Chapter 6 Segmentation, Targeting and Positioning QUESTIONS AND ANSWERS TO END-OF-CHAPTER MATERIAL adAlyze 1. What demographic is this ad targeting? Answer: The ad is targeting male and female teenagers and young adults who are in relatively high income families. They tend to be single and well educated. 2. What psychographic interests can you determine about the target market from this ad? Answer: The target market is probably out going, social, energetic, likes to live life on the edge, and loves sports. 3. What behavioural insights can you determine about the target market? Answer: The target market likes to ski and particularly enjoys the thrill of freestyle skiing. Hands-on…apply your knowledge Positioning Assignment HEAD targets its ski products to three distinct market segments: freestyle skiers, recreational skiers, and racers. Carefully read the sections on Product Positioning, Positioning Maps, and the chapter’s opening vignette for HEAD Canada and take note of the interests of the target markets. Determine which variables you think should be used for the two axes in a positioning map for the ski market and create a positioning map for the ski market that plots these categories. Answer: These assignments give students the opportunity to apply chapter material to a real-life example, using the chapter’s opening vignette as a foundation. There are no specific answers. For HEAD’s ski products, you could use "Performance Level" (from Beginner to Expert) and "Style of Skiing" (from Recreational to Competitive) as the two axes on a positioning map. Plotting these variables, freestyle skiers would be positioned high on performance and in the middle for style, recreational skiers lower on performance and more towards recreational style, and racers high on both performance and competitive style. Video Clip…Questions Review the video Influential Brands - Google from CONNECT to understand how Google Canada focuses on behavioural and psychographic information to build its businesses. Answer the following questions: • What over-riding benefit does Google, as a company, attempt to provide its users? Answer: Google tries to provide products that make users’ lives easier and better in some way. Google aims to provide users with the benefit of convenience and efficiency. By leveraging behavioral and psychographic insights, Google strives to deliver personalized, relevant information and services quickly, making it easier for users to find what they need and connect with content that matters to them. • What element does Google foster to increase brand loyalty? Answer: Google tries to increase brand loyalty by building trust between its users and Google. Google fosters personalization and user experience to increase brand loyalty. By using behavioral and psychographic data, Google customizes search results, recommendations, and advertisements, creating a more relevant and engaging experience for users. This tailored approach helps build deeper connections and enhances user satisfaction, encouraging ongoing use and brand loyalty. • What psychographic changes has Google noted about consumers in Canada? Answer: Google has noted that consumers are using more devices and in particular purchasing more Android products. There is also an increasingly high level of expectations from consumers. • What challenge is Google facing with its business partners? Answer: Google is facing the challenge of helping its business partners understand changes in the market and how to use new platforms. Google faces challenges with its business partners over issues such as data privacy, revenue sharing, and platform control. Partners often demand more transparency and fairer terms, while Google’s policies and practices can lead to tensions. Additionally, competition among partners and the growing influence of regulatory pressures further complicate these relationships. Infographic ... Data Analysis Review the infographic that compares two clusters from Pitney Bowes Psyte HD segmentation analytics. Navigate to its website at http://www.utahbluemedia.com/pbbi/psyte/psyteCanada.html and compare two other clusters to create a new infographic. (Infographic tip: use Excel and Word to create charts and place them in a single PowerPoint slide to combine the visuals). Answer: Psyte HD has segmented the population of Canada into 59 clusters. Clicking on each of the clusters under the Cluster Index reveals interesting data. You are advised to demonstrate how this website works by typing the postal code of your college or university into the search bar and showing the depth of data that is revealed. QUESTIONS AND ANSWERS TO ONLINE ACTIVITIES: APPLYING MARKETING CONCEPTS & PERSPECTIVES 1. What clusters might be used to segment these consumer markets? (a) Cellphones, (b) automobiles, and (c) radio stations Answer: The clusters may be as follows: a. Cellphones - teenagers who want to stay connected at all times - adults who need to stay in touch with work - families who want to stay in touch with their children b. Automobiles - single young adults looking for trendy, inexpensive transportation - older adults looking for prestige - families looking for comfortable transportation for their families c. Radio Stations - teenagers looking for the latest music hits - adults looking for news, traffic and weather - adults looking for talk radio - adults looking for a specific music mix 2. What variables might be used to segment these business/industrial markets? (a) industrial vacuum cleaners, (b) photocopiers, and (c) car rental agencies Answer: The variables used to segment these markets may be as follows: a. Industrial Vacuum Cleaners − the size of the area to vacuum − the type of dirt to vacuum − the type of building that requires vacuuming (factory, mall, office tower, residence) b. Photocopiers − average number of copies per day − clarity of image and need for colour − usage (copying, reduction, enlargement) c. Car rental agencies − use of vehicle (personal, business, vacation) − price range − size car required 3. Create a current positioning statement for McDonald’s Canada taking into consideration its recent repositioning. Answer: McDonald’s positioning statement could be: “McDonald’s is positioned in the fast-food industry as a restaurant that provides a wide range of product choices and eating options to suit different tastes, nutritional needs, and comfort requirements.” 