Marketing Canadian 3rd Edition Grewal Solutions Manual

Marketing Canadian 3rd Edition Grewal
Solutions Manual
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edition-grewal-solutions-manual/
Chapter 06 - Segmentation, Targeting, and Positioning
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.
1
Opening Vignette: Coke Zero Firms constantly look to increase

the markets for their products by
The soft drink category is getting current consumers to
competitive market with consume more, obtaining new
numerous brands. Coca-Cola consumers for current products,
successfully launched a new offering new products to current
product targeted at a group of consumers, or entering an entirely
consumers whose needs had new market. To use these
not been met in the past, men strategies, firms must understand
who wanted lower calorie customers in the various markets;
drinks but not “diet”. Coca-Cola identified a group of
customers whose needs were not
being met and offered an effective
solution.
The Segmentation, Previous chapters addressed how
Targeting, and Positioning to plan marketing strategy; this
Process chapter focuses on how firms use
that strategy to identify the target
markets they will serve.
Step One: Establish Overall Remind students that any strategy

Strategy or Objectives must be consistent with the firm’s
The strategy must be mission statement & be based on
consistent with and derived the current assessments from
from the firm’s mission and SWOT analyses.
objectives, as well as its
current situation (SWOT).
2

LO2: Step Two: This slide introduces the various
Segmentation Bases segmentation bases or methods.
Segment descriptions help A multiple segmentation method
firms understand the profile of approach can also be used –
the customers in each geogdemographics is one example
segment. 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 Geographic information software
segmentation (GIS) aids in such segmentation.
organizes customer Many firms use regional brands of
into groups on the popular products. For example,
basis of where they Frito-Lay introduced new flavours
live. 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 Ask students to watch CBC’s

Thinking out of the Box Dragons’ Den video. Have them
Scott McRae and Joanne consider what other segmentation
Secord secured the rights to bases might be used for
sell PaperNuts in Canada. The PaperNuts.
challenge for these
entrepreneurs was how to Note that demographics would be
target the market. They difficult, however, behavioural
decided to license distributors aspects could be applied.
across the country and set up
sales territories based on
geographic boundaries.
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B. Demographic Statistics Canada provides one of
segmentation groups the most important marketing
consumers according research tools: Census data, which
to easily measured, offer a rich, free source of
objective information about various
characteristics, such consumers that suggests
as age, gender, segmentation possibilities.
income, and
education. These On the Statistics Canada Web site,
variables represent the walk students through the
most common means information available about the
to define segments, postal code in which your
because university or college is located.
1. They are easy to
identify.
2. Demographically
segmented
markets are easy
to reach.
C. Psychographic Not just businesses segment their

segmentation relies on customers; segmentation also
how consumers helps organizations that counsel
describe themselves. drug addicts or other at-risk
1. Self-values: goals groups. Many parents are
for life, not just becoming increasingly concerned
immediate goals, about safety issues when their
which help children go online. This segment
determine the responded positively to information
benefits the target and tools to effectively manage
market wants from Internet use in the home and to
a product. teach their kids to be Web savvy.
2. Self-concept: the
image people have Group Activity: Divide students
of themselves. into groups. Have each choose a
3. Lifestyles: how product/service they like. Have
people live their them describe that product/service
lives to achieve in terms of psychographics.
their goals.
4

The values and lifestyle survey Click on the VALS hyperlink and
(VALS2) describes segments take the survey as a class.
on the basis of their resources,
including income, education, Group activity: Students
health, energy level, and complete the VALS survey
degree of innovativeness, on individually, and then bring their
horizontal dimensions, and on completed survey to class. Ask
the basis of their primary students: Why might you fall into
motivation, such as how they similar categories? Who fell into
see themselves and how that different categories?
self-image governs their
activities, on vertical For example, few business
dimensions. 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 Group activity: Have students

segmentation groups identify products that provide
consumers on the different types of benefits. How
basis of the benefits else might these products be
they derive from segmented?
products or services.
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.
5

Using Multiple Firms often use a combination of
Segmentation Methods segmentation methods in order to
better or more precisely segment
Multiple segmentation targeted consumers.
methods in combination
offer firms more refined Geodemographic segmentation:
segmentation. Based on geography, demography & lifestyle
consumer surveys LIMRA is combined.
identified 4 segments
using demographic and One tool used by Canada Post to
lifestyle information. 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.
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LO2: Step 3: Evaluate This slide introduces the criteria

