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252 Part 3 Target Market Selection
reinforce the firm’s image, yet keep within its unique
capabilities
Assessment check questions
8.1. Identify the four stages of market segmentation. The four stages are
8.2. Why is forecasting important to market segmentation? Forecasting is
Chapter Objective 9: Discuss four basic strategies for reaching target markets.
Key Terms: undifferentiated marketing, differentiated marketing, concentrated marketing or
niche marketing, micromarketing
PowerPoint Basic: 19-20
PowerPoint Expanded: 40-42
Using Social Media
to Reach Target
Markets
Note: To remain
competitive, some
service providers
have changed their
focus from
1. Strategies for reaching target markets
a. Marketers spend a lot of time and effort developing
strategies that will best match their firm’s product offerings
to the needs of particular target markets
b. Marketers have identified four basic strategies for
achieving consumer satisfaction:
2. Undifferentiated marketing
a. A firm may produce only one product or product line and
promote it to all customers with a single marketing mix;
such a firm is said to practice undifferentiated marketing,
sometimes called mass marketing
b. It was much more common in the past than it is today
c. While it is efficient from a production viewpoint, the
strategy also brings inherent dangers:
i. A firm that attempts to satisfy everyone in the
Chapter 9 Market Segmentation, Targeting, and Positioning 253
segments of the market to defeat another
competitor’s strategy of undifferentiated marketing
3. Differentiated marketing
a. Firms that promote numerous products with differing
marketing mixes designed to satisfy smaller segments are
said to practice differentiated marketing
b. By providing increased satisfaction for each of many target
markets, a company can produce more sales by following
a differentiated marketing strategy than undifferentiated
marketing would generate
c. In general, however, differentiated marketing also raises
costs
i. Production costs usually rise because additional
products and variations require shorter production
4. Concentrated marketing
a. With concentrated marketing, also known as niche
marketing, a firm focuses its efforts on profitably satisfying
a single market segment
b. This approach can appeal to a small firm lacking the
financial resources of its competitors and to a company
offering highly specialized goods and services
c. Along with its benefits, concentrated marketing has its
dangers:
i. Because the strategy ties a firm’s growth to a
5. Micromarketing
a. Micromarketing targets potential customers at a very basic
level, such as by Zip code, specific occupation, or lifestyle
b. Ultimately, it can target even individuals
c. The Internet allows marketers to make micromarketing
even more effective: by tracking specific demographic and
personal information, marketers can send email directly to
individual consumers most likely to buy their products
d. Micromarketing can become too much of a good thing if
254 Part 3 Target Market Selection
Assessment check questions
9.1. Explain the difference between undifferentiated and differentiated
marketing strategies. Undifferentiated marketing promotes a single
9.2. What are the benefits of concentrated marketing? Concentrated
marketing can allow a firm to focus on a single market segment, which is
especially appealing to smaller firms and those that offer highly
specialized goods and services.
Chapter Objective 10: Explain the four types of positioning strategies and the reasons for
positioning and repositioning products.
Key Terms: positioning, positioning map, repositioning
PowerPoint Basic: 21-22
PowerPoint Expanded: 43-45
1. Selecting and executing a strategy
a. Although most organizations adopt some form of
differentiated marketing, no single choice suits all firms
b. The basic determinants of a market-specific strategy are:
i. Company resources
ii. Product homogeneity
iii. Stage in the product life cycle
iv. Competitor’s strategies
c. A firm with limited resources may have to choose a
concentrated marketing strategy
d. An undifferentiated marketing strategy suits a firm selling
items perceived by consumers as relatively homogeneous
e. During the early stages, undifferentiated marketing might
effectively support the company’s effort to build initial
demand for the item
Chapter 9 Market Segmentation, Targeting, and Positioning 255
Figure 9.4—
Hypothetical
Positioning Map for
Selected Retailers
What does the map
tell you about the
way consumers view
g. Having chosen a strategy for reaching their firm’s target
market, marketers must then decide how best to position
the product
h. The concept of positioning seeks to put a product in a
certain position, or place, in the minds of prospective
buyers
i. Marketers use a positioning strategy to distinguish
their firm’s offerings from those of competitors and
to create promotions that communicate the desired
position
iii. Whatever strategy they choose, marketers want to:
• Emphasize a product’s unique advantages
• Differentiate their products from
competitors’ options
i. A positioning map provides a valuable tool in helping
managers position products by graphically illustrating
consumers’ perceptions of competing products within an
industry
i. A positioning map might present two different
characteristics—price and perceived quality—and
show how consumers view a product and its major
2. Strategic Implications of Marketing in the 21st Century
a. To remain competitive, marketers should accurately
identify potential customers and identify the most lucrative,
long-lasting potential markets
256 Part 3 Target Market Selection
Assessment check questions
10.1. What are the four determinants of a market-specific strategy? The
10.2. What is the role of positioning in a marketing strategy? Positioning
places a product in a certain position in the minds of prospective buyers
so marketers can create messages that distinguish their offerings from
those of competitors.
ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES
Chapter 9 Assurance of Learning Review
1. Classify each of the following as a business product or a consumer product:
a. Detroit Tigers ticket
b. bottle of body lotion
c. fleet of delivery trucks
d. bulk order of rice
e. digital camera
f. GE jet engine
2. What are core regions? Why do marketers try to identify these regions?
Answer: Demand for some categories of goods and services can vary according to the geographic
3. What is the cohort effect? This chapter suggested that the rise of video games was sufficiently
significant to have influenced a generation, currently referred to as the Millennials. Do you agree?
Answer: The cohort effect refers to the tendency of members of a generation with common
characteristics to be influenced and bound together by significant events occurring during their key
formative years, roughly ages 17 to 22. These events help define the core values of the age group that
eventually shape consumer preferences and behavior.
The current cohort—generally consisting of those born during the late 1970s to the early 1990s—may be
the most cohesive to date. Marketers have called this group by several names: Generation Y, the
4. What is the fastest-growing racial/ethnic minority group in the United States? What types of things do
marketers need to know about this group in order to market successfully to these consumers?
Answer: Hispanics and African Americans are currently the largest racial/ethnic minority groups in the
United States, with Hispanics surpassing African Americans at over 53 million, according to the most
recent census data. The Hispanic population is growing much faster than the African American
5 How is segmentation by family lifecycle and household type useful to marketers? Briefly describe your
258 Part 3 Target Market Selection
own family in these terms, identifying characteristics that might be helpful to marketers for a firm selling
HDTVs.
Answer: One form of demographic segmentation employs the stages of the family lifecycle— the process
of family formation and dissolution. The underlying theme of this segmentation approach is that life stage,
6. What are AIO statements? How are they used by marketers?
Answer: The most common method for developing psychographic profiles of a population is to conduct a
large-scale survey asking consumers to agree or disagree with a collection of several hundred AIO
7. Identify a branded product to which you are loyal, and explain why you are loyal to the product. What
factors might cause your loyalty to change?
Answer: Consumers want a product to do certain things for them, and this can extend beyond the
product’s purpose to the experience they have, the way it makes them feel, or what they believe it does.
Brand loyalty focuses on how strongly and attached consumers feel toward a product or service. They
8. Choose another branded product. Create a relevant profile for the marketing segment that product
serves.
Answer: Students will have a variety of ideas, considering there are almost unlimited branded products
9. What are the six categories generally used to position a product?
Answer: To achieve the goal of positioning, marketers follow a number of positioning strategies. Possible
approaches include positioning a product according to the following six categories:
2. Price/quality
4. Application
6. Product class
Point Value: 1
10. How does a positioning map work? What are its benefits?
Answer: A positioning map provides a valuable tool in helping managers position products by graphically
illustrating consumers’ perceptions of competing products within an industry. Marketers can create a
Projects and Teamwork Exercises
1. Answer: Have students or pairs select one of the following consumer products and think about how it
could be used as a business product. Some suggestions:
a. lawn care products— supplying to plantations, farms, resorts, hotels, nurseries, landscaping
firms
260 Part 3 Target Market Selection
b. microwave oven—supplying to restaurants, fast food chains, cafeterias
c. golf balls—supplying to clubs, golf associations
2. Answer: With a classmate, choose one of the following products (barbeque grill and accessories,
hunting or fishing supplies, nail salon, SUV, online video game, massage) that you believe is generally
targeted for either men or women. Students have to create an advertisement aimed for the product that is
aimed at the opposite gender. What suggestions did they have for broadening the audience for the item
they selected? Are the ads appealing?
3. Answer: Students should create a chart showing family’s income and expenditure patterns over the
years as the family life cycle changed. If possible, interview one or two family members for additional
information. What general trends do you notice in income? In expenditure? What conclusions can you
draw from the exercise? Be sensitive to the fact that some students may be reluctant to share personal
4. Answer: With a classmate, choose a product and come up with a slogan representing each of the six
positioning approaches for the product (attributes, price/quality, competitors, application, product user,
and product class). Why was the specific product chosen?
5. Answer: On your own or with a classmate, select one of the following products. Visit the website of the
following products to see how they are positioned.
a. Gatorade— attribute, competitive, product users (health enthusiasts)
b. Dove soap—attribute, product user
Critical-Thinking Exercises
1. Create a profile of yourself as part of a market segment. Include such factors as geographic location,
gender and age, household type, income and spending habits.
Answer: Answers will vary. Be sensitive to the fact that some students may be reluctant to share personal
information. Encourage students to give original data and not what is expected of them.
Point Value: 1
2. Select one of the following products and explain how you would use segmentation by income and
expenditure patterns to determine your targeted market.
a. Busch Gardens theme parks
b. GoPro video camera
c. Healthy Choice frozen entrées
d. Land Rover Evoque
Answer: Encourage students to be creative and explore all the various ways in which consumer markets
can be segmented. Try to encourage the use of multiple bases for segmentation.
