Chapter Six: Segmentation, Targeting, and Positioning TOOLS FOR INSTRUCTORS • Learning Objectives • Annotated Chapter Outline with Instructor’s Notes/Teaching Tips • Answers to End of Chapter Learning Aids Concept Review Marketing Application Questions Net Savvy Chapter Case Study • Video Activities Learning Objectives 1. Describe the bases marketers use to segment a market 2. Identify the criteria for determining the attractiveness of a segment and whether it is worth pursuing (targeting) 3. Explain the differences among targeting strategies: undifferentiated, differentiated, concentrated, or micromarketing 4. Define positioning and describe how do firms do it Annotated Chapter Outline PowerPoint Slides Instructor’s Notes Chapter 6 will focus on segmentation, targeting, and positioning. These questions are the learning objectives guiding the chapter & will be explored in more detail in the following slides. Opening Vignette: Coke Zero The soft drink category is competitive market with numerous brands. Coca-Cola successfully launched a new product targeted at a group of consumers whose needs had not been met in the past, men who wanted lower calorie drinks but not “diet”. Firms constantly look to increase the markets for their products by getting current consumers to consume more, obtaining new consumers for current products, offering new products to current consumers, or entering an entirely new market. To use these strategies, firms must understand customers in the various markets; Coca-Cola identified a group of customers whose needs were not being met and offered an effective solution. The Segmentation, Targeting, and Positioning Process Previous chapters addressed how to plan marketing strategy; this chapter focuses on how firms use that strategy to identify the target markets they will serve. Step One: Establish Overall Strategy or Objectives The strategy must be consistent with and derived from the firm’s mission and objectives, as well as its current situation (SWOT). Remind students that any strategy must be consistent with the firm’s mission statement & be based on the current assessments from SWOT analyses. LO2: Step Two: Segmentation Bases Segment descriptions help firms understand the profile of the customers in each segment. This slide introduces the various segmentation bases or methods. A multiple segmentation method approach can also be used – geogdemographics is one example and is discussed in a later slide. Group activity: Divide the class into groups. Have them choose either a manufacturer or national retailer for running shoes. Have them describe their segmentation strategy and then evaluate whether or not it is the best segmentation strategy for that firm. A. Geographic segmentation organizes customer into groups on the basis of where they live. Geographic information software (GIS) aids in such segmentation. Many firms use regional brands of popular products. For example, Frito-Lay introduced new flavours of Lays Potato Chips such as Wasabi and Curry in Vancouver and Toronto where large ethnic populations live. Understanding regional preferences can define a company’s success—or failure. Answer B; see page 170 Sustainable Marketing 6.1 Thinking out of the Box Scott McRae and Joanne Secord secured the rights to sell PaperNuts in Canada. The challenge for these entrepreneurs was how to target the market. They decided to license distributors across the country and set up sales territories based on geographic boundaries. Ask students to watch CBC’s Dragons’ Den video. Have them consider what other segmentation bases might be used for PaperNuts. Note that demographics would be difficult, however, behavioural aspects could be applied. B. Demographic segmentation groups consumers according to easily measured, objective characteristics, such as age, gender, income, and education. These variables represent the most common means to define segments, because 1. They are easy to identify. 2. Demographically segmented markets are easy to reach. Statistics Canada provides one of the most important marketing research tools: Census data, which offer a rich, free source of information about various consumers that suggests segmentation possibilities. On the Statistics Canada Web site, walk students through the information available about the postal code in which your university or college is located. C. Psychographic segmentation relies on how consumers describe themselves. 1. Self-values: goals for life, not just immediate goals, which help determine the benefits the target market wants from a product. 2. Self-concept: the image people have of themselves. 3. Lifestyles: how people live their lives to achieve their goals. Not just businesses segment their customers; segmentation also helps organizations that counsel drug addicts or other at-risk groups. Many parents are becoming increasingly concerned about safety issues when their children go online. This segment responded positively to information and tools to effectively manage Internet use in the home and to teach their kids to be Web savvy. Group Activity: Divide students into groups. Have each choose a product/service they like. Have them describe that product/service in terms of psychographics. The values and lifestyle survey (VALS2) describes segments on the basis of their resources, including income, education, health, energy level, and degree of innovativeness, on horizontal dimensions, and on the basis of their primary motivation, such as how they see themselves and how that self-image governs their activities, on vertical dimensions. Click on the VALS hyperlink and take the survey as a class. Group activity: Students complete the VALS survey individually, and then bring their completed survey to class. Ask students: Why might you fall into similar categories? Who fell into different categories? For example, few business students likely belong to the Believers category, but art majors very well may. The following slide gives a description of the VALS categories. D. Behavioural segmentation groups consumers on the basis of the benefits they derive from products or services. Group activity: Have students identify products that provide different types of benefits. How else might these products be segmented? This activity provides a good opportunity to remind students that products exist in multiple segments, just as consumers do. Different motives lead different consumers to purchase the same product. Firms encourage loyalty in various ways, such as airline mileage or hotel point reward programs. Ask students: Are you a loyal buyer of any single product, to the extent that you refuse to purchase a substitute? Students may refer to soft drinks, but true brand loyalty is extremely rare. Using Multiple Segmentation Methods Multiple segmentation methods in combination offer firms more refined segmentation. Based on consumer surveys LIMRA identified 4 segments using demographic and lifestyle information. Firms often use a combination of segmentation methods in order to better or more precisely segment targeted consumers. Geodemographic segmentation: geography, demography & lifestyle is combined. One tool used by Canada Post to segment via geodemography is the PSYTE cluster, a tool developed by Environics Research. The tool groups all neighbourhoods in Canada into 60 different groupings based upon lifestyle and location. Exhibit 6.5 gives you an example of a PSYTE cluster. Answer A; see page 178 Case-in-Point. The following case-in-point demonstrates the concept of geodemographic segmentation by showcasing ‘Neighborhood Scout’. An on-line tool that consumers can use to help them find the perfect place to live based on the criteria they choose. LO2: Step 3: Evaluate Segment Attractiveness This slide introduces the criteria used to determine segment attractiveness. More detailed slides follow that can be used to further elaborate on this discussion. A. Identifiable. Firms must characterize their market to design products or services that meet its needs. They also must ensure that market segments are sufficiently distinct, because too much overlap means they are unnecessarily expending efforts to create distinct marketing strategies. These women would appear in the same segment if the segmentation variable were gender but in individual segments based on race or lifestyle. They also may be in different geographic or income segments, for example. B. Reachable. The best product or service cannot have an impact if the firm cannot reach the market through persuasive communications and product distribution. The Internet has enabled more people to be reached more easily, but various areas around the world simply cannot be