4. Create a positioning map for the chocolate bar market by visiting a store and reviewing all the product offerings. Answer: To create a positioning map for the chocolate bar market, plot "Price" (from Low to High) on the horizontal axis and "Premium Quality" (from Basic to Gourmet) on the vertical axis. For example, mainstream chocolate bars like Hershey’s or Cadbury might fall in the lower price and basic quality quadrant, while high-end brands like Lindt or Godiva would be positioned in the higher price and gourmet quality quadrant. 5. Create a target market profile for a soft drink of your choice by reviewing all the elements of the marketing mix. Answer: For a premium soft drink like San Pellegrino Sparkling Water, the target market profile would include affluent health-conscious consumers who value high-quality, naturally sourced ingredients. They are likely urban professionals aged 25-45, seeking a sophisticated beverage option. The marketing mix emphasizes premium pricing, elegant packaging, exclusive distribution in high-end stores and restaurants, and focused promotional campaigns highlighting the product's premium and natural attributes. 6. Which step in the market segmentation process do you think is the most complex? Justify your answer. Answer: In general the most complex areas involve sales forecasting and creating profit and loss statements. The difficultly lies in estimating consumer purchase rates, competitive reactions, market growth rates, and forecasting changes in costs. QUESTIONS AND ANSWERS TO ONLINE ACTIVITIES: DISCUSSION FORUM As a marketing assistant for a sports company you have been asked to analyze the market for a local hockey team. You need to create: • A target market profile for the hockey team • A positioning statement for the team • A positioning map for the team Answer: Target Market Profile: The local hockey team targets sports enthusiasts aged 18-45, predominantly male, who enjoy live sports and community events. They are middle to upper-middle class, with a focus on families and young professionals living in the local area. Positioning Statement: "For passionate sports fans who crave excitement and community spirit, our local hockey team offers high-energy games and family-friendly entertainment that brings the thrill of the sport right to your hometown." Positioning Map: Position the team on a map with axes for "Local Community Engagement" (high to low) and "Game Excitement" (high to low). The hockey team would be placed in the high "Local Community Engagement" and high "Game Excitement" quadrant, highlighting its strong local involvement and thrilling match experience. Note: These discussions are meant to generate class discussion and a lively debate of issues raised, as well as a general review of the concepts discussed within the chapter. There are no correct or incorrect answers. QUESTIONS AND ANSWERS TO ONLINE ACTIVITIES: INTERNET EXERCISE In its 50-year history, Tim Hortons has become an iconic Canadian brand. Navigate to its website at http://www.timhortons.com/ca/en/ and identify its positioning. Answer: The Tim Hortons website includes a FAQ page where it identifies its mission as, “Our guiding mission is to deliver superior quality products and services for our guests and communities through leadership, innovation and partnerships. Our vision is to be the quality leader in everything we do.” This mission is also its positioning statement and includes both its basic and competitive stance. BRING IT TO LIFE: VIDEO SYNOPSIS & TEACHING SUGGESTIONS MOST INFLUENTIAL BRANDS STUDY - GOOGLE Synopsis The research company Ipsos conducts an annual Most Influential Brands study with consumers in Canada to determine the most influential brands in Canada. The study looks at five key dimensions that are considered crucial for an influential brand: trust, corporate citizenship, presence, engagement, and being leading edge. Both the 2012 and 2013 studies ranked Google as the most influential brand in Canada. This video shares Google’s insight into why its brand is so highly rated and what factors it considers the most critical in its positioning - trust and making people’s lives easier and better. Teaching Suggestions This video profiles the Google brand by interviewing Chris O’Neil, its managing director in Canada who discusses the strength of this brand. Students will be familiar with Google and this video-case is therefore a good example for discussing brand positioning and positioning maps. If you have an Internet-capable classroom, showing Google and its various products will be a good starting point. Students will be familiar with Google search, Google maps, Google Earth, Gmail, Google play, and Google+. They may not be familiar with Google trends, Google AdWords, or Google person finder (a humanitarian service from Google that helps people reconnect with friends and loved ones after natural and humanitarian disasters such as earthquakes, floods, and hurricanes.) You may wish to contrast Google search with BING and Yahoo! search services by bringing up their interfaces on the screen and then reveal that currently Google’s market share in Canada is 89.1 percent, followed by BING at 7 percent, and Yahoo at 3 percent. You can gather the latest market shares for the search engines at StatsCounter Global Stats at http://gs.statcounter.com/ where country data is available. This is an interesting exercise for students as Google does not enjoy such a strong following in many countries such as China where