, what marketing activities might it use in the United States to
promote tennis playing?
Answers:
This question addresses Prince’s strategy to (1) stimulate demand for the entire product
class (increasing tennis playing among children and adults by stimulating primary demand)
in order to (2) compete for market share for its Prince-brand products (stimulating selective
3. What promotional activities might Prince use to reach (a) recreational players and
(b) junior players?
Answers:
These are two of the three market segments mentioned in the video case. Some promotional
activities (1) are unique to only one of these segments (2) while others are common to both.
Promotional activities only unique to one of the segments appear in the Table A below.
However, Prince promotional activities common to both segments include:
a. Sponsor Prince Demo events where players can try out latest racquets and footwear.
Chapter 08 - Market Segmentation, Targeting, and Positioning
TABLE A
(a) Promotional Activities to Reach
Recreational Players
(b) Promotional Activities to Reach
Junior Players
• Sponsor tennis clinics for adult players.
• Sponsor tennis doubles mixers for adults
by broad age groups.
• Sponsor local adult tournaments.
• Sponsor “teaching pros” to give tennis
lessons.
• Gain distribution and have point-of-sale
information in specialty sports shops.
• Run ads in regional and national tennis
magazines.
• Sponsor tennis clinics for high-school age
players.
• Sponsor local summer high-school
tournaments.
• Include latest topics and Prince
information on Twitter and Facebook
pages.
• Gain distribution and have point-of-sale
information in mass-merchandise chains
like Target and Walmart.
4. What might Prince do to help it gain distribution and sales in (a) mass merchandisers
like Target and Walmart and (b) specialty tennis shops?
Answers:
Intense competition exists for sales of sporting goods among the various manufacturers to
gain effective distribution in a variety of retail outlets such mass merchandisers and
specialty tennis shops. Prince wants to assist both kinds of retail outlets to serve its
customers better. However, there are market segment differences:
a. Mass merchandisers. Less-experienced players are likely to patronize these retail
Chapter 08 - Market Segmentation, Targeting, and Positioning
TABLE B
KINDS OF
DISTRIBUTION
AND SALES
ACTIONS BY
PRINCE
TYPE OF RETAIL OUTLET
Mass Merchandisers
(Like Target and Walmart)
Specialty Tennis Shops
Assistance in
space planning
Often provide space plan-o-grams
Generally left to tennis shop
Advertising
materials
Co-op advertising to help produce
in-store circulars
Detailed catalogues and brochures of
tennis racquets, shoes, strings, etc.
Point-of-purchase
materials
In-store displays and signage
In-store displays and signage, player
“standees” (tall paper models of
Prince-sponsored players),
merchandising fixtures, posters
Availability of
“demonstration
racquets” on loan
Rarely available
Large supply of “demos” usually
available
Assistance of
knowledgeable
sales clerks
Some tennis knowledge among sales
clerks
Extensive knowledge among sales
clerks, many being good players
themselves
Availability of
racquet stringing
Rarely available
Almost always available
5. In reaching global markets outside the United States, (a) what are some criteria that
Prince should use to select countries in which to market aggressively, (b) what three
or four countries meet these criteria best, and (c) what are some marketing actions
Prince might use to reach these markets?
Answers:
a. Marketing selection criterion for countries. Suggested criteria for selecting which
countries to enter with a line of Prince tennis products include the following:
• Sufficient disposable and discretionary income for consumers to be able to purchase
