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Question & Answer:

  • Briefly describe the four major steps in designing a customer-driven marketing strategy.

  • Name and describe the four major sets of variables that might be used in segmenting consumer markets. Which segmenting variables does Starbucks use?

  • Discuss the factors marketers consider when choosing a targeting strategy.

  • Explain how micromarketing differs from differentiated and concentrated marketing and discuss the two types of micromarketing.

  • Explain how a company differentiates its products from competitors’ products.

  • Name and define the five winning value propositions described in the chapter. Which value proposition describes Walmart? Neiman Marcus? Explain your answers.

  • In a small group, visit a grocery store and examine the brands of breakfast cereal. Using the bases for segmenting consumer markets, identify the segmentation variables a specific brand appears to be using. Summarize the segmentation and targeting strategy for each brand. Identify brands with similar positioning strategies.

  • Assume you work at a regional state university whose traditional target market, high school students within your region, is shrinking. This segment is projected to decrease over the next ten years. Recommend other potential market segments and discuss the criteria you should consider to ensure that the identified segments are useful.

  • Form a small group and create an idea for a new business. Using the steps described in the chapter, develop a customer-driven marketing strategy. Describe your strategy and conclude with a positioning statement for your business.

  • What effect does very heavy usage by some customers have on other customers of broadband services? What are marketers of these services doing to counter the effect of heavy users?
    Most companies want customers to be heavy users of its products or services. When it comes to the Internet and wireless broadband services, however, that’s not necessarily the case. Internet providers, such as Comcast, may block or slow down Internet traffic for some heavy users, such as those who watch a lot of videos on YouTube. In 2009, the Federal Communications Commission (FCC) banned Comcast from blocking video file sharing; this ban was overturned in 2010 by a court ruling that the FCC does not have authority to enforce its “network neutrality” rules. Google, once a champion for unfettered Internet access for all, is changing its tune now that it can profit from favoring some customers over others in the burgeoning wireless broadband arena. Google and Verizon have teamed up to lobby for laws that allow them to favor some Web services over others.

  • Are marketers to blame for increasing obesity rates among children? Should the government ban the advertising of food products to children ages 17 and younger? Discuss the consequences of imposing such a ban.
    The obesity rate among children in the United States is 17 percent—triple what it was 30 years ago. Who’s to blame? One study reported that 76 percent of parents thought food advertising is a major contributor to childhood obesity but also found that over 80 percent blamed parents, not marketers. Yet, the federal government is homing its sights on marketers. Reminiscent of the 1970s when the FTC proposed banning advertising to children, a provision in the American Recovery and Reinvention Act of 2009 created an Interagency Working Group (IWG) on Food Marketing to Children. Although most regulations regarding marketing to children are limited to children ages 12 and younger, the current IWG guidelines include children up to 17 years old and propose restrictions on food marketing targeted to children. With $1.6 billion spent on food marketing and promotions targeted to children—$745 million of that on television—more than just marketers will be affected by marketing restrictions to this market segment.

  • What actions have food marketers taken to stem the threat of a ban on marketing to children?
    The obesity rate among children in the United States is 17 percent—triple what it was 30 years ago. Who’s to blame? One study reported that 76 percent of parents thought food advertising is a major contributor to childhood obesity but also found that over 80 percent blamed parents, not marketers. Yet, the federal government is homing its sights on marketers. Reminiscent of the 1970s when the FTC proposed banning advertising to children, a provision in the American Recovery and Reinvention Act of 2009 created an Interagency Working Group (IWG) on Food Marketing to Children. Although most regulations regarding marketing to children are limited to children ages 12 and younger, the current IWG guidelines include children up to 17 years old and propose restrictions on food marketing targeted to children. With $1.6 billion spent on food marketing and promotions targeted to children—$745 million of that on television—more than just marketers will be affected by marketing restrictions to this market segment.

  • Identify an appropriate market segment for this product. Discuss variables the company should consider when estimating the potential number of buyers for the high-performance Fisker Karma sports car.
    When you think of hybrid or electric automobiles, you probably think don’t think of the sports car. But the Fisker Karma is about to shatter that stereotype. It’s been called the hybrid with sex appeal and is often compared to a Mercedes-Benz roadster. In the increasingly crowded field of new-generation electric vehicles, Fisker Automotive wants to carve out a niche as a high-performance eco-car with lots of style. The Fisker Karma goes from 0 to 60 miles per hour in six seconds, can go up to 125 miles per hour, and can travel 50 miles on electric power and 300 miles on combined electric and gasoline power. All this performance and style does not come cheap; prices range from $87,900 to $106,000. Before bringing it to market, however, the company needs to identify its target market and estimate the market potential in this segment.

  • Using the chain ratio method described in Appendix 2, estimate the market potential for the Fisker Karma sports car. Search the Internet for reasonable numbers to represent the factors you identified in the previous question. Assume each buyer will purchase only one automobile and that the average price of automobiles in this market is $100,000.
    When you think of hybrid or electric automobiles, you probably think don’t think of the sports car. But the Fisker Karma is about to shatter that stereotype. It’s been called the hybrid with sex appeal and is often compared to a Mercedes-Benz roadster. In the increasingly crowded field of new-generation electric vehicles, Fisker Automotive wants to carve out a niche as a high-performance eco-car with lots of style. The Fisker Karma goes from 0 to 60 miles per hour in six seconds, can go up to 125 miles per hour, and can travel 50 miles on electric power and 300 miles on combined electric and gasoline power. All this performance and style does not come cheap; prices range from $87,900 to $106,000. Before bringing it to market, however, the company needs to identify its target market and estimate the market potential in this segment.

  • Using the full spectrum of segmentation variables, describe how Starbucks initially segmented and targeted the coffee market.
    By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

  • What changed first—the Starbucks customer or the Starbucks Experience? Explain your response by discussing the principles of market targeting.
    By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

  • Based on the segmentation variables, how is Starbucks now segmenting and targeting the coffee market?
    By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

  • Will Starbucks ever return to the revenue and profit growth that it once enjoyed? Why or why not?
    By now, you should be familiar with the Starbucks story. After a trip to Italy in the early 1980s, Howard Schultz was inspired to transform Starbucks—then just a handful of coffee shops in Seattle—into a chain of European-style coffeehouses. His vision wasn’t based on selling only gourmet coffees, espressos, and lattes, however. He wanted to provide customers with what he called a “third place”— a place away from home and work. As CEO of Starbucks, Schultz developed what became known as the Starbucks Experience, built around great coffee, personal service, and an inviting ambiance

  • Define product and the three levels of product.

  • Compare and contrast industrial products and consumer products.