Baidu leads the search engines with 65.1 percent market share, followed by 360 Search at 21.5, Google at 9.5, Soguo Search at 1.8, and BING at I.1 percent. Once you have set the stage for the search engine in Canada, distribute the case for students to read without answering the questions. Then show the video and ask the students to answer the questions. (Note: Internet links change from time to time, so be sure to check whether this link above is still available.) BRING IT TO LIFE: VIDEO CASE – PRINTOUT MOST INFLUENTIAL BRANDS STUDY - GOOGLE The Most Influential Brands study is an annual study conducted by Ipsos, an independent market research company with offices in 84 countries including Canada. Ipsos specializes in research that relates to advertising, customer loyalty, marketing, media, public affairs research, and survey management. Its perspective is that brands have meaning, personality, attitude, and influence. It conducts its annual Most Influential Brands study looking at five key dimensions considered crucial for an influential brand: trust, corporate citizenship, presence, engagement and being leading edge. The 2013 study was conducted online with 5,008 adult residents in Canada. Statistically, the study is considered accurate within +/- 1.6 percentage points, 19 times out of 20. The top ten influential brands in Canada in 2013 were: Most Influential Brands in Canada 2013 Rank Brand Consumer Attitudes and Opinions 1 Google - Part of our everyday language - just Google it 2 Facebook - Influential in how we communicate and interact 3 Microsoft - Has a strong future 4 Apple - Consumers want to hear from Apple 5 Visa - A brand that is seen everywhere 6 Tim Hortons - Consumers can identify with the brand 7 YouTube - Important in the world today 8 President’s Choice - Helps people make smarter/better choices 9 Walmart - Understands consumer needs 10 MasterCard - Shapes consumer behaviour Ipsos notes that when drilling down into the data some differences exist between generations, gender, and regions of Canada. For example digital media brands rank highly with millennials (YouTube, Netflix, and Pinterest), generation X rate the Weather Network higher than most, people in Ontario rate Tim Hortons as very influential, and men are very keen on the CBC. The top ten most influential brands all portray consistently strong brand images with consumers. Their brand positioning does not waver. Let’s look at what Chris O’Neil, managing director of Google Canada tells us about Google, the top ranked influential brand for 2012 and 2013: The Google brand Google fosters two important ingredients to make it successful: (1) it focuses on user-needs, trying to make users, lives easier and better in some meaningful way, and (2) it works to earn and sustain user-trust. Whether a person is using Google search, Google maps, Google Chrome, or any other Google platform, this is what Google does. This focus started with it cofounder and CEO, Larry Page who said from the start, “Focus on the user and all else will follow.” YouTube is a Google product that also follows Google’s brand approach. It provides an easy tool for self-expression, and for people to discover, engage, and share new things. It is also an easy platform for businesses to use video to engage consumers and advertise. YouTube is a successful story, particularly in Canada where people watch more online videos than in any other country and create content that is watched and shared around the world. When looking at the five factors that go into an influential brand, two elements stand out for Google; trust and being leading edge: - Trust is critical because in Canada people conduct over 5 billion searches per month on Google, knowing that Google will help find information quickly and easily. People keep coming back to use Google because they trust it, and it delivers every time. - Innovation is crucial for Google and this ties into being leading edge. At Google the focus is on what is coming around the corner and what Google can do to make consumers’ lives and business interactions easier and better. Consumer expectations are high in the digital space and Google works to deliver on being at the forefront of this area and leading the way with relevant new elements that make consumers’ lives (and business platforms) easier and better; whether this be with driverless cars, wearable devices, or superfast downloads. Google has its eye on the future and staying ahead of the curve is paramount. The challenge for Google is to stay relevant and ahead of the curve by predicting what is next in the digital world and translating this into products and services that continue to make things easier and better. Google tells us to expect the unexpected from Google. Questions 1. Create a positioning statement for Google as a consumer brand in the search market. Answer: Positioning Statement: "For users seeking fast, reliable, and relevant information online, Google provides the most accurate search results and intuitive interface, ensuring a seamless experience that connects you to what matters most." 2. Create a positioning map for Google in the search market versus BING and Yahoo!. Answer: Positioning Map: On a map with axes for "Search Result Accuracy" (high to low) and "User Experience" (high to low), Google would be placed in the high "Search Result Accuracy" and high "User Experience" quadrant, while BING and Yahoo! would be positioned lower on both axes. 3. What approach to market segmentation is Google search taking – mass marketing, segment marketing, niche marketing, or individualized marketing? Explain your answer. Answer: Market Segmentation Approach: Google search uses mass marketing, as it aims to serve a broad, diverse global audience with a single, unified search experience that caters to general needs rather than targeting specific segments or niches. Sources: News release, “Two new brands join Top 10 Most Influential Brands in Canada: