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Chapter 09 - Market Segmentation, Targeting, and Positioning
9-21
• What Wendy’s headquarters is doing.
• What competitors are doing.
• What might be changing in the area around your restaurant.
c. Wendy’s recently announced a new marketing program:
• Advertising use of fresh beef (not frozen); switching to eggs from cage-
free hens; and testing new menu items.
• Increased convenience by adding more than 1,000 self-service ordering
kiosks, and testing home delivery.
• Becoming the official hamburger of the NCAA.
d. Wendy’s strategy has been remarkably successful, replacing Burger King as
the #2 burger chain in terms of sales behind McDonald’s.
e. Consumer Reports surveyed best and worst fast-food restaurants and ranked
Wendy’s burgers higher than McDonald’s, Burger King, and five other fast-
food options.
4. Apple’s Ever-Changing Segmentation Strategy.
a. In 1977, Apple introduced the Apple II, which launched today’s multi-billion
dollar PC industry.
b. Typical of young companies, Apple focused on its products and had little
concern for its markets.
c. In 1997, Steve Jobs described a new market segmentation strategy that he
called the “Apple Product Matrix.”
d. This strategy consisted of:
• Developing two general types of computers—desktops and laptops.
• Targeted at two general market segments—consumers and professionals.
e. In most segmentation situations:
• A single product does not fit into an exclusive market niche.
• Rather, product lines and market segments overlap.
• So too does Apple’s segmentation strategy.
Chapter 09 - Market Segmentation, Targeting, and Positioning
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MARKETING MATTERS
Technology: Apple’s Segmentation Strategy—Camp Runamok No Longer
Apple has targeted its various lines of Macintosh computers at specific market
segments, as shown in the market-product grid. Because the market-product grid shifts as a
firm’s strategy changes, the one shown is based on Apple’s current computer products.
[Video 9-3: 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:
a. Seeks market-product opportunities by…
b. Finding the optimum balance between marketing efficiencies versus
product/R&D–manufacturing efficiencies.
• Market-product grids illustrate where such synergies can be found.
• Marketing synergies.
a. Run horizontally across the market-product grid.
b. Each row is an opportunity for efficiency in terms of a market segment.
c. If a firm can focus on one segment, its marketing efforts could be streamlined.
d. Often comes at the expense of product synergies because:
• A single consumer segment will likely require a variety of products…
• Each of which will have to be designed and manufactured.
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.
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c. If product synergies are emphasized, marketing:
• Will have to address concerns of a wide variety of consumers, which …
• Costs more time and money to develop and execute marketing actions.
• Marketing managers must balance both product and marketing synergies as they
seek to increase profits by:
a. Developing a firm’s product line.
b. Selecting its target market segments.
LEARNING REVIEW
9-5. What factor is estimated or measured for each of the cells in a market-product
grid?
9-6. What are some criteria used to decide which segments to choose for targets?
9-7. How are marketing and product synergies different in a market-product grid?
III. POSITIONING THE PRODUCT [LO 9-5]
• Product positioning refers to the place a product occupies in consumers’ minds on
important attributes relative to competitive products.
[ICA 9-2: 3M Post-it® Flag + Highlighter:
Product Positioning for Consumers and Retailers]
Chapter 09 - Market Segmentation, Targeting, and Positioning
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• 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
product attributes in the same target market.
• Differentiation positioning involves seeking a less competitive, smaller market
niche in which to locate a brand.
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:
a. Internally, within the marketing department.
b. Externally, with research and development engineers or advertising agencies.
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:
a. Identify the important attributes for a product or brand class.
b. Discover how target customers rate competing products or brands with respect
to these attributes.
c. Discover where the company’s product or brand is on these attributes in the
minds of potential customers.
d. Reposition the company’s product or brand in the minds of potential
customers.
• A perceptual map:
a. Is a means of displaying in two dimensions the location of products or brands
in the minds of consumers.
b. Enables a manager to see how consumers perceive competing products or
brands, as well as the firm’s own product or brand.
D. A Perceptual Map to Reposition Chocolate Milk for Adults
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• [Figure 9-11] 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:
• Low versus high nutrition.
• Children’s drinks versus adult drinks.
b. Discover how adults see various competing drinks.
c. Discover how potential customers see chocolate milk. Adults see chocolate
milk as:
• Moderately nutritious (vertical axis).
