Chapter 7: Market Segmentation & Target-Market Strategies
7-1 HAMMERING OUT THE POWER TOOL MARKET (157, 182)
The Black & Decker case study in Chapter 7 presents an excellent example of how a firm can use market segmentation to establish competitive advantage. As you explore the Black & Decker homepage, answer the questions below:
Black & Decker http://www.blackanddecker.com
a) How does this homepage reflect the market segmentation strategy described in the text? If you find that one or more market segments are not addressed through this homepage, why do you think that is the case? How could B&D improve its Web marketing strategy with respect to each segment? Based on what you've learned, write a brief description of a likely marketing mix for each market segment.
b) Now take a look at B&D's primary competition...
Do these companies seem to take the same market segmentation approach as B&D? If so, how is this reflected in each homepage? If not, how would you characterize their market segmentation strategies?
7-2 FOCUSING ON AN INDIVIDUAL MARKET SEGMENT (159)
As the authors point out, by tailoring marketing programs to individual market segments, management can do a better marketing job and make more efficient use of its marketing resources. The first examples given in the text reflect a one- or two-market segment approach. Take a look at the following homepages and describe how each of these firms is zeroing in on a definable individual market:
Casual Male/Big & Tall http://www.thinkbig.com
Godiva Chocolatier http://www.godiva.com
Southwest Airlines http://www.iflyswa.com
Provide a description of the overall market environment in which each company operates, followed by a profile of the individual market segment or "niche" each company is trying to carve out. What are the potential pitfalls of such an approach? What are the strategic advantages? If these companies found their market segment definitions too restrictive, what could each of them do to expand their market share?
In contrast to the individual market segment strategies highlighted in Exercise 7-2, many larger companies embrace market segmentation as an effective strategy for reaching the fragments that once constituted a more homogenous market in the U.S. Peruse the following homepages and answer the questions below:
Holiday Inn http://www.basshotels/holiday-inn
Write a brief description of each company's market segmentation strategy as evidenced in these homepages. What do all of them have in common? What are the potential advantages and disadvantages of this kind of strategy? How does this differ from the market segmentation strategy addressed in Exercise 7-2?
7-4 ULTIMATE CONSUMERS AND BUSINESS USERS: THE FIRST CUT (161)
The first step in market segmentation is to divide a potential market into two broad categories: ultimate consumers and business users. How would you characterize the ultimate consumers and business users for the primary product(s) or service(s) offered by the following companies?
American Greetings http://www.amgreetings.com
Verio New York http://newyork.verio.net
How do these homepages address the different needs and buying motives of these two market categories? Why is it important make this distinction?
How can the following firms use geographic segmentation to focus their overall marketing strategy?
Omega Research & Development http://www.caralarm.com
AGCO Corporation http://www.agcocorp.com
Hawaiian Tropic http://www.htropic.com
a) The American Association of Retired Persons (AARP) is one of the more obvious examples of demographic segmentation by age. Or is it?
Which age-based market segment would you expect AARP to focus on? Is this what you found on their homepage? Besides seniors (persons over the age of 65), what other age-based market segment(s) does AARP need to address? Why? What does this say about the need for flexibility when defining an organization's target age group?
b) It may surprise you to learn that the cable music channels MTV and VH-1 are owned and operated by the same company. While casual observers may see these two stations as competitors, they have actually been cleverly positioned to appeal to different age-based demographic segments. How do the following homepages reflect the age-based marketing strategy of each channel?
What are the potential pitfalls of marketing to specific age-based market segments?
How can the concept of psychographic segmentation be used to explain the marketing strategies of the following companies? What personality characteristics, life-styles, and values are these companies catering to? Give examples from each homepage to support your answer.
The Sharper Image http://www.sharperimage.com
What are the limitations of psychographic segmentation?
Using the following homepages for reference, how would you segment the business and consumer markets for photographic paper?
How would you classify the target-market strategies of the following three companies? Decide whether each one represents a market-aggregation, single-segment, or multiple-segment strategy. Provide examples from each homepage to support you answer.
New Balance http://www.newbalance.com
Golden Escapes http://www.goldenescapes.com
What are the potential drawbacks of these strategies for each company?
Using whatever Internet resources you need (search engines, etc.), locate a detailed annual report for a large for-profit company. How does this organization address the issue of forecasting market demand? What does this report tell you about the market potential, market share, and sales forecast for this company's primary product(s)? What methods could this firm use to effectively measure and forecast market demand? Why is it important for this company to forecast market demand?
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