Ipsos Reid,” CNW, Jan. 28, 2014, accessed at, http://www.newswire.ca/en/story/1296301/two-new-brands-join-top-10-most-influential-brands-in-canada-ipsos-reid Wing Sze Tang, “Canada’s Most Influential Brands: Ipsos Reid,” Marketing magazine, January 28, 2014, accessed at, http://www.marketingmag.ca/news/marketer-news/canadas-most-influential-brands-ipsos-reid-99316 ICA, “Most Influential Brands Study - Google,” YouTube video, uploaded February 2, 2013, accessed at, http://youtu.be/NLEqKC61l7s BRING IT TO LIFE: VIDEO CASE WORKSHEET MOST INFLUENTIAL BRANDS STUDY - GOOGLE Name: Section: The video will review the Google brand and how it positions itself in the market. Please answer the following questions once you have watched the video and read the case: 1. Create a positioning statement for Google as a consumer brand in the search market. Answer: Positioning Statement for Google: • Basic Stance: "Google delivers the most relevant and precise search results quickly, ensuring users find what they need effortlessly." • Competitive Stance: "Compared to BING, Google offers superior search accuracy and a more intuitive user experience, setting the standard in the search market." 2. Create a positioning map for Google in the search market versus BING. Answer: Positioning Map: On a map with axes for "Search Result Accuracy" (high to low) and "User Experience" (high to low), Google would be positioned in the high "Search Result Accuracy" and high "User Experience" quadrant, while BING would be positioned slightly lower on both axes. 3. What approach to market segmentation is Google search taking – mass marketing, segment marketing, niche marketing, or individualized marketing? Explain your answer. Answer: Market Segmentation Approach: Google search employs mass marketing. It focuses on providing a universal search solution that appeals to a broad audience globally, rather than targeting specific segments or individual preferences. BRING IT TO LIFE: VIDEO CASE – ANSWERS TO QUESTIONS MOST INFLUENTIAL BRANDS STUDY - GOOGLE 1. Create a positioning statement for Google as a consumer brand in the search market. Answer: Basic stance: Google is poisoned in the search market as the most trusted brand to deliver fast and accurate online search results. Competitive stance: Google’s search engine results can be trusted to be consistently better than those from competitive search engines. 2. Create a positioning map for Google in the search market versus BING. Answer: Students will use different axis for this question - the terms chosen should be measurable. Selections may include accuracy, speed, or quality of results. Some may wish to use the terms trust, reputation, or influential which can prompt a discussion on how these elements can be measured, something that Ipsos has done with its annual brand study. An example of a positioning map is outlined below. To create a positioning map for Google versus BING in the search market: • Axes: • X-Axis: "Search Result Relevance" (low to high) • Y-Axis: "User Experience" (low to high) • Positioning: • Google: High on both "Search Result Relevance" and "User Experience" • BING: Lower on "Search Result Relevance" but moderate on "User Experience" Google is positioned in the upper-right quadrant, while BING is in the lower-right quadrant. 3. What approach to market segmentation is Google search taking – mass marketing, segment marketing, niche marketing, or individualized marketing? Explain your answer. Answer: There may be some debate on whether Google is using mass marketing or individualized marketing. It is using individualized marketing as its search engine results will vary depending the location of the user and the results will deliver pay-per-click ads along the top and side of many search results that are tailored to the specific search term, and therefore user-need. Google search uses mass marketing. It targets a broad global audience with a single, standardized search platform that addresses general needs and preferences. Instead of focusing on specific segments or personalizing for individual users, Google aims to provide a universally effective and accessible search experience for everyone. BRING IT TO LIFE: NEWSFLASHES SYNOPSIS AND DISCUSSION QUESTIONS The NewsFlashes for this chapter are on the loyalty management company AIMIA and on the fashion house Burberry. Discussing these NewsFlashes in class can bring the material to life for the students in an interesting, relevant, and timely fashion. They can be used as ice-breakers to launch into a relevant subject. Many of the topics are interesting to students and may be familiar. A. AIMIA ANNOUNCES SOCIAL MEDIA SEGMENTATION AIMIA conducted a social media segmentation study to understand the motivation and behaviour behind social media interactions, and to better understand how marketers can engage customers on social networks. The study revealed five segments: passive single network users, passive multi-network users, active single network users, active multi-network users, and non-users. Questions 1. Which social network segments apply to you and your family? Review the social media behaviour of 3 family members and determine which segments apply. Answer: To determine the social network segments for my family: 1. Myself: Active multi-network user—engages regularly across multiple platforms for both personal and professional interactions. 2. Parent: Passive single network user—uses Facebook primarily for keeping up with family updates but is not very active otherwise. 3. Sibling: Active single network user—frequently uses Instagram for sharing updates and engaging with friends but avoids other platforms. Each family member fits into distinct segments based on their engagement and network usage patterns. 