served because they aren’t accessible to marketing messages or because there isn’t adequate distribution. Ask students: What types of media influence they way they shop? The answer may lead to an interesting discussion about how difficult it is to reach Generation Y customers either because they don’t participate in traditional media such as newspapers or because they are skeptical about being influenced by commercial messages. C. Responsive. Customers in the segment must react positively to the firm’s offerings. Group activity: Develop a list of potential products for Nike. Ask students: Are any of the following acceptable: cologne, deodorant, toothpaste, or hair gel. Why or why not? What about Nike towels, sheets, or pyjamas? What differences can you identify between these two types of product categories? D. Substantial. Firms need to measure the size of the identified market, because a market that is too small or lacks sufficient buying power cannot generate profits that will support marketing mix activities. Just because a firm can identify a segment does not necessarily mean it represents a good market. Size, in terms of number of people, is not the only consideration; despite its small size, the market for the original Hummer was incredibly profitable & therefore was substantial. A hot segment today may not last long enough to make it worth investment. Many firms are investigating when and how much to invest in the Millennial/GenY generational cohort. Firms in financial services and housing understand that it provides a new potential market, but the debt levels this segment carries makes it difficult to target effectively. Children under 15 represent a very profitable market segment as this example illustrates, generating approximately $1000M. Answer C; see page 183 LO3: Step 4: Select a Target Market Assess both the attractiveness of the opportunity and the firm’s own competencies to serve the market. The choice will be based on which segment of jean buyers would be most responsive to the value proposition of the new jean line. If the product is designed as a fashion jean with the latest styling and colours then the young woman might represent the best target market. However if the product line is a functional jean, designed to be used for work and features a more durable fabric then the man may represent the best target market. Four strategies to serve the market: A. An undifferentiated targeting strategy, or mass marketing considers everyone a potential consumer. Products/services in this category provide the same benefits to everyone. B. A differentiated targeting strategy targets several market segments with different offerings and thus helps firms obtain bigger shares of the market while simultaneously increasing the market for their products overall. C. A concentrated targeting strategy selects a single primary target market and focuses all its energies on providing a product to fit that market’s needs. D. With micromarketing or one-to-one marketing, a firm tailors its product or service to suit an individual customer’s wants or needs. Ask students: What is an example of a mass market product? Answer: There are very few mass market products. Even commodity goods such as flour now get differentiated. For different products, consumers fall in different segments. Ask students: What are examples of products that use differentiated, concentrated, and micromarketing segmentation strategies? Differentiated = Vanilla Coca Cola Concentrated = Clinique cosmetics Micromarketing = Mariposa which makes custom-built bicycles for racers; Financial Services Providers such as BMO Harris Private Banking for very wealthy clients Answer D; see page 184 LO4: Step 5: Identify and Develop a Positioning Strategy This step defines the marketing mix variables to give target customers a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products. Positioning is how consumers view a company’s products and services based on important attributes. It places a company in mind relative to competing products. Positioning may use one or more of the following strategies: Value – e.g. relationship of price to quality Product Attributes – e.g. innovation, quality, performance, and reliability Benefits and Symbolism Competition – e.g. head to head, differentiation Market Leadership – e.g. leadership position within an industry Answer: C; see page 189 A. Value is a popular positioning method because the relationship between price and quality represents one of the most important considerations when consumers make a purchase decision. Selling to Grandpa Tony and the millions of other value-conscious consumers is not easy. Firms like Wal-Mart use an everyday low price (EDLP) strategy to stress how a dollar can go further in their stores. Other firms position themselves as reasonably priced with outstanding quality and selection, e.g. The Bay. B. Product attributes are those product attributes that are most important to the target market. Like Melissa, many students develop a list of product attributes when choosing a college. These lists often include price, but price might not be the most important attribute in the purchase decision. Group activity: Develop a list of the product attributes you used to choose a college. How well did this university meet the criteria on your list? Compare lists to determine how your school positioned itself to appeal to the various attributes you desired. C. Benefits and Symbolism can be powerful positioning tools. Ask students: What commercial symbols resonate with you? Do you feel positively or negatively toward these firms based on their commercial symbol? D. Competition, whether with a specific competitor or an entire product/service class, can position a firm’s offering effectively. Firms that lack market leadership often position themselves in contrast with the leader to demonstrate that they offer the same (or better) service and quality. Motel 6 used quirky commercials to poke fun at its low budget approach but still point out that it offered the same services as more expensive hotels. E. Market leadership is used by companies which have a leadership position in the marketplace, e.g. Amazon, Google. Positioning Steps 1. Determine consumer’s perceptions and evaluations in relation to their perceptions of competitors’ products or services. 2. Identify the market’s ideal points and size 3. Identify competitors’ positions. 4. Determine consumer preferences. 5. Select appropriate positions. 6. Monitor the positioning strategy. This slide provides the steps necessary to develop the positioning map on the next slide. Switch back and forth on these slides to explain the positioning map. Perceptual Mapping Perceptual maps depict positioning strategies by displaying, in two or more dimensions, the position of products or brands in consumers’ minds. These maps contain ideal points that indicate where on the map a particular market segment’s ideal product would lie. Go to the Positioning Toolkit on the OLC. Walk students through the positioning exercise or have them do this as a hand-in exercise. Repositioning Sometimes firms must change their positioning. Firms reposition their brand in the marketplace in various ways, but the overriding purpose is to convey that the brand meets consumers’ changing needs. Baking soda is an excellent example of a product that has been repositioned many times in the marketplace. The periodic introduction of new uses causes consumers to redefine why they might need baking soda. Ask students to identify a brand that might need repositioning, e.g., 7Up, or Ginger Ale. How would they reposition the brand? Concept Review Generally, the concept questions are designed to achieve a single purpose – to encourage students to test their knowledge and understanding of the theoretical content of the chapter. These questions encourage recall and reflection, which will better prepare students to answer the marketing applications questions based on their understanding of the theory. 1. How do segmentation, targeting and positioning add value to a company’s value proposition? Answer: If the segmentation strategy is consistent with and derived from the firm’s mission and objectives, as well as its current situation—its strengths, weaknesses, opportunities, and threats (SWOT), then STP adds value by using the company’s assets and opportunities and aligning the marketing strategy with them. This approach will ensure customer needs are understood and met in the most efficient way for the customer. 