WRITTEN ASSIGNMENT 2
MRKT 310 Principles of Marketing
Week 4 Writing Assignment
Consumer Behavior, Market Segmentation & Positioning
Learning Outcomes
Consumer decision-making process.Student can identify how marketing strategy can influence each of the steps in the consumer decision-making process.
Segmentation. Students can use the segmentation characteristics to identify and describe market segments.
Target market & strategy. Students can identify a usable market segment to be a target market and determine an appropriate target-market strategy
Positioning. Students can develop and interpret a perceptual map.
Directions
Refer to the product or service you selected at the beginning of the semester. This week, you want to take a closer look at what consumer factors may be relevant for customers who are considering buying your product or service offering. This will require some critical thinking on your part based on your own behavior if you are a customer yourself, or you may want to talk to others who have purchased the product. Sometimes you can find clues when looking at the marketing messages that may be addressing some of these factors.
So far, you have only been considering the customers of your product or service as one big group, or a mass market. More astute marketing breaks down this large group into smaller market segments of consumers who have similar characteristics. For any specific product or service, there could be numerous market segments. However, company resources may only allow a company to pursue one or two or these market segments, which then become target market(s). In this paper, you should divide the mass market for your product or service into at least two market segments and then pick one target market you think would have the most potential for future growth.
Think outside your own box. Chances are you picked a product with which you are familiar. That is a good starting point, and you may represent one target market. But you may represent a target market that is saturated and therefore not the best target market to pick for the remainder of the semester. So be sure your second target market is different enough and represents growth potential.
If you did not do a thorough analysis of the competition in the prior writing assignment, you may need to go back and figure out the nature of the product’s or services competition. This will be important when you address the positioning of your product for your newly identified target market inasmuch as positioning is a competition-based concept.
We understand you are not an employee of the company and do not have access to the insider data that you feel will allow you to discuss the questions to the degree you would like. Take your best educated and reasoned guesses whenever you need to do so.
Your job will be to critically examine all of the segmentation bases and arrive at your own description of potential market segments for your product or service.
You may want to visit this resource for more information on how to construct a perceptual map
Foley, B. (2018, February 16).How to construct perceptual maps from survey data. https://www.surveygizmo.com/resources/blog/perceptual-map/
You will be constructing your map from general knowledge rather than survey data, but the process is similar and the output will look similar, most likely with more competitors.
Remember to label both axes of your perceptual map.
Prepare your assignment beginning with a title page with your name and the name of your product or service. Then answer each of the following questions (two in part 1 and two in part 2) in order and number the beginning of your response to each question.Do not repeat the question. Do use headings to separate the sections.
Part 1
Consumer decision-making process. Go through the six steps of the purchase process outlined in the readings and identify where marketing can influence each of the six steps. For example, if a consumer just identified a need for your product in step one, then the company can advertise how your product fills that need. Or, if a consumer purchased your product, the consumer can be called and asked about their satisfaction with the product and if there is any dissatisfaction steps can be taken to ensure the customer satisfaction. Be sure to be more specific with respect to your product or service than this example.
Segmentation. Using the various criteria of the segmentation bases described in the week’s readings and in Table 4.1, identify at least two distinct market segments for your product or service. Each market segment description must include at least three (more if needed)of the characteristics from amongst any of the four bases categories, e.g. one from demographic variables, one or two from psychographic variables, and one from behavioral variables, or a similar scheme. Be sure to explain your choices based on what customer need the product or service offering can fill for each segment.
Part 2
Target market & strategy. Select one of the market segments you described in your segmentation response as the one you believe is or can be the most profitable for your product or service offering and explain why you feel they can represent growth for the company. Refer to the six criteria for an attractive market segment as described in course content under Selecting Target Markets. Name your target market so you can use this name throughout all of your remaining writing assignments. Your name should be descriptive of the segments’ characteristics like ‘savvy young shoppers’ or ‘educated baby boomers’, or ‘urban hipsters’, or the like. The goal is for your faculty member to get a mental image of your target market for the remainder of the semester. Should the company focus all their resources on this new target market (concentrated marketing) or should they continue to pursue both the new and the existing target market as well as other market segments (multi-segment marketing)? Alternatively, is the market so saturated might they be more successful by focusing solely on an even more narrow market segment, perhaps an even narrower version (niche marketing) of your selected target market, as their best chance for growth? What is your reasoning?