2. How can this information on the segmentation of social networks help marketers? Answer: This segmentation data can help marketers determine whether and what type of social media programs can be used to reach target consumers. Understanding social network segmentation helps marketers tailor their strategies to different user behaviors. For example, they can create targeted content for active multi-network users who engage across multiple platforms, while designing more straightforward campaigns for passive users. This segmentation also allows for personalized advertising and engagement strategies that resonate with specific behaviors, enhancing overall marketing effectiveness. B. BURBERRY CEMENTS POSITIONING WITH FLAGSHIP STORE The luxury clothing brand Burberry was losing is lustre to illegal knock-offs, promotional discounts, and inconsistent licensing agreements. It reclaimed its brand as a luxury celebration of British design by reducing its reliance on discounts, purging and evolving its product lines, and connecting through a revamped website and social media. It also trained its salespeople to be better informed on the Burberry brand and used its iconic and uniquely Burberry trench coat to showcase the Burberry brand in its advertising campaigns. Questions 1. What two elements do you think most helped to reposition the Burberry brand and why? Answer: The two elements that were central to the repositioning of Burberry were its website and its flagship store in London. These elements allowed people to easily visualize the brand and all that it represents. 2. Navigate to the BESPOKE section of the Burberry website to research the customization of the Burberry trench coat. What elements can be customized and what is the price tag of a customized Burberry trench coat? Answer: The BESPOKE section of the Burberry website allows website users to customize a Burberry trench coat. This includes customizing the fabric, colour, lining, buttons, length, and style of its collar, sleeves, buttons, and belts. The prices hover around $1,800! BRING IT TO LIFE: NEWSFLASH PRINTOUT AND WORKSHEET Name: Section: AIMIA Announces Social Media Segmentation Canadian loyalty-management leader AIMIA, operating in over 20 countries around the world and owner of Aeroplan, announced the results of a segmentation study that analyzed people in the social media space. The study’s purpose, to determine and understand the motivation and purchase behaviours behind social media interactions, points to how marketers can engage customers on social networks and focus on what adds value to consumers, rather than just count likes, followers, and interactions. It buckets social media users into five different market segments and creates engaging personas to help marketers focus on their target market needs. Although the study uses U.S. data, its emotional parameters are common to the Canadian social network user, which makes the segments useful for Canadian marketers. The research looks at the level of trust people have with their social media as well as how much control they feel they have over the information they share. In brief, the more trust and control that people have over their social networking activity, the greater their engagement and participation. Five distinct market segments surfaced: - Passive single-network users: Those who reluctantly join a social network so as to not feel left out, they have little trust and limited involvement with social networks. - Passive multi-network users: Those who like to use social networks to gather information but rarely share personal information due to a lack of trust in social networks. - Active single network users: Those who limit their social network of friends and share information only with the most trusted friends. - Active multi-network users: Those who freely share personal information and create content that they readily share across social networks. - Non-users: Those who have never used a social network or have not used one in the last month. Questions 1. Which social network segments apply to you and your family? Review the social media behaviour of 3 family members and determine which segments apply. Answer: • Myself: Active multi-network user—regularly shares and engages across various platforms. • Parent: Passive single-network user—uses Facebook mainly for updates from family but rarely interacts otherwise. • Sibling: Active single-network user—frequently posts and engages on Instagram but avoids other networks. 2. How can this information on the segmentation of social networks help marketers? Answer: It enables marketers to tailor content and campaigns based on user engagement levels and trust. For example, they can create more interactive content for active users and informative, low-involvement content for passive users. This targeted approach improves relevance and effectiveness in reaching each segment. BRING IT TO LIFE: NEWSFLASH PRINTOUT AND WORKSHEET Name: Section: Burberry Cements Positioning with Flagship Store Do you remember Burberry knock-offs—cheap imitations of the expensive camel, black, red, and white checkered brand that typifies Burberry clothing and accessories? So did Burberry, and took note that illegal knock-offs, promotional discounts, and inconsistent licensing agreements around the world cheapened and weakened the brand. Over the next few years, from 2006 to 2013, Burberry etched a path to reclaim its brand as a luxury celebration of British design. It pulled on its U.K. heritage, which dates back to 1856, and appointed brand champion Christopher Bailey, chief creative officer, to ensure consistent imagery for all things Burberry, and to help reinvent the brand to embody digital hipness and cool, vintage British style. The brand reduced its discounting, purged and evolved its product lines, embraced the digital web, connected on social media, and trained its salespeople to be better informed on the Burberry brand. It used its iconic and uniquely Burberry trench coat to showcase Burberry’s heritage and to present a consistent and uniquely Burberry image to the fashion industry. Its edgy advertising campaigns featured only