2. Outline the steps in the STP process. What are some of the key decisions marketers have to make at each step? Answer: The STP process, with key decisions highlighted, is as follows: Step 1: Establish Overall Strategy or Objectives - what is our company good at? what are our goals? Step 2: Profile Segments - what are all the groups we could target? what are their characteristics? Step 3: Evaluate Segment Attractiveness - is each segment identifiable, reachable, responsive, and substantial and profitable? Step 4: Select Target Market - which segment is the best fit for this company, this product? Step 5: Identify and Develop Positioning Strategy - how do we want consumers to perceive our product? 3. List the bases that can be used to segment a market for a product or service. Which of these bases is considered to be the most difficult to use and which is the easiest? Why? Answer: The four key bases are geographic, demographic, psychographic and behavioural. The easiest to use is geography because it is simple to measure and the information is readily available. The most challenging to employ is psychographic, since it involves a high level of understanding of the consumers’ personality, lifestyles, values, attitudes, and beliefs – characteristics that are not easy to observe and often misinterpreted and understood. Market research is needed to observe the consumer - their lifestyles and personality traits. 4. Describe the segmentation bases you think Coca-Cola used to develop its target segment. What kinds of products do you think this segment was buying before Coca-Cola introduced its Coke Zero brand? Thinking back to the consumer buying decision process, what kind of strategies do you think were necessary to get this segment to switch to Coke Zero? Answer: Coca-Cola could have used in-depth interviews to understand men’s attitudes to diet drinks, an example of using psychographic segmentation. Behavioural segmentation was used since Coca-Cola Unilever wanted to understand the benefits sought in a soft drink by their target market, namely lower calories. Before Coke Zero was launched, this segment was probably consuming regular soft drinks, even regular Coke, but feeling guilty about the higher calorie count. The successful launch of Coke Zero actually shows that this segment’s needs were not being satisfied previously. Based on the consumer buying decision process, the first step for Coca-Cola was to establish need recognition. In other words, psychological needs had to be triggered so that consumers questioned if their existing soft drinks were providing the desired results. Then, the company had to design marketing communications suitable for these consumers as they conducted an external search for information. Coke Zero needed to become a part of consumers’ evoked set of brands to be evaluated as an alternative and considered for purchase when searching out a soft drink. They did this by positioning Coke Zero as tasting similar to Coke and by running advertising that featured bold, dark colours and associations with masculine sports like football. 5. List the four types of targeting strategies companies can use to serve selected market segments. What are the main points to consider before selecting one or more of these strategies? What are the advantages and disadvantages of each strategy and how can competitors influence the strategy a company chooses? Answer: Strategy Description Advantages Disadvantages Undifferentiated Same product offering to everyone Reach everyone with the same message Hard to define competitive advantages Differentiated Targets several market segments with a different offering for each Larger share potential Expensive Concentrated (Niche) Focused on meeting the needs of a single, primary target Uses limited resources efficiently Smaller target to attract Micromarketing Tailored to a specific individual’s needs, usually uses the internet Opportunity to offer truly unique product Incremental design and marketing costs Competitors can influence the use of one strategy over another by the positioning and targeting tactics they choose. Some companies may choose to pursue the same targets if they feel their product is meaningfully better. Alternatively, they may choose to pursue a completely different target or strategy in order to bring new customers into the franchise. 6. Explain the difference between positioning and a positioning statement. Why do you think marketers find market positioning one of the most difficult aspects of the STP process? How can marketers try to influence the positioning of their products or services in the market place? Answer: Positioning is the act of trying to define how consumers perceive your product or service. A positioning statement is simply the statement of what a brand or product aspires to be. It is intended to shape consumers’ perceptions of the marketer or its brand. It is a difficult part of the STP process because it is not easy to shape consumers’ perceptions in the way marketers may want. It is also difficult because while marketers have to keep their positioning fresh in order to keep abreast with the ever changing marketplace, consumers’ perceptions are enduring and do not change easily. There are many ways marketers try to influence market positioning such as through messaging, selecting specific product and brand attributes, benefits and symbols, leveraging their position in the market or by contrasting against the competition. 7. List four types of strategies companies could use to position their products or services in the marketplace. When Home Depot says, “you can do it, we can help”, what type of positioning is it striving for? Answer: Some of the different positioning strategies are value, product attributes, benefits and symbolism, and contrasting against the competition. When Home Depot uses such a tagline “you can do it, we can help”, they are striving benefit and symbolism in their positioning by suggesting that they add value to their customers effort and to increase the symbolism of the Home Depot brand to customers – “reliable partners”. 8. What is a perceptual map? How is it used in developing positioning strategies or to identify market opportunities? Answer: A perceptual map displays, in two or more dimensions, the position of products or brands in the consumer’s mind. After determining consumer perceptions of the marketer’s brand in relation to the competitors’ brand, marketers will then identify competitors’ positions, determine consumer preferences, choose ideal positioning, and work to move the perceived brand from the current position to the desired position. Generally, perceptual maps could be used to identify new opportunities by looking what is currently offered in the market and if it is feasible to fulfill gaps shown in perceptual map. It is also used to tell marketers how their brand stack-up against the competition and where they may choose to compete or differentiate their brand in a crowded market. 9. Why should marketers consider repositioning their brand? Explain what is meant by repositioning and what are the major challenges and risks inherent in repositioning. Answer: Repositioning a brand is required to keep up with changes in the marketplace or to put a fresh spin to their stale and stodgy brand. It is the act of changing a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences. Some of the major challenges and risks inherent in repositioning include the required cash outlay as it is expensive to perform, the risk of unsuccessfully moving the brand to a new space, but destroying the old position, leaving the brand somewhere undefined. This results in alienating former customers while failing to attract new ones and is the fundamental risk with repositioning. 10. A news article on the Internet suggests that Sony is thinking of repositioning its PlayStation 4 game console into a computer. Do you think that Sony can do this successfully? Give reasons. Do you think consumers will ever see the PlayStation as a computer? Why or why not? Answer: There is no one correct answer to this question. Some students may disagree. The issues to be addressed are - why would consumers reject or accept the idea of the PlayStation as a computer, what does Sony have to do to reposition the brand as a computer, and what are the risks in trying to reposition the PlayStation? Those who answer yes could point to the computing capability of the Xbox arguing that it is a “game console and computer”, therefore the idea is not far-fetched or impossible. They will argue that Sony needs to enhance the computing capability of the PlayStation (e.g., being able to browse the internet, download games from the Internet, search the web, etc.) Those who argue that it is not possible will likely suggest that even if it is technically feasible, it may never be seen or purchased for its computing capability but its gaming performance. For these students, the PlayStation would remain in their minds as simply a gaming console. The risk is that it may not attract a new market segment but may alienate its core customers, especially if its gaming performance is reduced or hindered by adding computing capability or the price goes up as a result of the additional computer-like features. Sony could potentially reposition the PlayStation 4 as a computer, leveraging its powerful hardware and existing user base. However, several factors could impact success: 1. Technical Challenges: Adapting the PS4's operating system and hardware for general computing tasks would require significant modifications. 