Segment Attractiveness used to determine segment
attractiveness. More detailed
slides follow that can be used to
further elaborate on this
discussion.
A. Identifiable. Firms These women would appear in the

must characterize their same segment if the segmentation
market to design variable were gender but in
products or services individual segments based on race
that meet its needs. or lifestyle. They also may be in
They also must ensure different geographic or income
that market segments segments, for example.
are sufficiently distinct,
because too much
overlap means they
are unnecessarily
expending efforts to
create distinct
marketing strategies.
7

B. Reachable. The best The Internet has enabled more
product or service people to be reached more easily,
cannot have an impact but various areas around the world
if the firm cannot reach simply cannot be served because
the market through they aren’t accessible to marketing
persuasive messages or because there isn’t
communications and adequate distribution.
product 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. Group activity: Develop a list of

Customers in the potential products for Nike.
segment must react Ask students: Are any of the
positively to the firm’s following acceptable: cologne,
offerings. 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 Just because a firm can identify a

need to measure the segment does not necessarily
size of the identified mean it represents a good market.
market, because a Size, in terms of number of people,
market that is too small is not the only consideration;
or lacks sufficient despite its small size, the market
buying power cannot for the original Hummer was
generate profits that incredibly profitable & therefore
will support marketing was substantial.
mix activities.
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.
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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 The choice will be based on which

Market segment of jean buyers would be
most responsive to the value
Assess both the attractiveness proposition of the new jean line. If
of the opportunity and the the product is designed as a
firm’s own competencies to fashion jean with the latest styling
serve the market. 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 Ask students: What is an

market: example of a mass market
product?
A. An undifferentiated Answer: There are very few mass
targeting strategy, or market products. Even commodity
mass marketing considers goods such as flour now get
everyone a potential differentiated. For different
consumer. products, consumers fall in
Products/services in this different segments.
category provide the same
benefits to everyone. Ask students: What are examples
of products that use differentiated,
B. A differentiated concentrated, and micromarketing
targeting strategy targets segmentation strategies?
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several market segments Differentiated = Vanilla Coca Cola
with different offerings and Concentrated = Clinique cosmetics
thus helps firms obtain Micromarketing = Mariposa which
bigger shares of the makes custom-built bicycles for
market while racers; Financial Services
simultaneously increasing Providers such as BMO Harris
the market for their Private Banking for very wealthy
products overall. clients
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.
Answer D; see page 184
LO4: Step 5: Identify and Positioning is how consumers view

Develop a Positioning a company’s products and
Strategy services based on important
This step defines the attributes. It places a company in
marketing mix variables to give mind relative to competing
target customers a clear, products.
distinctive, desirable
understanding of what the Positioning may use one or more
product does or represents in of the following strategies:
comparison with competing Value – e.g. relationship of price to
products. quality
Product Attributes – e.g.
innovation, quality, performance,
and reliability
Benefits and Symbolism
Competition – e.g. head to head,
differentiation
Market Leadership – e.g.
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leadership position within an
industry
Answer: C; see page 189
A. Value is a popular Selling to Grandpa Tony and the

positioning method millions of other value-conscious
because the consumers is not easy. Firms like
relationship between Wal-Mart use an everyday low
price and quality price (EDLP) strategy to stress
represents one of the how a dollar can go further in their
most important stores. Other firms position
considerations when themselves as reasonably priced
consumers make a with outstanding quality and
purchase decision. selection, e.g. The Bay.
B. Product attributes are Like Melissa, many students

those product develop a list of product attributes
attributes that are most when choosing a college. These
important to the target lists often include price, but price
market. 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.
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C. Benefits and Ask students: What commercial
Symbolism can be symbols resonate with you? Do
powerful positioning you feel positively or negatively
tools. toward these firms based on their
commercial symbol?
D. Competition, whether Firms that lack market leadership