Positioning. Draw yourself a perceptual map as illustrated in the week’s readings or the website in the directions. Be sure to pick two criteria that are important to your new target market for your two axes, perhaps two of the criteria you used in Week 1 in your competitive analysis. Map at least the two major competitors you noted in the previous writing assignment and add any others that you may have discovered since then. Describe what the perceptual map is telling you regarding how each product is perceived in the minds of the new target market you described above. You may have to make a series of educated guesses for some of the data points. Ideally, you want to find uncontested space. If your product overlaps with a competing offering discuss whether or not your product or service should try for an uncontested space on the map and reposition itself; or if it should keep the same position and compete head on with the other product.
General Submission Requirements See Writing Assignment Instructions
PLEASE ENSURE THAT YOU REVIEW ALL ATTACHED RESOURCES! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
There are four writing assignments, due in Weeks 2, 4, 6, and 8 of this course. In this document you will find the format instructions that apply to all four assignments. You will use the same one product or service as the subject of each of your four writing assignments. Review the
Writing Assignment Rubric
.
Please select ONE product or service offering from the list below.
Samsung cell phones (highly competitive market, includes product/service components)
Product Choice and Content
Think carefully about your choice as you will focus on this product or service offering for each of the four writing assignments. It is in your best interest to select a product or service that interests you and for which you feel you can gain sufficient information.
Your focus will be on the domestic, or U.S. marketing of this product only. If the product is also marketing in other countries you do not need to concern yourself with the global operations.
You are not expected to be an expert on the product or service, and you will have large gaps in your knowledge due to proprietary information. You are not expected to purchase any sources that may have the information you need. You are expected to form well-reasoned conclusions based on what you do know or have found through research, or can reasonably assume. Respond comprehensively. Give examples when appropriate. Be sure to provide your own perspective on each of the questions.
See
Supporting Conclusions with Your Ideas and Reasoning
.
FORMAT & WRITING
Each writing assignment will require you to respond to four questions total (two in Part 1 and two in Part 2).You must respond to all four questions, or the assignment will be unsatisfactory.
Each assignment should be approximatelyfour tofivepagesof double-spaced text in length. A page is approximately 250 words. You may attach exhibits if you wish. More pages are acceptable, however, fewer than three pages is not satisfactory.
Note that a percentageof your grade will be based on your grammar, composition, adherence to the submission requirements, and use of an appropriate college-level style guide for writing and referencing (APA format).
Prepare each assignment in Microsoft Word.Here are the technical requirements:
Use a simple 12-point font such as Times New Roman and black ink primarily. Use color where it enhances your ability to communicate your thoughts
A cover page is required. A references page is required.The cover page and references page are not included in the written analysis or the page count.
Be sure your name, writing assignment number, the date, and the name of your product or service are on the cover page of your writing assignment.
Use headings to separate topics (e.g., Part 1, 1. Creating Value for Customers)
Use a minimum of six (6) references, four (4) of them dated 2016 to the present.
Includes references that explain the assignment concepts and references to the actual product.
Use credible academic sources. See,
Is My Source Credible?
Wikipedia it is not acceptable as a reference source.
Use APA format for citation of sources, both in-text and on the references list. See,
Using APA in this course
.
You should use APA style for a student paper. Follow APA 7thedition. See a sample APA 7thedition student paper here.
More information about using APA, including a sample APA student paper, can be found under Course Resources>APA & Writing Resourcesorat
UMGC’s virtual library
Upload your Word document (only .doc or .docx) in your Assignments folder by the due date in the LEO calendar. The due date is Tuesday 11:59 pm Eastern Time.
Save and post your paper in the following manner: FirstInitial_LastName_A1. For example, for Assignment 1, Marlon Hutchison would post: MHutchison_A1.
Where to go for help with the Writing Assignments
Have a content question? Post your specific or general questions to
Ask the Professor
.
Need help with research?
Ask a Librarian
or see
Research Resources
.