2. Software Compatibility: Ensuring compatibility with a wide range of software and applications is crucial for a successful transition. 3. Market Perception: Consumers currently view the PS4 primarily as a gaming console, so changing this perception would be challenging. In summary, while technically feasible, repositioning the PS4 as a computer would require overcoming substantial hurdles. Consumers might not readily see the PS4 as a computer due to its strong association with gaming. Marketing Applications 1. What segmentation methods would you suggest for a small entrepreneur starting her own business selling gourmet chocolates? Justify why you would recommend those methods. Instructor’s Notes: To reveal their understanding of the four key segmentation bases or methods presented in this chapter, students should be able to explain what each base is and its application. Example answers: Students must think about the different benefits and trade-offs of the segmentation methods. Descriptions of the different segments help firms better understand the customer profiles in each segment. With this information, marketers can distinguish customer similarities within a segment and dissimilarities across segments. The entrepreneur might consider segmentation variables such as geography, income, life-style, and convenience in her development of her target markets. For a small entrepreneur starting a gourmet chocolate business, I would recommend the following segmentation methods: 1. Demographic Segmentation: Target customers based on age, income, gender, and occupation. This helps in identifying high-income individuals or special occasion buyers who are likely to spend more on gourmet chocolates. 2. Geographic Segmentation: Focus on specific regions or cities where there is a higher demand for luxury products or where gourmet chocolates can be positioned as a premium offering. 3. Psychographic Segmentation: Target based on lifestyle, personality, and values. This can help in reaching out to customers who prioritize high-quality, artisanal, and organic products. 4. Behavioral Segmentation: Segment customers based on purchasing behavior, such as frequency of purchase, brand loyalty, and occasion-based buying (e.g., holidays, gifts). These methods are recommended as they help in identifying and targeting niche markets effectively, allowing the entrepreneur to tailor their marketing efforts and product offerings to meet the specific needs and preferences of different customer groups. This approach can lead to higher customer satisfaction and loyalty, ultimately driving sales and growth for the business. 2. You have been asked to identify various segments in the market and then a potential targeting strategy. Describe the segments for a pet supply store. Justify the best targeting strategy to use. Instructor’s Notes: Students must understand the bases used in segmenting markets to identify an appropriate segment and then determine the best targeting strategy. Example answers: Using a variety of segmentation bases students can come up with one potential segment. For example, the pet supply store could consider everyone within a certain distance from the store a potential customer of its products. (geographic segmentation) This is probably not the best segmentation method for this type of store considering that even if people live near the store, not all will have pets. And so students also need to consider demographic segmentation, e.g. do people have high enough incomes to buy the products’ behavourial segmentation, do they buy products occasionally or are they loyal, repeat customers; and psychographic segmentation which takes into consideration the lifestyle and personality of prospective customers. Specifically: ○ Geographic: A consumer who lives within a mile of the business. ○ Demographic: A middle-aged woman who earns between $65,000 and $75,000. ○ Psychographic: An outdoor enthusiast who seeks adventure and thrills that make him or her look cool. ○ Behavioural: An allergy sufferer who uses a product to alleviate symptoms such as coughing, sneezing, and itchy eyes (Benefits). A Starbucks Frappuccino drinker who will not consider getting a sweet, frozen coffee drink from any other place than Starbucks (Loyalty). ○ Geodemographic: A 28-year-old professional who rents an upscale apartment in an urban area surrounded by other young professionals. Then students must apply targeting strategies. A differentiated targeting strategy uses several market segments to obtain a bigger share of the market. The pet supply store might consider this strategy as it sells to consumers who have dogs, cats, fish, reptiles, etc. Each customer with a different type of pet might have different needs. A concentrated targeting strategy is used when an organization selects a single, primary target market and focuses all its energy on providing a product to fit that market’s needs. This might be an appropriate strategy for the pet supply store if the store only sold to customers with one type of pet. Micromarketing occurs when a firm tailors a product or service to suit an individual customer’s wants or needs. This strategy would only work for the pet store if they were custom making food, clothing, or supplies for pets. For a pet supply store, the market can be segmented into the following groups: 1. Pet Type Owners: • Dog Owners • Cat Owners • Small Pet Owners (e.g., hamsters, rabbits) • Aquatic Pet Owners (e.g., fish, turtles) • Exotic Pet Owners (e.g., reptiles, birds) 2. Demographic Segments: • Families with Children • Single Pet Owners • Elderly Pet Owners • High-Income Households 3. Behavioral Segments: • Frequent Buyers (e.g., those who purchase regularly) • Occasional Buyers (e.g., those who buy during sales or specific occasions) • Brand Loyal Customers • Health-Conscious Pet Owners (e.g., those who buy organic or specialty foods) 4. Geographic Segments: • Urban Pet Owners • Suburban Pet Owners • Rural Pet Owners Best Targeting Strategy: Multi-Segment Targeting is the most suitable strategy. This approach involves targeting multiple segments with tailored marketing efforts for each. For instance: • Dog Owners: Promote dog-specific products like food, toys, and grooming supplies. • Health-Conscious Pet Owners: Focus on organic and specialty pet foods and wellness products. • Urban Pet Owners: Emphasize convenience products like compact carriers and indoor play equipment. Justification: Multi-segment targeting allows the pet supply store to cater to the diverse needs of different customer groups, maximizing market coverage and potential revenue while ensuring personalized marketing efforts that resonate with each segment's unique preferences and requirements. 3. Various methods are used to target markets. Identify the typical customer for each of the four methods discussed in the text. Instructor’s Notes: Students should understand the difference between segmentation bases and targeting strategies. They should be able to explain what each targeting strategy is and its application. Although a simple, undifferentiated, mass market approach seems appealing, because it requires less effort, students must consider the perspective of the small entrepreneur and its products or services. Example answers: Undifferentiated targeting strategy: the pet supply store would consider everyone a potential user of the product. They would need to target a wide variety of customers who need basic supplies and are not terribly particular about the products they purchase. Differentiated targeting strategy: the pet supply store realizes that customers with different kinds of pets will have different needs. The store may decide to specialize in small pets and target owners of cats, dogs, rabbits and guinea pigs. Concentrated targeting strategy: the pet supply store decides to pursue only a single, primary target market. For example, if tropical fish are in high demand in the area where the store is located, it could focus all its energy on meeting that market’s needs. Micromarketing: It is difficult to imagine a scenario where a pet supply store could be viable using this approach. Here are the typical customers for each of the four market targeting methods: 1. Undifferentiated (Mass) Marketing: • Typical Customer: General population. This approach targets everyone with the same product and marketing strategy, assuming a broad appeal. For example, a basic household staple like sugar or salt. 2. Differentiated (Segmented) Marketing: • Typical Customer: Specific segments within the broader market. Each segment is targeted with a tailored marketing mix. For instance, a clothing retailer may have different lines for men, women, and children. 