with a specific often position themselves in
competitor or an entire contrast with the leader to
product/service class, demonstrate that they offer the
can position a firm’s same (or better) service and
offering effectively. 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 This slide provides the steps
1. Determine consumer’s necessary to develop the
perceptions and positioning map on the next slide.
evaluations in relation to Switch back and forth on these
their perceptions of slides to explain the positioning
competitors’ products or map.
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.
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Perceptual Mapping Go to the Positioning Toolkit on the
Perceptual maps depict OLC. Walk students through the
positioning strategies by positioning exercise or have them
displaying, in two or do this as a hand-in exercise.
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.
Repositioning Firms reposition their brand in the
marketplace in various ways, but
Sometimes firms must change the overriding purpose is to convey
their positioning. 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?
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.
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2. Outline the steps in the STP process. What are some of the key decisions marketers have
to make at each step?
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?
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?
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
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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?
Strategy Description Advantages Disadvantages
Undifferentiated Same product offering Reach everyone Hard to define

to everyone with the same competitive advantages
message
Differentiated Targets several Larger share Expensive
market segments with potential
a different offering for
each
Concentrated Focused on meeting Uses limited Smaller target to attract
(Niche) the needs of a single, resources
primary target efficiently
Micromarketing Tailored to a specific Opportunity to Incremental design and
individual’s needs, offer truly unique marketing costs
usually uses the product
internet
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?
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
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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?
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?
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.
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.
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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?
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.
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.
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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:
o Geographic: A consumer who lives within a mile of the business.
o Demographic: A middle-aged woman who earns between $65,000 and $75,000.
o Psychographic: An outdoor enthusiast who seeks adventure and thrills that make him or her
look cool.
o 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).
o 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.
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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.
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.
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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.
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.
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?
20
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.
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.
21
 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.
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.
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?
22
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.
Net Savvy
23
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:
o 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.
o Segmentation: Demographic and psychographics.
o 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.
o 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).
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?
24
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.
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:
o 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.
o 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.
o Psychographics: lifestyles are identified in some clusters, e.g. “Wine with Dinner” enjoys home
decorating and gardening.
o Benefits – Perhaps less important, however the case mentions time-starved consumers who need
convenient food options.
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.
25
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.
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.
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?
26
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.
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.
27

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Chapter Six: Segmentation, Targeting, and Positioning

TOOLS FOR INSTRUCTORS

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

These questions are the learning

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

Opening Vignette: Coke Zero Firms constantly look to increase

Step One: Establish Overall Remind students that any strategy

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

Group activity: Divide the class

Answer B; see page 170

Sustainable Marketing 6.1 Ask students to watch CBC’s

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

C. Psychographic Not just businesses segment their

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

The following slide gives a

D. Behavioural Group activity: Have students

Firms encourage loyalty in various

Ask students: Are you a loyal

Students may refer to soft drinks,

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

The tool groups all

Exhibit 6.5 gives you an example

Answer A; see page 178

Case-in-Point. The following case-in-point

An on-line tool that consumers can

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

LO2: Step 3: Evaluate This slide introduces the criteria

A. Identifiable. Firms These women would appear in the

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

C. Responsive. Group activity: Develop a list of

D. Substantial. Firms Just because a firm can identify a

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

Answer C; see page 183

LO3: Step 4: Select a Target The choice will be based on which

Four strategies to serve the Ask students: What is an

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

Answer D; see page 184

LO4: Step 5: Identify and Positioning is how consumers view

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

Answer: C; see page 189

A. Value is a popular Selling to Grandpa Tony and the

B. Product attributes are Like Melissa, many students

Group activity: Develop a list of

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

D. Competition, whether Firms that lack market leadership

Annotated Chapter Outline PowerPoint Slides Instructor’s Notes

Ask students to identify a brand

1. How do segmentation, targeting and positioning add value to a company’s value

The STP process, with key decisions highlighted, is as follows:

Strategy Description Advantages Disadvantages

Undifferentiated Same product offering Reach everyone Hard to define

8. What is a perceptual map? How is it used in developing positioning strategies or to

o Geographic: A consumer who lives within a mile of the business.

o Demographic: A middle-aged woman who earns between $65,000 and $75,000.

o Geodemographic: A 28-year-old professional who rents an upscale apartment in an urban area

Then students must apply targeting strategies.

4. How and why would a retailer use micromarketing?

In applying the ethical decision-making framework:

1. Go to L’Oréal Canada website (http://www.lorealparis.ca/en/home.html) and try to describe the

o Segmentation: Demographic and psychographics.

M&M Meat Shops – Using demographics to drive decisions

3. Why do companies like M&M need to use a combination of segmentation approaches

Learning Objective: LO1