• Mainly a child’s drink (horizontal axis).
d. Reposition chocolate milk to make it more appealing to adults. Issue:
Which of the circled letters (A-F) in Figure 9-G should the dairies try to move
chocolate milk to reach adults and increase sales?
• [Figure 9-11] These are the marketing actions dairies implemented:
a. Dairies sought to move chocolate milk to the location of the “star” shown in
Figure 9-11.
• Chocolate milk provides calcium, critically important in female diets.
• Dieters get a more filling, nutritious beverage than with a soft drink for
about the same calories.
b. Chocolate milk sales increased dramatically because of adult consumption.
• This is due to giving chocolate milk “nutritional respectability” for adults.
• Another part is due to the innovative packaging that enables many new
chocolate milk containers to fit in a car’s cup holders.
LEARNING REVIEW
9-8. What is the difference between product positioning and product repositioning?
9-9. Why do marketers use perceptual maps in product positioning decisions?
Chapter 09 - Market Segmentation, Targeting, and Positioning
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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:
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:
3. In Figure 9-9, 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?
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4. You may disagree with the estimates of market size given for the rows in the market-
product grid in Figure 9-9. 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:
5. Suppose you want to increase revenues for your fast-food restaurant even further.
Referring to Figure 9-10, what advertising actions might you take to increase
revenues from (a) dormitory students, (b) dinners, and (c) after-dinner snacks from
night commuters?
Answers:
6. Locate these drinks on the perceptual map in Figure 9-11: (a) cappuccino, (b) beer,
and (c) soy milk?
Answers:
Chapter 09 - Market Segmentation, Targeting, and Positioning
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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 (discussed in Chapter 8)
to make a sales forecast (company forecast).
6. Draft your positioning statement.
Answers:
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
because of how closely they link to marketing mix actions in the plan. So instructors should
stress their importance. Also, students should be forced to look at both the marketing synergies
and operations efficiencies in studying their marketing-product grid and related strategies.
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TEACHING NOTE FOR VIDEO CASE VC-9
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
products that deliver performance benefits for avid players.”
The Prince Sports portfolio of brands includes Prince (tennis, squash, and badminton),
Ektelon (racquetball), and Viking (platform/paddle tennis). Its complete line of tennis products
includes more than 150 racquet models; more than 50 strings; over 50 footwear models; and
countless types of bags, apparel and other accessories.
Prince has a history of innovation in tennis—including inventing the first “oversize” and
“long body” racquets, the first “synthetic gut” tennis string, and the first “Natural Foot Shape”
tennis shoe. To remain the market leader, Prince Sports must continue to develop key
innovations to meet the needs of all market segments of tennis players.
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.
Students are asked to assess changes in the marketing environment Prince Sports faces
and to suggest ways that it can stay ahead of its competitors and future trends.
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 9). 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
incidence of tennis playing among college students.
2. How many of you have started playing tennis in the past two years? This question is a
“mini-check” on the study sited above that says tennis participation is increasing.
3. Of those that own your own tennis racquet, how many own a Prince brand of racquet?
How many of you own a racquet with a different brand? These two questions provide an
indication of market share of Prince Sports racquets within the class.
Chapter 09 - Market Segmentation, Targeting, and Positioning
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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
buying their particular brand and model of tennis racquet.
5. How could Prince Sports increase awareness and purchase of its tennis brands to college
students such as you? This question gets students thinking about the marketing mix
actions (product, price, promotion, and distribution tactics) that Prince Sports could take
to reach college students in marketing its line of tennis products.
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
• Tennis is often perceived to be
difficult to learn.
• Tennis participation may be a
temporary fad whose attractiveness
Economic
• Tennis is still an affordable
sporting activity. Relatively low
cost to participate, especially
compared to golf.
• The historic profitability of the
tennis industry provides an
opportunity for powerful
competitors to enter the market.
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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:
3. What promotional activities might Prince use to reach (a) recreational players and
(b) junior players?
Answers:
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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:
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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
Point-of-purchase
materials
In-store displays and signage
In-store displays and signage, player
“standees” (tall paper models of
Prince-sponsored players),
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:
Chapter 09 - Market Segmentation, Targeting, and Positioning
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Epilogue
Prince Sports was recently acquired by Authentic Brands Group (ABG), a brand
development and licensing company based in New York, Toronto, and Los Angeles. ABG’s
objective is to maintain Prince Sports’ historical reign in the tennis world by offering
performance racquet sports equipment to its target markets. For example, Prince recently
announced the release of new racquets featuring their latest technological innovation, Extreme