3. Concentrated (Niche) Marketing: • Typical Customer: A narrowly defined, specialized market. This approach focuses on a single market segment. For example, a company selling high-end, organic pet food targets health-conscious pet owners. 4. Micromarketing (Local or Individual Marketing): • Typical Customer: Individual customers or small groups. This highly personalized approach tailors products and marketing efforts to individual preferences. For example, a local bakery offering custom cakes for individual customers' occasions. 4. How and why would a retailer use micromarketing? Instructor’s Notes: This exercise asks students to examine one targeting strategy and correctly apply the theory to a scenario. Example answers: Micromarketing occurs when a firm interacts on a one-on-one basis with many people to create custom-made products or services. A firm could use micromarketing by standardizing aspects of the products but leaving enough room for variability to tailor the product to each customer’s needs. For example, a jeans manufacturer might pre-cut fabric, then modify the pre-cut patterns to fit each customer who orders a pair of jeans. Micromarketing increases customer satisfaction by specifically meeting the exact need or want of the customer, which in turn increases the likelihood of customer loyalty and repeat business. A retailer would use micromarketing to tailor products and marketing efforts to the specific preferences and needs of individual customers or small local groups. This approach is effective for building strong customer relationships and loyalty by offering personalized shopping experiences. How: • Collect and analyze customer data to understand individual preferences. • Customize product offerings, promotions, and communication based on customer insights. • Use local advertising and community engagement to connect with nearby customers. Why: • Increase customer satisfaction and loyalty through personalized service. • Differentiate from competitors by offering unique, tailored experiences. • Boost sales and profitability by meeting the specific needs of niche markets or individual customers. 5. You have been asked to evaluate the attractiveness of several potential market segments. What criteria should you use to evaluate those segments? Why are these appropriate criteria? Instructor’s Notes: The third step in the segmentation process entails evaluating the attractiveness of market segments. To complete such an evaluation, students must employ criteria that can be used regardless of the market segment in question; in other words, the criteria must be universal enough to apply to all potential segments. In exploring the five criteria mentioned in the chapter, students gain practice and a fuller understanding of why they might be the appropriate. Example answers: The criteria to evaluate the attractiveness of a group of identified potential market segments include identifiable, substantial, accessible, responsive, and profitable. If a firm can determine who appears in the market and thus design products or services to meet their needs, the market segment is identifiable. If it can measure the size of the segment and determine its worth, the market segment is substantial. If the firm can reach the segment through persuasive communications and product distribution, it is reachable. If customers in a market segment react positively to the firm’s offerings, the market segment is considered responsive. Finally, if a market segment has sufficient size and the potential for high adoption rates and repeat purchases with sufficient profit margins, it is profitable. These criteria are appropriate because they apply to any market segment, regardless of the product or service offered, and represent the key issues to address to make the new product or service a lucrative opportunity. To evaluate the attractiveness of potential market segments, use the following criteria: 1. Market Size: Assess the number of potential customers in the segment. Larger segments offer greater revenue potential. 2. Growth Potential: Evaluate the segment's future growth prospects. Segments with high growth rates can lead to long-term profitability. 3. Competitive Intensity: Consider the level of competition within the segment. Less competitive segments can be easier to penetrate and more profitable. 4. Accessibility: Determine how easily the segment can be reached and served. Accessible segments reduce marketing and distribution costs. 5. Profitability: Analyze the potential profitability of the segment. High-profit segments ensure better returns on investment. 6. Compatibility: Ensure the segment aligns with the company's resources, capabilities, and overall strategic goals. These criteria are appropriate because they help identify segments that are large, growing, accessible, less competitive, profitable, and aligned with the company's strengths, ensuring effective allocation of resources and maximizing returns. 6. A small business owner is trying to evaluate the profitability of different segments. What are the key factors he or she must consider? For how long should the business owner conduct the evaluation? Instructor’s Notes: At a different level than that in the previous question, students must suggest ways to determine profitability. Example answers: The business owner should consider the following key factors: market growth (current size, expected growth rate), market competitiveness (number of competitors, entry barriers, product substitutes), and market access (ease of developing or accessing distribution channels, brand familiarity). As far as the length of evaluation, it should be a minimum of 12 months to ensure the owner knows what one year’s operations will entail. To evaluate the profitability of different segments, a small business owner should consider the following key factors: 1. Revenue Potential: Expected sales volume and price points for each segment. 2. Cost Structure: Costs associated with serving each segment, including production, marketing, distribution, and customer service. 3. Margin Analysis: The profit margin for each segment after accounting for costs. 4. Customer Lifetime Value: The total revenue a business can expect from a single customer segment over the duration of their relationship. 5. Market Trends: Changes in demand, competition, and external factors impacting each segment. 6. Segment Size and Growth: Current size and future growth potential of each segment. The business owner should conduct the evaluation for at least 6-12 months to account for seasonal variations and obtain a comprehensive understanding of each segment's profitability over time. Regular reviews should follow to adapt to market changes. 7. Think about the various hotel brands that you know (e.g., Coke, Pepsi, 7-Up. Gatorade, Powerade). How do those brands position themselves in the market? Instructor’s Notes: In responding to this question, students should recognize that a company can position its brand in one of four ways: value, salient attributes, symbols, and in comparison with the competition. Example answers: Market positioning involves a process of defining the marketing mix variables so that target customers have a clear, distinctive, desirable understanding of what the product does or represents in comparison with competing products. Positioning strategies focus on either how the product or service affects the consumer or how it is better than competitors’ products or services. Companies position their products using values, salient attributes, and symbols. Students should discuss which of these tools the different energy drinks use to differentiate themselves from competitors. For example, 5-hour energy might use salient attributes, while Red Bull might use symbols. Here are how various hotel brands position themselves in the market: 1. Marriott: Targets both business and leisure travelers with a range of options from budget-friendly to luxury. Emphasizes reliability, quality service, and global presence. 