Need help with APA citation? Go to
Citing and Writing (UMGC Library APA Resources)
.
Need help with writing? Consider Writing Tutoring through UMGC. Go to the tutoring site via the Tutoring Assistance link on the top navigation bar in the classroom. See,
Writing Tutoring @ UMGC
. Week 4, “Market Segmenting, Targeting, and Positioning” was derived from Principles of Marketing,
which was adapted by the Saylor Foundation under a Creative Commons Attribution-NonCommercial-
ShareAlike 3.0 Unported license without attribution as requested by the work’s original creator or
licensee. 2015, The Saylor Foundation. UMGC has modified this work and it is available under the original
license.
Week 4
Market Segmenting, Targeting, and Positioning
Suppose you’ve created a great new offering you hope will become a hot seller. Before you quit
your day job to market it, you’ll need to ask yourself, “Who’s going to buy my product?” and “Will
there be enough of these people to make it worth my while?”
Certain people will be more interested in what you have to offer than others. Not everyone needs
homeowners’ insurance, not everyone needs physical therapy services, and not everyone needs
the latest and greatest cell phone. Among those that do, some will buy a few, and a few will buy
many. In other words, in terms of your potential buyers, not all of them are “created equal.” Some
customers are more equal than others, however. A number of people might be interested in your
product if it’s priced right. Other people might be interested if they simply are aware of the fact
that your product exists.
Your goal is to figure out who these people are. To do this, you will need to divide them into
different categories. The process of breaking down all consumers into groups of potential buyers
with similar characteristics is called market segmentation. The key question to ask yourself
when segmenting markets: What groups of buyers are similar enough that the same product or
service will appeal to all of them? (Barringer & Ireland, 2010). After all, your marketing budget is
likely to be limited. You need to focus on those people you truly have a shot at selling to and
tailoring your offering toward them.
Once market segments are identified, the next step is to identify which of those segments, if any,
the company wants to pursue with its limited resources and consistency with its mission. This is
called target marketing. A company may decide not to target market, in which case it is mass
marketing. But mass marketing is rare.
4.1 Targeted Marketing vs. Mass Marketing
LEARNING OBJECTIVES
1. Distinguish between targeted marketing and mass marketing and explain what led to the rise of each.
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2. Describe how targeted marketing can benefit firms.
3. Explain why companies differentiate among their customers.
Choosing select groups of people and organizations to sell to is called targeted marketing,
or differentiated marketing. It is a relatively new phenomenon. Mass marketing,
or undifferentiated marketing, came first. It evolved along with mass production and involves
selling the same product to everybody. You didn’t need to conduct any market research to know
that a household could use an electric washing machine. Build it and they will come. You can
think of mass marketing as a shotgun approach: you blast out as many marketing messages as
possible on every medium available as often as you can afford (Spellings Jr., 2009). (By contrast,
targeted marketing is more like shooting a rifle; you take careful aim at one type of customer with
your message.)
Automaker Henry Ford was very successful at both mass production and mass marketing. Ford
pioneered the modern-day assembly line early in the twentieth century, which helped him cost-
effectively pump out huge numbers of identical Model T automobiles. They came in only one
color: black. “Any customer can have a car painted any color he wants, so long as it is black,” Ford
used to joke. He also advertised in every major newspaper and persuaded all kinds of publications
to carry stories about the new, inexpensive cars. By 1918, half of all cars on America’s roads were
Model Ts (Ford, 1922).
Figure 4.1
You could forget about buying a custom Model T from Ford in the early 1900s. The good news?
The price was right.
Source: Unknown. Wikimedia Commons. In the public domain.
Then Alfred P. Sloan, the head of General Motors (GM), appeared on the scene. Sloan began to
segment consumers in the automobile marketto divide them by the prices they wanted to pay
and the different cars they wanted to buy. His efforts were successful, and in the 1950s, GM
overtook Ford in the as the nation’s top automaker (Manzanedo, 2005). (You might be interested
to know that before GM declared bankruptcy in 2009, it was widely believed the automaker
actually had too many car models. Apparently, “old habits die hard,” as the saying goes.)