hip young British actors and models such as Eddie Redmayne (Les Misérables and My Week with Marilyn), Romeo Beckham (10-year-old son of soccer star David Beckham), and supermodel Cara Delevingne. It reduced its reliance on licensing and strategically opened new stores in high-end international luxury markets, including upscale locations in Canada. The Burberry brand evolved beyond stores and runways into the digital space with an e-commerce website at Burberry.com that reached millions of consumers. It also used a social media program that connected with consumers on Facebook, Twitter, YouTube, Pinterest, and Instagram. Burberry is the leading luxury fashion brand on social media, with vast followings on Facebook (+15 million fans), Twitter (+2 million followers), YouTube (+24 million lifetime views), Pinterest (+56 thousand followers), and Instagram (+1 million followers). Burberry.com contains breathtaking images, video, and an extensive product line that dwarfs its in-store merchandise. It allows visitors to select standard items, made-to-order runway products, and customized trench coats. Up-and-coming unsigned British music artists and celebrity advertising images grace the website to add a cool lustre to the brand. In order to cement its revitalization, in September 2012, Burberry launched a 44,000-square-foot, four-story, global flagship store on Regent Street in London, England, as a tangible and digital representation of the reinvented Burberry brand. It fused the digital website experience with breathtaking retail design, allowing people to experience the brand as they do online and in person. By entering the store, visitors enter a physical representation of the website, complete with the digital ability to customize trench coats, order engraved name plates, or select Runway Made to Order items from Burberry fashion shows. In the store, visitors live within the brand, admiring displays of vintage trench coats that date back to the early 1900s and browsing current merchandise. The Burberry flagship store features over 500 speakers, 100 digital screens, and a 22-foot movie-theatre backdrop. When chip-enabled Burberry products are shown in the store in front of full-length mirrors, the mirrors transform into digital screens that play runway footage of the product or show video on how the product was made. At synchronized times during the day, the entire store momentarily morphs into a virtual raincloud with beautiful rain shower footage playing on every screen and heard on every speaker, emphasizing the importance of the Burberry trench coat to the Burberry brand. The store is home to exclusive, invitation-only music events of unsigned British bands and live screening events of Burberry runway shows. In support of the Burberry Foundation, 1 percent of Regent Street store purchases support the Burberry Foundation, which invests in charities that support needy and creative young people. Around the world, Burberry now speaks with one voice and owns its positioning as an iconic, cool, vintage British luxury brand. Its vision is to protect, explore, and inspire. Questions 1. What two elements do you think most helped to reposition the Burberry brand and why? Answer: Two Key Elements in Repositioning Burberry: • Flagship Store: The Regent Street store effectively merged physical and digital experiences, showcasing Burberry’s heritage and modern luxury through immersive technology and exclusive events. • Digital and Social Media Presence: Burberry's strong presence on social media platforms and its advanced e-commerce website reinforced its brand image and engaged a global audience, emphasizing its luxury and innovative edge. 2. Navigate to the BESPOKE section of the Burberry website to research the customization of the Burberry trench coat. What elements can be customized and what is the price tag of a customized Burberry trench coat? Answer: BESPOKE Section Customization and Pricing: • Customization Options: Customers can personalize their Burberry trench coats with choices for fabric, color, collar style, buttons, and monogramming. • Price Tag: A customized Burberry trench coat typically starts at around $2,000, depending on the selected options and materials. BRING IT TO LIFE: IN-CLASS ACTIVITY INSTRUCTIONS – 3M’S POST-IT® FLAG HIGHLIGHTER Learning Objectives 1. To understand how to create a target market profile 2. To learn write positioning statements Description of In-Class Activity • Provide students with a visual of 3m’s Post-It® Flag Highlighter and ask them to create a target market profile and positioning statement for the product. • Once students have completed the activity, complete a review of the target market profile and positioning statement with the class by asking for their input as you complete it on the board. • This activity can be completed individually or in pairs. The estimated class time is 45 minutes. Preparation before Class Review 3m’s Post-It® Flag Highlighter with the class. This can be done by showing the product and if you have an Internet capable classroom, you can navigate to its website at http://www.3m.com/intl/ca/english/ to locate an image or find an image on Google Images. In-Class Implementation • Relevant Chapter Content - Prior to conducting this in-class activity you will need to review the following chapter material with your students: • Explain the concept of a target market profile and all the areas used to describe a target market. Using figure 6-1 from chapter 6 is very useful for this activity. In brief in it shows the following: Geographic descriptors – this look at where a target market lives using variables such as country, region, province, city size, and type of loca¬tion such as urban, suburban, or rural Demographic descriptors – this identifies ranges for age, gender, marital status, income, occupation, education, and home ownership Psychographic descriptors – this involves an understand¬ing consumer attitudes to life, their