2. Hilton: Focuses on upscale and mid-range travelers, offering consistent quality and premium amenities. Known for its loyalty program and wide range of properties. 3. Hyatt: Positions itself as a premium brand with a strong focus on customer experience and luxury. Targets high-end business and leisure travelers. 4. Holiday Inn: Targets budget-conscious travelers, offering comfortable and affordable accommodations. Emphasizes convenience and family-friendly services. 5. Four Seasons: Positioned as a luxury brand, catering to affluent travelers seeking exceptional service, exclusivity, and high-end amenities. 6. Motel 6: Focuses on economy travelers, offering basic, no-frills accommodations at affordable rates. Emphasizes value and convenience. These positions help each brand appeal to specific customer segments based on budget, preferences, and travel needs. 8. Put yourself in the position of an entrepreneur developing a new product to introduce into the market. Briefly describe the product. Then, develop the segmentation, targeting, and positioning strategy for marketing the new product. Be sure to discuss (a) the overall strategy, (b) characteristics of the target market, (c) why that target market is attractive, and (d) the positioning strategy. Provide justifications for your decisions. Instructor’s Notes: This exercise challenges students to proceed through the entire segmentation/targeting/positioning process described in the chapter. In so doing, they should gain a solid feel for the amount of thought that goes into marketing a new product. Example answers: The new product is a self-propelled, robotic lawn mower, similar to the robotic vacuum cleaner that is on the market today. • Overall strategy: Segment the market into those consumers who own homes with lawns and those who do not. Segment those with lawns into geodemographic markets to identify the segments most likely to see value in such a new product. Focus marketing efforts—most likely, television advertising, Internet banner ads, and newspaper inserts—specifically on those segments. • Characteristics of the target market: The target market includes middle- to upper-middle-class households with no children and at least 20 square feet of lawn to mow. • Why that target market is attractive: These households likely can afford the product, do not have children to mow the lawn as a chore, and possess enough lawn space to justify the purchase for the sake of ease and convenience. • Positioning strategy: The product positioning should use both value (under $200) and salient (self-propelled, does not need supervision, senses the boundaries of the lawn automatically, and saves energy because it stops when it finishes mowing) attributes. Product Description A new line of eco-friendly, reusable, and stylish water bottles made from sustainable materials. The bottles feature innovative insulation technology to keep beverages hot or cold for extended periods. Segmentation, Targeting, and Positioning Strategy (a) Overall Strategy The overall strategy is to market the eco-friendly water bottles as premium, sustainable, and stylish alternatives to single-use plastic bottles, targeting environmentally-conscious consumers and active lifestyle enthusiasts. (b) Characteristics of the Target Market • Demographics: Young adults (18-35), middle to high income, educated. • Geographics: Urban and suburban areas with access to outdoor activities. • Psychographics: Environmentally-conscious, health and fitness-oriented, trendsetters. • Behavioral: Frequent buyers of eco-friendly products, active on social media, participate in outdoor activities and sports. (c) Why That Target Market is Attractive • Growth Potential: Increasing global awareness and concern about environmental issues. • Spending Power: Willingness to pay a premium for sustainable and high-quality products. • Market Trends: Growing trend towards healthy lifestyles and eco-friendly products. • Influence: Young adults are trendsetters who can influence others through social media. (d) Positioning Strategy Position the product as a premium, eco-friendly, and stylish choice for active and environmentally-conscious consumers. Emphasize unique features such as sustainable materials, advanced insulation technology, and modern design. Justifications • Differentiation: By focusing on sustainability and innovative features, the product stands out from generic water bottles. • Value Proposition: Offers both environmental benefits and high functionality, appealing to the target market's values and needs. • Brand Image: Aligns with the growing consumer demand for responsible and stylish products, enhancing brand perception and loyalty. 9. Think of a specific company or organization that uses various types of promotional material to market its offerings. (The Web, magazine ads, newspaper ads, catalogs, newspaper inserts, direct mail pieces, and flyers might all be sources of promotional materials.) Locate two or three promotional pieces for the company and use them as a basis to analyze the segment(s) being targeted. Describe the basic segmentation strategy and the characteristics of the target market reflected in these materials. Be sure to include a copy of all the materials used in the analysis. Instructor’s Notes: This exercise takes the examination of segmentation, targeting, and positioning one step further to the actual implementation of the entire process of marketing materials. Example answers: A company like Pillsbury uses a variety of promotional materials to sell its products. Three common types are newspaper coupon inserts, magazine advertisements, and its website. According to these materials, the basic segmentation strategy Pillsbury uses focuses on salient attributes; all the material tends to highlight product attributes (flavour, quick baking time, convenient to make, enough for a family of four). As far as the target market, it appears to be predominately cost-conscious women with children who have limited time and budgets to make home-cooked meals for their family and are looking for easy recipes and convenience. Company: Nike Promotional Materials 1. Web Ad (Online): Dynamic and interactive advertisement showcasing the latest running shoes with a focus on innovation and performance. Features athletes demonstrating the product's benefits. 2. Magazine Ad: A full-page spread in a sports magazine highlighting Nike's new eco-friendly apparel line, emphasizing sustainability and high performance. 3. Direct Mail Piece: Personalized postcards sent to loyal customers featuring exclusive discounts on new releases and an invitation to a local store event. Analysis of Segmentation Strategy Segmentation Strategy: Nike uses a combination of demographic, psychographic, and behavioral segmentation strategies to target its market. Characteristics of the Target Market: 1. Demographics: • Age: 18-35 years old. • Gender: Both male and female. • Income: Middle to high income, willing to spend on premium athletic wear. • Education: Educated, aware of brand values and innovations. 2. Psychographics: • Lifestyle: Active, health-conscious, and trend-focused. • Values: Values innovation, sustainability, and quality. • Personality: Ambitious, driven, and style-conscious. 3. Behavioral: • Usage: Frequent buyers of athletic apparel and gear. • Loyalty: Loyal to the Nike brand, likely to participate in events and promotions. • Benefit-Seeking: Looking for performance-enhancing, stylish, and eco-friendly products. Justifications Web Ad: • Target Segment: Tech-savvy, performance-oriented athletes. • Justification: Engages users with interactive content, appealing to those who value innovation and performance. Magazine Ad: • Target Segment: Environmentally-conscious athletes and fashion-forward individuals. • Justification: Emphasizes sustainability and high performance, attracting readers interested in eco-friendly products. Direct Mail Piece: • Target Segment: Loyal customers and local community members. • Justification: Personalized approach to reward loyalty and drive in-store traffic, appealing to customers who appreciate exclusive offers and local events. 