Benefits of Segmenting and Targeting Markets
The story of General Motors raises an important point, which is that segmenting and targeting
markets doesn’t necessarily mean “skinnying down” the number of your customers. In fact, it can
help you enlarge your customer base by giving you information with which to successfully adjust
some component of your offeringthe offering itself, its price, the way you service and market it,
and so on. More specifically, the process can help you do the following:
Avoid head-on competition with other firms trying to capture the same customers
Develop new offerings and expand profitable brands and product lines
Remarket older, less-profitable products and brands
Identify early adopters
Redistribute money and sales efforts to focus on your most profitable customers
Retain “at-risk” customers in danger of defecting to your competitors
The trend today is toward more precise, targeted marketing. Figuring out “who’s who” in terms of
your customers involves some detective work, thoughoften market research. A variety of tools
and research techniques can be used to segment markets. Government agencies, such as the US
Census Bureau, collect and report vast amounts of population information and economic data
that can reveal changing consumption trends.
Technology is also making it easier for even small companies and entrepreneurs to gather
information about potential customers. For example, the online game company GamePUMA.com
originally believed its target market consisted of US customers. But when the firm looked more
closely at who was downloading games from its website, they were people from all over the globe.
The great product idea you had? As we explained in Week 3, “Consumer Behavior: How People
Make Buying Decisions,” companies are now using the Internet to track people’s web browsing
patterns and segment them into groups that can be marketed to. Even small businesses are able
to do this cost-effectively now because they don’t need their own software and programs. They
can simply sign up online for products like Google’s AdSense and AdWords programs. You can
locate potential customers by looking at blog sites and discussion forums on the web. Big-
boards.com has thousands of discussion forums you can mine to find potential customers. Do you
have a blog? Go to BlogPoll.com, and you can embed a survey in your blog to see what people
think of your idea. If you have a website, you can download an application onto your iPhone that
will give you up-to-the-minute information and statistics on your site’s visitors.
Getting a read on potential target markets doesn’t have to involve technology, though. Your own
experience and talking to would-be buyers is an important part of the puzzle. Go where you think
would-be buyers gorestaurants, malls, gyms, subways, grocery stores, day care centers, and
offices. Ask questions: What do buyers do during the day? What do they talk about? What
products or services do you see them using? Are they having an enjoyable experience when using
those products, or are they frustrated?
Figure 4.2
The Healthy Choice line of frozen dinners was launched by a heart attack victim.
Source: Photo by Ken. (2008). Flickr. Used under the terms of the
Creative Commons Attribution-NonCommercial 2.0 Generic license.
Healthy Choice frozen dinners were conceived as a result of questioning potential customers. The
food-maker ConAgra launched the dinners in the late 1980s after its CEO, Charlie Harper,
suffered a heart attack. One day a colleague complimented Harper on his wife’s tasty low-fat
turkey stew. That’s when Harper realized there were people like him who wanted healthy
convenience foods, so he began talking to them about what they wanted. Two years after the
Healthy Choice line was launched, it controlled 10 percent of the frozen-dinner market (Birchall
[b.], 2009).
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Segmenting and Targeting a Firm’s Current Customers
Finding and attracting new customers is generally more difficult than retaining your current
customers. People are creatures of habit. Think about how much time and energy you spend when
you switch your business from one firm to anothereven when you’re buying something as
simple as a haircut. If you aren’t happy with your hair and want to find a new hairdresser, you
first have to talk to people with haircuts you like or read reviews of salons. Once you decide to go
to a particular salon, you have to look it up on the Internet or your GPS device and hope you don’t
get lost. When you get to the salon, you explain to the new hairdresser how you want your hair cut
and hope he or she gets it right. You might also have to navigate different methods of payment.
Perhaps the new salon won’t accept your American Express card or won’t let you put the tip on
your card. However, once you have learned how the new salon operates, doing business with it
gets much easier.
The same is true for firms when it comes to finding new customers. Finding customers, getting to
know them, and figuring out what they really want is a difficult processone that’s fraught with
trial and error. That’s why it’s so important to get to know and form relationships with your
current customers. Broadly speaking, your goal is to do as much business with each one of them
as possible.
