Consumer Behavior, 12th Edition Solution Manual
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Consumer Behavior
12e
Leon Schiffman
Joseph Wisenblit
Instructor’s Resource Manual
for Consumer Behavior
Christy Ashley
12e
Leon Schiffman
Joseph Wisenblit
Instructor’s Resource Manual
for Consumer Behavior
Christy Ashley
CHAPTER 1
Consumer Behavior and Technology
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able:
1.1 To understand the evolution of the marketing concept, what consumer behavior is,
and the components of strategic marketing.
1.2 To understand how technology has benefited both marketers and consumers.
1.3 To understand providing value and satisfaction and how technology has enhanced
customer loyalty and retention.
1.4 To understand marketers’ social and ethical responsibilities.
1.5 To understand consumer decision-making as the foundation of this book.
1.6 To explain how the knowledge of consumer behavior advances seeking employment
after graduation.
CHAPTER SUMMARY
Learning Objective 1.1: To understand the evolution of the marketing concept, what
consumer behavior is, and the components of strategic marketing.
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society. Consumer behavior consists of consumers’ actions taken while searching for,
purchasing, using, evaluating, and disposing of products and services that they expect
will satisfy their needs. Consumer behavior influences how marketers can communicate
and deliver products that offer value to customers and society and explains how
individuals make decisions to spend their available resources on products and services.
Marketing and consumer behavior stem from the marketing concept, which maintains
that the essence of marketing consists of satisfying consumers’ needs, creating value, and
retaining customers. Companies must produce only those goods they have already
determined that consumers will buy. Marketing myopia is a focus on the product rather
than on the needs that the product presumes to satisfy.
The marketing mix (also known as the four Ps) consists of product, price, place
(distribution), and promotion. Market segmentation, targeting, and positioning are the
foundation of turning consumers into customers. Market segmentation is the process of
dividing a market into subsets of consumers who share common needs or characteristics.
Targeting means selecting the segments that the company views as prospective customers
and pursuing them. Positioning is the process by which a company creates a distinct
image and identity for its products, services, and brands in consumers’ minds. The
societal marketing concept requires marketers to fulfill the needs of their target markets
in ways that improve, preserve, and enhance society’s well-being and simultaneously
Consumer Behavior and Technology
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able:
1.1 To understand the evolution of the marketing concept, what consumer behavior is,
and the components of strategic marketing.
1.2 To understand how technology has benefited both marketers and consumers.
1.3 To understand providing value and satisfaction and how technology has enhanced
customer loyalty and retention.
1.4 To understand marketers’ social and ethical responsibilities.
1.5 To understand consumer decision-making as the foundation of this book.
1.6 To explain how the knowledge of consumer behavior advances seeking employment
after graduation.
CHAPTER SUMMARY
Learning Objective 1.1: To understand the evolution of the marketing concept, what
consumer behavior is, and the components of strategic marketing.
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society. Consumer behavior consists of consumers’ actions taken while searching for,
purchasing, using, evaluating, and disposing of products and services that they expect
will satisfy their needs. Consumer behavior influences how marketers can communicate
and deliver products that offer value to customers and society and explains how
individuals make decisions to spend their available resources on products and services.
Marketing and consumer behavior stem from the marketing concept, which maintains
that the essence of marketing consists of satisfying consumers’ needs, creating value, and
retaining customers. Companies must produce only those goods they have already
determined that consumers will buy. Marketing myopia is a focus on the product rather
than on the needs that the product presumes to satisfy.
The marketing mix (also known as the four Ps) consists of product, price, place
(distribution), and promotion. Market segmentation, targeting, and positioning are the
foundation of turning consumers into customers. Market segmentation is the process of
dividing a market into subsets of consumers who share common needs or characteristics.
Targeting means selecting the segments that the company views as prospective customers
and pursuing them. Positioning is the process by which a company creates a distinct
image and identity for its products, services, and brands in consumers’ minds. The
societal marketing concept requires marketers to fulfill the needs of their target markets
in ways that improve, preserve, and enhance society’s well-being and simultaneously
CHAPTER 1
Consumer Behavior and Technology
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able:
1.1 To understand the evolution of the marketing concept, what consumer behavior is,
and the components of strategic marketing.
1.2 To understand how technology has benefited both marketers and consumers.
1.3 To understand providing value and satisfaction and how technology has enhanced
customer loyalty and retention.