10. You have been hired recently by a large bank in its credit card marketing division. The bank has relationships with a large number of colleges and prints a wide variety of credit cards featuring college logos, images, and the like. You have been asked to oversee the implementation of a new program targeting the freshman class at the schools with which the bank has a relationship. The bank has already purchased the names and home addresses of the incoming freshman class. You have been told that no credit checks will be required for these cards as long as the student is over 18 years of age. The bank plans a first day of school marketing blitz that includes free hats, t-shirts, and book promotions, as well as free pizza, if the students simply fill out an application. Do you think it is a good idea to offer this program to these new students? Instructor’s Notes: What ethical issues might arise from the situation outlined, and to what degree do these issues violate students’ own ethical standards? Using the ethical decision-making framework discussed in Chapter Three, students should evaluate their opinion of the practice of marketing credit cards to college freshmen and thus determine an appropriate course of action. Example answers: In applying the ethical decision-making framework: • “Have you thought broadly of any ethical issues associated with the decision to be made?” I have thought broadly about the ethical issues and have concerns about targeting a market segment of young consumers who lack jobs and are just learning how to manage their own finances. Such targeting could breed a population of students who run up credit card bills to the point that it affects their ability to buy a car or house a few years down the line. • “Have you involved as many possible people who might have a right to offer input into or have actual involvement in making this decision and action plan?” At this point, the students have no say in whether such marketing efforts should be on campus, parents have had no chance to give input to a process that probably is occurring without their knowledge, and the school administration has not been consulted about whether this target population is appropriate. • “Does this decision respect the rights and dignity of the stakeholders?” College freshmen likely have little understanding of the potential pitfalls involved with running up credit card debt they cannot pay for, and the parents of these students might be the ones most adversely affected if they have to bail out their child, incurring costs of which they were not even aware. • “Does this decision produce the most good and the least harm to the relevant stakeholders?” The college freshmen would be making important credit decisions without full knowledge of the potential consequences, and their credit ratings could be affected for life, ruining their chances of obtaining credit in the future for car and home purchases. • “Does this decision uphold relevant conventional moral rules?” It likely violates the community’s standard for what is appropriate, because it targets young adults with credit cards that they cannot afford. • “Can you live with this decision alternative?” If the decision is to forgo such marketing to college freshmen, then yes, I could live with that. Therefore, I would choose not to offer the program to college freshmen but instead focus on another market segment that is better equipped to make the credit card payments that will ensue. Offering this credit card program to incoming freshmen without requiring credit checks is not advisable for several reasons: 1. Financial Responsibility: Freshmen may lack financial literacy and responsibility, leading to potential debt accumulation and credit issues. 2. Ethical Concerns: Targeting young, financially inexperienced individuals with easy credit can be seen as exploitative and may harm the bank's reputation. 3. Regulatory Risks: Potential for increased scrutiny and regulation as such practices might be perceived as predatory lending. Instead, consider offering financial education programs alongside any credit offerings to promote responsible credit use and build long-term customer relationships. Net Savvy 1. Go to L’Oréal Canada website (http://www.lorealparis.ca/en/home.html) and try to describe the segmentation approach they use to group customers. Try to apply the vocabulary presented in this chapter to describe their segmentation strategy. Then click on “Skincare”, then “brand portfolio”, and finally “ReFinish” – who do you think is the target market for their “ReFinish Micro-Dermabrasion system”? How would you describe L’Oréal’s product positioning in Canada? Instructor’s Notes: This exercise encourages students to apply their knowledge of segmentation, targeting, and positioning in the context of a real company, which many, especially female, will be familiar with. They will see first-hand how companies form segments, pick target markets and develop marketing strategy to reach different target market. Example answers: ○ Students should look for the bases of segmentation inherent in the site and who is the target market by trying to identify what are the characteristics that are common to the group in terms of how they buy and use the products as well as other demographic and psychographic information. In terms of positioning, students should look to for information about how the different products are described and promoted to the different target market – what are they appealing to or benefits they are trying to serve. (Hint: look at quality of site graphics, models, etc.). They should also tie this in with the overall perception of L’Oreal in Canada. ○ Segmentation: Demographic and psychographics. ○ Target market: Middle-aged and mature women who care about beauty, self-concept and lifestyle – those who want to look young, fresh, and regenerate or protect their skin. ○ Products & Positioning: Age Perfect (regenerating and hydrating make-up for mature skin), Skin Genesis (create skin that looks younger, visibly stronger, tighter, and brighter), and Collagen Remodeller (recharges the skin natural collagen production for more defined facial features). Segmentation Approach L’Oréal Canada uses demographic, psychographic, and behavioral segmentation strategies: 1. Demographic Segmentation: Groups customers by age, gender, and income. Their product range caters to various age groups, from teens to mature adults, and includes options for different income levels. 2. Psychographic Segmentation: Targets customers based on lifestyle and values. They emphasize beauty and self-care, aligning with consumers who value personal appearance and are willing to invest in premium skincare. 3. Behavioral Segmentation: Focuses on benefits sought and purchasing behavior. L’Oréal offers products for specific skin concerns and preferences, such as anti-aging or moisturizing. Target Market for "ReFinish Micro-Dermabrasion System" Target Market: • Demographics: Adults, primarily women, likely aged 25-55. • Psychographics: Individuals interested in advanced skincare solutions, valuing skin rejuvenation and maintaining a youthful appearance. • Behavioral: Customers seeking professional-grade skincare products for home use, possibly with previous experience using skincare or cosmetic products. Product Positioning in Canada L’Oréal positions its products, including the "ReFinish Micro-Dermabrasion System," as premium, high-quality solutions that offer professional results at home. Their positioning emphasizes innovation, effectiveness, and luxury, appealing to consumers who are looking for advanced skincare technologies and are willing to invest in high-end beauty products. 2. Suppose you want to open a specialty coffee and treats shop in near the campus of your University and so you thought it would be helpful as a starting point to collect some demographic data. Your first hunch is StatsCan but from your experience you realise that would be difficult and take a long time. Help is on the way. Go to SRC’s Free Demographics website at http://www.freedemographics.com/ and register to use this free service. Use this site to generate a report on the demographics of the area you want to locate your coffee shop. How helpful is this site? Instructor’s Notes: Similar to the preceding question, this exercise gives students a better understanding of how actual market research firms like SRC segment consumer markets. Example answers: Most students will be able to generate a report and comment on the accuracy and helpfulness of the data they got. SRC’s Free Demographics website (http://www.freedemographics.com/) is quite helpful for gathering demographic data quickly and easily. After registering, you can generate detailed reports on the demographics of a specific area, including information on age, income, education levels, and more. This site provides a convenient and efficient way to access relevant data for making informed decisions about your coffee shop’s location and target market. It’s especially useful if you're looking to save time and obtain localized demographic insights without extensive manual research. End-of-Chapter Case M&M Meat Shops – Using demographics to drive decisions Questions 1. Describe the type of segmentation strategy M&M Meat Shops uses to serve its suburban markets. Provide support for your answer. Instructor’s Notes: This question asks students to consider the different segmentation methods and confirm they understand them by applying them to this case. Example answers: ○ Demographics: the case notes that M&M Meat Shops tracks population growth, whether apartment dwellers or home owners live in an area and the dominant home language. ○ Geo-demographic: Using the Mosaic system, M&M identifies attractive geographical areas of Canada. The system provides data on household income, house value, ethnicity, education, language, occupation, and dwelling type of consumers in these areas. ○ Psychographics: lifestyles are identified in some clusters, e.g. “Wine with Dinner” enjoys home decorating and gardening. ○ Benefits – Perhaps less important, however the case mentions time-starved consumers who need convenient food options. 