The economic downturn of the first decade in the 2000s drove home the point of making the most
of one’s current customers. During the downturn, new customers were hard to find, and firms’
advertising and marketing budgets were cut. Expensive, untargeted, shotgun-like marketing
campaigns that would probably produce spotty results were out of the question. Consequently,
many organizations chose to focus their selling efforts on current customers in hopes of retaining
their loyalty once the downturn was over (Birchall [a.], 2009).
This is the situation in which the adventure-based travel firm Backroads found itself in 2009. The
California-based company increased its revenues by creating a personalized marketing campaign
for people who had done business with Backroads in the past. The firm looked at information
such as customers’ past purchases, the seasons in which they took their trips, the levels of activity
associated with them, and whether or not the customers tended to vacation with children. The
company then created three relevant trip suggestions for each customer based on the information.
The information was sent to customers via postcards and e-mails with links to customized web
pages reminding them of the trips they had previously booked with Backroads and suggesting
new ones. “In terms of past customers, it was like off-the-charts better [than past campaigns],”
says Massimo Prioreschi, the vice president of Backroads’ sales and marketing group
(MarketingSherpa, 2009).
In addition to studying buying patterns, firms also try to know their customers by surveying them
or hiring marketing research firms to do so. Firms also use loyalty programs to find out about
their customers. For example, if you sign up to become a frequent flier with a certain airline, the
airline will likely ask to you a number of questions about your likes and dislikes. This information
will then be entered into a customer relationship management (CRM) system, and you might be
e-mailed special deals based on the routes you tend to fly. British Airways goes so far as to track
the magazines its most elite fliers like to read so the publications are available on its planes.
Many firmseven small onesare using Facebook to develop closer relationships with their
customers. At Hansen Cakes, a Beverly Hills (California) bakery, employee Suzi Finer posts “cake
updates” and photos of the goodies she’s working on to the company’s Facebook page. Along with
information about the cakes, Finer extends special offers to customers and mixes in any gossip
about Hollywood celebrities she’s spotted in the area. After Hansen Cakes launched its Facebook
page, the bakery’s sales shot up 1520 percent. “And that’s during the recession,” noted Finer
(Graham, 2009). Twitter is another way companies are keeping in touch with their customers and
boosting their revenues. For example, when the homemaking maven Martha Stewart schedules a
book signing, she tweets her followers, and voilmany of them show up at the bookstore she’s
appearing at to buy copies. Finding ways to interact with customers that they enjoywhether it’s
meeting or “tweeting” them, or putting on events and tradeshows they want to attendis the key
to forming relationships with them.
Remember what you learned in Week 2, “Customer Satisfaction, Loyalty, Empowerment , and
Management”: not all customers are created equal, including your current customers. Some
customers are highly profitable, and others aren’t. Still others will actually end up costing your
company money to serve. Consequently, you will want to interact with some more than others.
Believe it or not, some firms deliberately “untarget” unprofitable customers. That’s what Best Buy
did. In 2004, Best Buy got a lot of attention (not all good) when it was discovered the company
had categorized its buyers into “personas,” or types of buyers, and created customized sales
approaches for each. For example, an upper-middle-class woman was referred to as a “Jill.” A
young urban man was referred to as a “Buzz.” And pesky, bargain-hunting customers that Best
Buy couldn’t make much of a profit from? They were referred to as “devils” and taken off the
company’s mailing lists (Marco, 2009).
The knife cuts both ways, though. Not all firms are equal in the minds of consumers, who will
choose to do business with some companies rather than others. To consumers, market
segmentation means: meet my needsgive me what I want (Market Segmentation, 2009).
“Steps in One-to-One Marketing” outlines the steps companies can take to target their best
customers, form close, personal relationships with them, and give them what they wanta
process called one-to-one marketing. In terms of our shotgun vs. rifle approach, you can think
of one-to-one marketing as a rifle approach, but with an added advantage: now you have a scope
on your rifle.
One-to-one marketing is an idea proposed by Don Peppers and Martha Rogers in their 1994
book The One to One Future. The book described what life would be like after mass marketing.