1.4 To understand marketers’ social and ethical responsibilities.
1.5 To understand consumer decision-making as the foundation of this book.
1.6 To explain how the knowledge of consumer behavior advances seeking employment
after graduation.
CHAPTER SUMMARY
Learning Objective 1.1: To understand the evolution of the marketing concept, what
consumer behavior is, and the components of strategic marketing.
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society. Consumer behavior consists of consumers’ actions taken while searching for,
purchasing, using, evaluating, and disposing of products and services that they expect
will satisfy their needs. Consumer behavior influences how marketers can communicate
and deliver products that offer value to customers and society and explains how
individuals make decisions to spend their available resources on products and services.
Marketing and consumer behavior stem from the marketing concept, which maintains
that the essence of marketing consists of satisfying consumers’ needs, creating value, and
retaining customers. Companies must produce only those goods they have already
determined that consumers will buy. Marketing myopia is a focus on the product rather
than on the needs that the product presumes to satisfy.
The marketing mix (also known as the four Ps) consists of product, price, place
(distribution), and promotion. Market segmentation, targeting, and positioning are the
foundation of turning consumers into customers. Market segmentation is the process of
dividing a market into subsets of consumers who share common needs or characteristics.
Targeting means selecting the segments that the company views as prospective customers
and pursuing them. Positioning is the process by which a company creates a distinct
image and identity for its products, services, and brands in consumers’ minds. The
societal marketing concept requires marketers to fulfill the needs of their target markets
in ways that improve, preserve, and enhance society’s well-being and simultaneously
Consumer Behavior and Technology
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able:
1.1 To understand the evolution of the marketing concept, what consumer behavior is,
and the components of strategic marketing.
1.2 To understand how technology has benefited both marketers and consumers.
1.3 To understand providing value and satisfaction and how technology has enhanced
customer loyalty and retention.
1.4 To understand marketers’ social and ethical responsibilities.
1.5 To understand consumer decision-making as the foundation of this book.
1.6 To explain how the knowledge of consumer behavior advances seeking employment
after graduation.
CHAPTER SUMMARY
Learning Objective 1.1: To understand the evolution of the marketing concept, what
consumer behavior is, and the components of strategic marketing.
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and
society. Consumer behavior consists of consumers’ actions taken while searching for,
purchasing, using, evaluating, and disposing of products and services that they expect
will satisfy their needs. Consumer behavior influences how marketers can communicate
and deliver products that offer value to customers and society and explains how
individuals make decisions to spend their available resources on products and services.
Marketing and consumer behavior stem from the marketing concept, which maintains
that the essence of marketing consists of satisfying consumers’ needs, creating value, and
retaining customers. Companies must produce only those goods they have already
determined that consumers will buy. Marketing myopia is a focus on the product rather
than on the needs that the product presumes to satisfy.
The marketing mix (also known as the four Ps) consists of product, price, place
(distribution), and promotion. Market segmentation, targeting, and positioning are the
foundation of turning consumers into customers. Market segmentation is the process of
dividing a market into subsets of consumers who share common needs or characteristics.
Targeting means selecting the segments that the company views as prospective customers
and pursuing them. Positioning is the process by which a company creates a distinct
image and identity for its products, services, and brands in consumers’ minds. The
societal marketing concept requires marketers to fulfill the needs of their target markets
in ways that improve, preserve, and enhance society’s well-being and simultaneously
meet their business objectives.
Learning Objective 1.2: To understand how technology has benefited both marketers
and consumers.
Technology has revolutionized the marketing mix, segmentation, targeting, positioning,
and customer retention. When consumers use their computers, cell phones, electronic
readers, tablets, and other electronic devices, they provide marketers with the kind of
information that enables companies to target them immeasurably more effectively than
during the pre-internet days. Online technologies create a “value exchange:” marketers
provide value to consumers in the form of information, opportunities to customize
products easily, entertainment content, and much more. While online, consumers
provide value to marketers by “revealing themselves,” thereby enabling companies to
market their products more efficiently and precisely. Surfing online allows consumers to
locate the best prices for products or services, bid on various offerings, bypass
distribution outlets and middlemen, and shop for goods around the globe and around the
clock. Online communication abilities have created sophisticated and discerning
consumers who are hard to attract, satisfy, and retain. More than ever before, marketers
must customize their products, add value to the physical product or the core of a service,
provide the right benefits to the right consumer segments, and position their products
effectively.