1. M&M Meat Shops uses a geographic segmentation strategy to serve its suburban markets. 2. Support: 3. • Location-Based Targeting: They focus on suburban areas where families and busy professionals seek convenient, quality meal solutions. 4. • Store Placement: Their stores are often located in suburban shopping centers to capture local foot traffic and cater to community needs. 5. • Product Offering: They offer frozen, ready-to-cook meals tailored to the preferences and lifestyles of suburban customers who value convenience and quality. This approach allows M&M Meat Shops to effectively cater to the specific needs and preferences of suburban households. 2. Why would a different approach be needed for its Uptown urban store locations? Instructor’s Notes: Students should recognize that urban dwellers can have quite different lifestyles and buying habits from those who live in other parts of Canada and so a different strategy and even product offerings are required. Example answers: Consumers who work and live in downtown Toronto likely to earn higher incomes and lead a more upscale lifestyle, so Uptown requires edgier décor than suburban outlets. The case notes that Uptown offers extended hours of operation designed to suit the lifestyle of urban dwellers and carries specialty products not available in suburban stores. 3. Why do companies like M&M need to use a combination of segmentation approaches when identifying potential target markets? Instructor’s Notes: This question reminds students that although all segmentation methods are useful, a superior understanding can be obtained by combining various segmentation approaches. Example answers: Consumers differ dramatically across Canada. The case notes that immigration is accounting for huge growth in the population. These new arrivals to Canada do not have the same values and lifestyles, and their diet consists of different foods. Demographics may be helpful when identifying potential target markets in cities like Vancouver. And although visible minorities projected to make up one-third of BC’s population in the future, M&M needs to consider other segmentation methods, such as psychographics and benefits sought, to identify the most attractive target markets. Companies like M&M Meat Shops need to use a combination of segmentation approaches to: 1. Enhance Precision: By integrating geographic, demographic, psychographic, and behavioral segmentation, they can more accurately identify and meet the diverse needs of various customer groups. 2. Improve Marketing Effectiveness: A multi-faceted approach allows for tailored marketing strategies that resonate with different segments, increasing engagement and conversion rates. 3. Optimize Product Offerings: Combining segmentation methods helps in designing products and services that appeal to specific preferences and lifestyles, leading to better customer satisfaction and loyalty. Overall, a combination of segmentation approaches ensures a more comprehensive understanding of the market and more effective targeting strategies. 4. What are some key demographic differences M&M Meat Shops should consider for their entry into the U.S. market? Instructor’s Notes: Many students may assume that the U.S. market is very similar to the Canadian market. They only need to look at the diversity of the Canadian population (e.g. the difference in consumers who live in the Maritimes versus the Prairies, versus Vancouver) to realise that the U.S. market is equally diverse and that the differences must be identified and taken into consideration. Example answers: M&M Meat Shops should start by considering income differences. With the mortgage meltdown of 2008, many consumers may have less disposable income to spend on pre-packaged, ready to heat meals. Ethnic backgrounds will also be important. For example, most states have a higher proportion of Black Americans who have different eating habits. Family size may also be a factor in some states where families are larger, i.e. more children and/or extended families living in the same household. For their entry into the U.S. market, M&M Meat Shops should consider the following key demographic differences: 1. Income Levels: Varying income levels across regions may affect pricing strategies and product offerings. 2. Age Distribution: Different age groups may have distinct preferences for meal types and convenience. 3. Household Size: Larger or smaller households will influence the demand for meal portions and family-oriented products. 4. Cultural Diversity: Regional cultural differences may impact preferences for specific types of cuisine and dietary needs. Understanding these demographic factors will help M&M Meat Shops tailor their products and marketing strategies to effectively meet the needs of U.S. consumers. 5. Besides adapting their advertising to reflect different cultural holidays, what are some other ways M&M could reach out to Canada’s growing ethnic population? Instructor’s Notes: This question asks students to move beyond the examination of segmentation and targeting to consider the implementation of marketing communications. Example answers: M&M Meat Shops could continue to develop products that cater to the customs and dietary habits of new immigrants. It could support causes in the community that are associated with specific ethnic groups. Data from the M&M Max program could be used to identify geographic areas where ethnic minorities and new immigrants do not regularly shop at stores and bi-weekly sales flyers could be distributed in those neighbourhoods. To reach out to Canada’s growing ethnic population, M&M Meat Shops could: 1. Product Diversification: Offer products that cater to specific ethnic cuisines and dietary preferences. 2. Community Engagement: Partner with local ethnic community organizations and participate in cultural events. 3. Bilingual Packaging: Provide packaging and marketing materials in multiple languages to appeal to diverse linguistic groups. 4. Targeted Promotions: Use ethnic media channels and digital platforms to create tailored promotions and advertisements. 5. Inclusive Store Design: Reflect cultural diversity in store decor and customer service to create a welcoming environment for all customers. Video Activities Video: PaperNuts – Thinking Out of the Box (CBC’s Dragons’ Den) Learning Objective: LO1 Description: This video provides a real world pitch by two entrepreneurs on CBC’s Dragons’ Den. Scott MacRae and Joanne Secord secured exclusive distribution rights in Canada for an environmentally friendly alternative to Styrofoam used as packing filler. Their challenge was to divide the Canadian market into segments to sell and distribute the PaperNuts solution. The video introduces some of the complexities involved with both segmentation as well as selling in a B2B environment. Key Words: market segment, geographic segmentation, target marketing Activity: Ask students to come up with three potential segments that PaperNuts could consider as new target markets. Have them describe one segment in depth using the four segmentation bases (geographic, demographic, psychographic and behavioural). Let students share the details of their segment with the class and then have them evaluate three segments that would be the most attractive. (use Exhibit 6.6: Identifiable, Reachable, Substantial and Profitable, Responsive) Lastly, ask them to vote on which one segment PaperNuts should select as a new target market. Solution Manual for Marketing Dhruv Grewal, Michael Levy, Shirley Lichti, Ajax Persaud 9781259030659, 9781259104312
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