3. How do you think the Internet has affected differentiated marketing techniques?
262 Part 3 Target Market Selection
4. Choose one of the following products and describe a marketing approach that segments the target
market by benefits sought:
a. Kryptonite bicycle lock
b. A private college or university
c. Andersen windows and doors
d. Coke Zero
e. Edy’s Grand Ice Cream
5. Visit the website for a large company such as Kraft Foods, Samsung, or Campbell Soup. Look for
ways the firm practices differentiated marketing. How do you think this approach benefits the firm?
Answer: Student answers will vary. Companies practice differentiated marketing by offering products that
suit different customers, segmenting them based on age, gender, income, and many other
characteristics. It is often used when distinct needs are identifiable for different customers. Example:
Ethics Exercises
Marketers are making a new pitch to men—at the risk of political incorrectness. Marketers for firms such
as Unilever and Kmart were frustrated at their inability to reach young male consumers with their
messages. After searching for clues about what this crowd likes, these firms created marketing
campaigns designed to grab their attention—perhaps at the expense of other consumers. Some
advertising is designed to appeal to “bad boy” attitudes, lowbrow humor, and sex.
1. What are some of the pitfalls of this kind of segmentation?
2. Do you think these ads will be successful in the long run? Why or why not?
3. Should marketers be concerned about offending one market segment when trying to reach another?
Why or why not?
1. Psychographic segmentation. Visit the websites of Caterpillar, Marriott Hotels, and Dr Pepper. How
does each firm employ psychographic segmentation (such as the VALS approach) to the marketing of its
products? Is there a relationship between the use of psychographic segmentation and the types of
products sold by each firm?
http://www.cat.com
http://www.marriott.com
http://www.drpepper.com
2. Market segmentation. Go to the website of Siemens. How does Siemens segment its markets, such
as geographical, product related, demographic, or brand loyalty? Does the firm use more than one
method of product segmentation? Why or why not?
http://www.siemens.com/entry/cc/en/
3. Target market. Visit the website of Philips. What strategy or strategies does the firm employ for
reaching its target markets? Does it rely more on undifferentiated or differentiated marketing?
http://www.usa.philips.com
Answer: Students are expected to either prepare a report on the complete range of products, or select a
few product categories. Students should perform an extensive research to identify the categories for
which these companies practice undifferentiated marketing. Consumer-goods is probably the best
Case 9.1 Cruise Lines Cater to Travelers’ Specific Interests—Questions for Critical Thinking
1. Is segmenting customers as “Explorers,” “Admirals,” and the like a useful marketing tool? Why or why
not?
2. Which segments of the cruise market are most likely to be influenced by social media? Why?
Answer: Student answers may vary. Many of them may say that “Marines,” “Little Mermaids,” “Escapers,”
and “Souvenirs” are most likely to be influenced by social media. “Marines” are young professionals who
are on the lookout for a better experience each time and this will prompt them to explore the opportunities
available through the social media. “Little Mermaids” are upper middle-class families in search of a
Video Case 9.2 Nederlander Targets Theatergoers Everywhere—Questions for Critical Thinking
1. How does Nederlander achieve the three major criteria for effective market segmentation?
Answer: Nederlander achieves the three major criteria for effective market segmentation in the following
ways:
a. By demonstrating that the market segment has measurable purchasing power and size, Broadway
Direct contains more than 2.5 million customers, and many are willing and able to purchase theater
2. Where would you place Evita’s audience members on the VALSTM framework? Explain your choice.
How might Nederlander use this framework to identify audiences for future shows?
266 Part 3 Target Market Selection
COLLABORATIVE LEARNING EXERCISES
Geographic Segmentation
Purpose:
To explain how the government classifies urban data
Background:
The move from urban to suburban areas after World War II created a need to redefine the urban
marketplace. This trend radically changed cities’ traditional patterns of retailing and led to decline
Relationship to Text:
Geographic Segmentation
Estimated Class Time:
15 minutes
Preparation/Materials:
The Internet
Exercise:
Divide the entire class into groups of five. Ask each group to select a state of their choice and find
out at least two core based statistical area; metropolitan statistical area; micropolitan statistical
area; consolidated metropolitan statistical area; and primary metropolitan statistical area for that
particular state.
Questions for Reflection:
• Why is it important to geographically segment a market?
• How does this classification of urban data help the marketers?
Product Positioning
Purpose:
Chapter 9 Market Segmentation, Targeting, and Positioning 267
To give students a chance to apply product positioning concepts
Background:
Many students particularly enjoy articulating product positioning in new and exciting ways to
capitalize on windows of opportunity in the marketplace. This exercise is designed to give them
hands-on positioning experience.
Relationship to Text:
Selecting and Executing a Strategy
Estimated Class Time:
About 15 to 20 minutes
Preparation/Materials:
None needed
Exercise*:
Divide your class into groups of three to five students, and ask each group to choose a product—
familiar to all of them—that needs repositioning. (Possible categories: a beer brand, a pizza
restaurant, cigarettes, your college, a television network, etc.) Then, direct them to just do it!
Questions for Reflection:
• How do you know when a product needs to be repositioned?