Technology also enables marketers to refine their strategies because they can readily
customize their offerings and promotional messages, offer more effective pricing and
shorter distribution channels, and build long-term relationships with customers. By using
rapidly advancing technologies to track consumers, marketers can identify opportunities
for creating new offerings, as well as improving and extending existing products and
services. They can gather comprehensive consumer information by tracking consumers
online, requiring prospective buyers to register at their websites, and combining this
knowledge with demographic and lifestyle data gathered offline.
Learning Objective 1.3: To understand providing value and satisfaction and how
technology has enhanced customer loyalty and retention.
Customer value is the ratio between customers’ perceived benefits and the resources they
use to obtain those benefits. Customer satisfaction is customers’ perceptions of the
performance of the product or service in relation to their expectations. Customer retention
involves turning individual consumer transactions into long-term customer relationships
by making it in the best interests of customers to stay with the company rather than
switch to another firm.
It is more expensive to win new customers than to retain existing ones. Technologies
allow marketers to retain more customers and collect highly sophisticated data about
shoppers’ preferences and post-purchase evaluations. Consumers who are highly satisfied
Learning Objective 1.2: To understand how technology has benefited both marketers
and consumers.
Technology has revolutionized the marketing mix, segmentation, targeting, positioning,
and customer retention. When consumers use their computers, cell phones, electronic
readers, tablets, and other electronic devices, they provide marketers with the kind of
information that enables companies to target them immeasurably more effectively than
during the pre-internet days. Online technologies create a “value exchange:” marketers
provide value to consumers in the form of information, opportunities to customize
products easily, entertainment content, and much more. While online, consumers
provide value to marketers by “revealing themselves,” thereby enabling companies to
market their products more efficiently and precisely. Surfing online allows consumers to
locate the best prices for products or services, bid on various offerings, bypass
distribution outlets and middlemen, and shop for goods around the globe and around the
clock. Online communication abilities have created sophisticated and discerning
consumers who are hard to attract, satisfy, and retain. More than ever before, marketers
must customize their products, add value to the physical product or the core of a service,
provide the right benefits to the right consumer segments, and position their products
effectively.
Technology also enables marketers to refine their strategies because they can readily
customize their offerings and promotional messages, offer more effective pricing and
shorter distribution channels, and build long-term relationships with customers. By using
rapidly advancing technologies to track consumers, marketers can identify opportunities
for creating new offerings, as well as improving and extending existing products and
services. They can gather comprehensive consumer information by tracking consumers
online, requiring prospective buyers to register at their websites, and combining this
knowledge with demographic and lifestyle data gathered offline.
Learning Objective 1.3: To understand providing value and satisfaction and how
technology has enhanced customer loyalty and retention.
Customer value is the ratio between customers’ perceived benefits and the resources they
use to obtain those benefits. Customer satisfaction is customers’ perceptions of the
performance of the product or service in relation to their expectations. Customer retention
involves turning individual consumer transactions into long-term customer relationships
by making it in the best interests of customers to stay with the company rather than
switch to another firm.
It is more expensive to win new customers than to retain existing ones. Technologies
allow marketers to retain more customers and collect highly sophisticated data about
shoppers’ preferences and post-purchase evaluations. Consumers who are highly satisfied
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or delighted keep buying the same products and brands, provide positive word-of-mouth
to others, and often become “customers for life.” Those who are less satisfied or feel
neutral either switch to a competitor immediately or wait until another marketer offers
them a somewhat lower price and then switch. Dissatisfied customers spread negative
and often exaggerated word-of-mouth. Internal marketing is marketing the organization
to its personnel.
Learning Objective 1.4: To understand marketers’ social and ethical responsibilities.
The marketing concept—fulfilling the needs of target audiences— is shortsighted. Some
products that satisfy customer needs are harmful to individuals and society, and others
cause environmental deterioration. Studying consumer behavior results in an
understanding of why and how consumers make purchase decisions. The societal
marketing concept requires marketers to fulfill the needs of the target audience in ways
that improve, preserve, and enhance society’s well-being while simultaneously meeting
their business objectives.
Learning Objective 1.5: To understand consumer decision-making as the foundation of
this book.
Consumer behavior stems from four disciplines: (1) psychology, which is the study of the
human mind and the mental factors that affect behavior; (2) sociology, which is the study
of the development, structure, functioning, and problems of human society; (3)
anthropology, which compares human societies’ cultures and development; and (4)
communication, which is the process of imparting or exchanging information.