We would all be able to get exactly what we want from sellers, and our relationships with them
would be collaborative, rather than adversarial. Are we there yet? Not quite. But it does seem to
be the direction the trend toward highly targeted marketing is leading.
Steps in One-to-One Marketing
1. Establish short-term measures to evaluate your efforts. Determine how you will
measure your effort. For example, will you use higher customer satisfaction ratings, increased
revenues earned per customer, number of products sold to customers, transaction costs, or
another measure?
2. Identify your customers. Gather all the information you can about your current customers,
including their buying patterns, likes, and dislikes. When conducting business with them,
include an “opt in” question that allows you to legally gather and use their phone numbers and
e-mail addresses so you can remain in contact with them.
3. Differentiate among your customers. Determine who your best customers are in terms of
what they spend and will spend in the future (their customer lifetime value), and how easy or
difficult they are to serve. Identify and target customers that spend only small amounts with
you but large amounts with your competitors.
4. Interact with your customers, targeting your best ones. Find ways and mediums in
which to talk to customers about topics they’re interested in and enjoy. Spend the bulk of your
resources interacting with your best (high-value) customers. Minimize the time and money you
spend on low-value customers with low growth potential.
5. Customize your products and marketing messages to meet their needs. Try to
customize your marketing messages and products in order to give your customers exactly what
they wantwhether it’s the product itself, its packaging, delivery, or the services associated
with it (Harler, 2008; Peppers & Rogers, 1999; Peppers, Rogers, & Dorf, 1999).
4 . 1 K E Y T A K E A W A Y
Choosing select groups of people to sell to is called targeted marketing, or differentiated marketing. Mass
marketing, or undifferentiated marketing, involves selling the same product to everyone. The trend today
is toward more precise, targeted marketing. Finding and attracting new customers is generally far more
difficult than retaining one’s current customers, which is why organizations try to interact with and form
relationships with their current customers. The goal of firms is to do as much business with their best
customers as possible. Forming close, personal relationships with customers and giving them exactly what
they want is a process called one-to-one marketing. It is the opposite of mass marketing.
4.2 How Markets Are Segmented
LEARNING OBJECTIVES
1. Understand and outline the ways in which markets are segmented.
2. Explain why marketers use some segmentation bases vs. others.
We will learn more about business markets and how they are segmented in Week 8. Now, we will
focus on consumer markets and how they can be segmented. In Week 3, “Consumer Behavior:
How People Make Buying Decisions,” we mentioned that certain factors drive consumers to buy
certain things. Many of the same factors can also be used to segment customers. A firm will often
use multiple segmentation bases, or criteria to classify buyers, to get a fuller picture of its
customers and create real value for them. Each variable adds a layer of information about those
buyers until you have a profile of a market segment.
There are all kinds of characteristics you can use to segment a market. You might not immediately
think of some of them. What about the physical sizes of people? “Big-and-tall” stores cater to the
segment of population that’s larger-sized. What about people with wide or narrow feet, or people
with medical conditions, certain hobbies, or different sexual orientations? Next, we’ll look at some
of the more common characteristics market researchers look at when segmenting buyers.
Types of Segmentation Bases
Table 4.1, “Common Ways of Segmenting Buyers,” shows some of the different types of buyer
characteristics used to segment markets. Notice that the characteristics fall into one of four
segmentation categories: behavioral, demographic, geographic, or psychographic. We’ll discuss
each of these categories in a moment. For now, you can get a rough idea of what the categories
consist of by looking at them in terms of how marketing professionals might answer the following
questions:
Behavioral segmentation. What benefits do customers want, and how do they use our
product?
Demographic segmentation. How do the ages, races, and ethnic backgrounds of our
customers affect what they buy?
Geographic segmentation. Where are our customers located, and how can we reach
them? What products do they buy based on their locations?
Psychographic segmentation. What do our customers think about and value? How
do they live their lives?
Table 4.1 Common Ways of Segmenting Buyers
By Behavior By Demographics By Geography By Psychographics
Benefits sought from the product
How often the product is used
(usage rate)
Usage situation (daily use,
holiday use, etc.)
Buyer’s status and loyalty to
product (nonuser, potential user,
first-time users, regular user)
Age/generation
Incom