personalities, general interests, opin¬ions, and activities Behaviouristic descriptors – this looks at why consumers buy a product, the product benefit, and how the product is used. It also examines whether consumers are brand loyal in their purchase behaviour and their frequency of product usage • Ensure students understand the following factors: Product positioning – this refers to the image of the product relative to the competition Positioning statements – this crystallizes the product image for marketers in a short paragraph. Positioning statements are simple, clear, and focused. They identify the main reasons the target market buys the product and what sets it apart in the market. They identify four ele¬ments: (1) the product name, (2) the category in which the product competes, (3) one or two main reasons that the target market buys the product (product benefits), and (4) what sets the product apart from the competition. It has two sections, a basic stance and a competitive stance. An example of a positioning statement that was created by students for the Smart car2go service is as follows: Basic stance: “Smart car2go is positioned in the car-share market as a flexible and affordable alternative to purchasing or renting a car, and as an extension of public transportation in city centres.” Competitive stance: “Unlike other options, this car can be picked-up and dropped-off at different locations across the city that are easily located with an app or on its website. The car can be rented by the minute, hour, or day.” • In-Class Instructions – Show a visual of a 3m’s Post-It® Flag Highlighter. Showing the product from the 3M website at this point may be helpful for the students to see. Briefly and informally explain the activity and then ask students to get into groups of two people to complete the task. Distribute the handout to each group and then formally review the activity. Allocate 30 minutes for groups to complete the task and then another 15 minutes to complete the task with class participation on the board. • Handout – Distribute the handout and worksheet for students to complete. • Evaluation – Collect the worksheets from this activity for evaluation purposes. They can be evaluated for completion, or graded for quality of the work completed. BRING IT TO LIFE: IN-CLASS ACTIVITY 3M’S POST-IT® FLAG HIGHLIGHTER – HANDOUT AND WORKSHEET Name: Section: Review 3M’S post-it® flag highlighter and create a target market profile and positioning statement for the product. Refer to the table presented in Figure 1 in chapter 6 of your text book for examples of target market variables. TARGET MARKET PROFILE GEOGRAPHICS • Region • City or census metropolitan area • Density DEMOGRAPHICS • Age • Gender • Marital status • Income • Occupation • Education • Home ownership PSYCHOGRAPHICS • Personality traits • Lifestyle values and approaches • Leisure activities, hobbies, and interests • Media habits • Technology uses BEHAVIOURISTICS • The main occasion for product use • The main product benefit sought • Primary and secondary product usage • Frequency of use • Frequency of purchase • Product usage rate • Product usage status • Product loyalty status PRODUCT POSITIONING Basic stance: 3M’s Post-it® Flag Highlighter is positioned in the ___________ category as a product that provides benefits of ______________ to it users. Answer: stationery, enhanced organization and visibility Competitive stance: 3M’s Post-it® Flag Highlighter is different than competitive products in that it ___________. Answer: combines highlighting and flagging functions in one tool PRODUCT POSITIONING Basic stance: 3M’s Post-it® Flag Highlighter is positioned in the ‘highlighter pen’ category as a product that provides students with the benefits of a highlighter and a flag-sticky-note in one so they can get better grades. Competitive stance: 3M’s Post-it® Flag Highlighter is different from the competition in that it is the only highlighter that also has sticky notes to flag important pages. BRING IT TO LIFE: METRICS ASSIGNMENT P&L: LUNCH BAGS - WORKSHEET Name: Section: Marketers are responsible for bringing in company profits. The programs marketers create to drive business are evaluated against the financial results they generate. A Profit and Loss (P&L) statement is a financial tool used to help assess and track a product or business’ financial performance and to determine its profitability. You are a marketing assistant working on a special back to school promotion for a new environmentally friendly canvas lunch bag for children. The bag is being launched in August and you have created a special back to school promotion to encourage retailers to display and support the product, and for consumers to buy it. The promotion includes a merchandising rack that retailers can use to display the products, a pamphlet on healthy school lunch ideas that is zipped into the bag for parents, and a pack of miniature greeting cards that can be used by parents to include fun and loving messages with their children’s lunches. Your boss has called a meeting with you to discuss the financial projections for the lunch bag. You need to create a monthly P&L for August, September, October, November, and December and a total for this year’s financial forecast. Task 1. Sales Projections Forecast sales projections for August, September, October, November, and December, and a total for the year. Based on previous years’ experience, data shows that sales should follow the following pattern: 45% in August 45% in September 8% in October 2% in November 0% in December Sales are expected to reach 8,000 units for the August-December (inclusive) period. 2. Marketing Expenditures Project monthly marketing expenditures, assuming all expenditures will occur in August. Your promotional plan includes the following items and costs: Merchandising rack – 100 racks at $200 each Pamphlets – 8,000 at $1 each Greeting cards – 8,000 packs at $1 per pack 3. P&L Create a P&L by month and a total for the August-December period (inclusive). Use the following information: Sales units – forecasted projections from above Wholesale price - $9 per bag Cost of goods (COG) - $5 per bag Marketing expenditures - forecasted projections from above Overheads - $1 per unit Complete your tasks by using the following spreadsheet: P&L Lunch Bags August September October November December Total Gross sales (units) Gross sales ($) Cost of Goods (COG) Gross margin Marketing Expenditures Merchandising racks Pamphlets Greeting cards Total Mktg Expenditures Net Margin Overheads Net profit before taxes BRING IT TO LIFE: METRICS ASSIGNMENT P&L: LUNCH BAGS – TEACHING NOTE This assignment familiarizes students with the importance of financial analyses and how to create a simple P&L. To be successful, this assignment requires the instructor to first explain a P&L. It is easier for students to understand a P&L if it is first explained by using a simple example such as a small business which manufactures pencils. Conceptually explaining how a P&L is structured without looking at numbers, generally helps students more clearly grasp the concept. A concrete example, such as manufacturer of pencils then helps clarify the specific details. Then students are ready to tackle the P&L assignment. A P&L can be simply explained to students by structuring the explanation around the purpose, the structure, and the flow of a P&L as follows: A. The purpose of a P&L Its purpose is to assess and track program, product, or business profitability. B. The structure of a P&L P&Ls identify 3 basic elements to help determine profitability: 1. The money that comes in the door (unit sales and revenues) 2. The money that goes out the door (costs and expenditures) 3. The money that is left in profits or losses (tracked at three check points – gross margin, net margin, net profit before taxes) C. The flow of a P&L P&Ls are structured so that the money that comes in the door is first identified and then the costs and expenditures required to run the business are subtracted in three stages. After each of these stages the P&L keeps a running profit tally to allow analysts and marketers to focus on problem areas. The reason costs and expenditures are subtracted in three stages is that this allows analysts and marketers to easily pinpoint financial issues and to drill down into the numbers to identify solutions. 1. Money coming in the door When a company sells a product, the money that comes in the door is identified as gross sales. It is computed by multiplying the number of units sold, by the wholesale price per unit. (For the lunch bag example, this is 8,000 units x $9 = $72,000). 2. Money going out the door Cost of goods The first area that is subtracted is the actual cost of buying or producing the good. This is a sum of various elements such as production, warehousing, and distribution costs. This allows an analyst or marketer to track the cost of the products and easily identify if there is a costing problem. (For the lunch bag example, this is 8,000 units x $5 = $40,000). Marketing expenditures The second area that is subtracted is the one that identifies marketing expenditures. These expenditures include elements such as consumer and trade promotions, coupon redemption, advertising, market research, web design, and package design. This allows an analyst or marketer to track marketing expenditures and easily identify if there is a marketing spending issue. [For the lunch bag example, these expenditures are the merchandising racks (100 units x $200 unit = $2,000), the pamphlets (8,000 pamphlets x $1 unit = $8,000), and the greeting cards, (8,000 greeting card packs x $1 unit = $8,000). This totals $18,000]. Overheads The third area that is subtracted is the one that identified the overheads that a company incurs regardless of its success. Examples of fixed costs are the costs incurred to run the office such as heating, lighting, and rent. This allows a marketer to track these elements to make sure they are not too high and are being covered by the business. (For the lunch bag example, this has been set at $1/unit, or 8,000 units x $1/unit = $8,000). 3. Running tally of profits and loses As the money flows through the P&L with the cost and expenditure subtractions as noted above, a running tally is created to track profitability: Gross margin This is the computation of gross sales ($) minus cost of goods. (For the lunch bag example, this is $72,400 – $40,000 = $32,000). Net margin This is the computation of gross margin minus marketing expenditures. (For the lunch bag example, this is $32,000 - $18,000 = $14,000). Net profit This is the computation of net margin minus overheads. (For the lunch bag example, this is $14,000 - $8,000 = $6,000). BRING IT TO LIFE: METRICS ASSIGNMENT P&L: LUNCH BAGS – ANSWERS The correct P&L is outlined below. Once reviewed with the class, the instructor can explain how gross margin percentages, net margin percentages, and net profit percentages can be used to quickly flag deviations from previous reporting periods. These percentages are relative to gross sales ($). P&L Lunch Bags August September October November December Total Gross sales (units) 3,600 3,600 640 160 0 8,000 Gross sales ($) 32,400 32,400 5,760 1,440 0 72,000 Cost of Goods (COG) 18,000 18,000 3,200 800 0 40,000 Gross margin 14,400 14,400 2,560 640 0 32,000 Marketing Expenditures Merchandising racks 2,000 0 0 0 0 2,000 Pamphlets 8,000 0 0 0 0 8,000 Greeting cards 8,000 0 0 0 0 8,000 Total Mktg Expenditures 18,000 0 0 0 0 18,000 Net Margin (3,600) 14,440 2,560 640 0 14,000 Overheads 3,600 3,600 640 160 0 8,000 Net profit before taxes (7,200) 10,800 1,920 480 0 6,000 Solution Manual for Marketing: The Core Roger A. Kerin, Steven W. Hartley, William Rudelius, Christina Clements, Harvey Skolnick, Arsenio Bonifacio 9781259030703, 9781259269264, 9781259107108
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