The process of consumer decision-making consists of the input, process, and output
stages. The input stage includes two influencing factors: the firm’s marketing efforts and
sociocultural influences. This stage also includes the methods by which information
from firms and sociocultural sources is transmitted to consumers. The process stage
focuses on how consumers make decisions. Psychological factors affect how the external
inputs influence the consumer’s recognition of a need, pre-purchase search for
information, and evaluation of alternatives. The output stage consists of two post-
decision activities: purchase behavior and post-purchase evaluation.
This book includes five parts. Part I provides an overview of marketing and consumer
behavior and the components of strategic marketing. Part II describes the consumer as an
individual and explains the psychological factors that affect consumer behavior. Part III
addresses the communication and persuasion process, the revolutionary impact of new
media, and the roles of reference groups, opinion leaders, and word-of-mouth. Part IV
examines consumers in their social and cultural settings. Part V includes discussions of
the consumer decision-making process, consumers’ reactions to innovative products,
marketers’ social responsibility and ethically questionable practices, and the methodology
of consumer research.
to others, and often become “customers for life.” Those who are less satisfied or feel
neutral either switch to a competitor immediately or wait until another marketer offers
them a somewhat lower price and then switch. Dissatisfied customers spread negative
and often exaggerated word-of-mouth. Internal marketing is marketing the organization
to its personnel.
Learning Objective 1.4: To understand marketers’ social and ethical responsibilities.
The marketing concept—fulfilling the needs of target audiences— is shortsighted. Some
products that satisfy customer needs are harmful to individuals and society, and others
cause environmental deterioration. Studying consumer behavior results in an
understanding of why and how consumers make purchase decisions. The societal
marketing concept requires marketers to fulfill the needs of the target audience in ways
that improve, preserve, and enhance society’s well-being while simultaneously meeting
their business objectives.
Learning Objective 1.5: To understand consumer decision-making as the foundation of
this book.
Consumer behavior stems from four disciplines: (1) psychology, which is the study of the
human mind and the mental factors that affect behavior; (2) sociology, which is the study
of the development, structure, functioning, and problems of human society; (3)
anthropology, which compares human societies’ cultures and development; and (4)
communication, which is the process of imparting or exchanging information.
The process of consumer decision-making consists of the input, process, and output
stages. The input stage includes two influencing factors: the firm’s marketing efforts and
sociocultural influences. This stage also includes the methods by which information
from firms and sociocultural sources is transmitted to consumers. The process stage
focuses on how consumers make decisions. Psychological factors affect how the external
inputs influence the consumer’s recognition of a need, pre-purchase search for
information, and evaluation of alternatives. The output stage consists of two post-
decision activities: purchase behavior and post-purchase evaluation.
This book includes five parts. Part I provides an overview of marketing and consumer
behavior and the components of strategic marketing. Part II describes the consumer as an
individual and explains the psychological factors that affect consumer behavior. Part III
addresses the communication and persuasion process, the revolutionary impact of new
media, and the roles of reference groups, opinion leaders, and word-of-mouth. Part IV
examines consumers in their social and cultural settings. Part V includes discussions of
the consumer decision-making process, consumers’ reactions to innovative products,
marketers’ social responsibility and ethically questionable practices, and the methodology
of consumer research.
Loading page 5...
Learning Objective 1.6: To explain how the knowledge of consumer behavior advances
seeking employment after graduation.
Students with expertise in consumer behavior should pursue employment in three areas:
brand management, advertising, and consumer research.
CHAPTER OUTLINE
INTRODUCTION
1. Marketing is the activity, set of institutions, and processes for creating,
communicating, and delivering offerings that have value for customers, clients,
partners, and society.
2. Consumer behavior is the study of consumers’ actions during searching, evaluating,
purchasing, and using products and services that they believe would satisfy their
needs.
3. Consumer purchases are determined not by needs alone, but also by how the product
helps owners express their characteristics.
*****Use Key Terms marketing, consumer behavior Here, Use Figure #1.1
Here*****
The Marketing Concept
1. Marketing and consumer behavior stem from the marketing concept, which
maintains that marketing consists of satisfying consumers’ needs, creating value, and
retaining customers, and that companies must produce only those goods that they
have already determined would satisfy consumer needs and meet organizational
goals.
*****Use Key Term marketing concept Here, Use Learning Objective #1.1 Here; Use
Figure #1.2 Here; Use Review and Discussion Question 1.1 Here*****
2. The production concept focused on cheap, efficient production and intensive
distribution.
3. The product concept assumes consumers will buy the product that offers the most
features.
4. A product orientation may lead to marketing myopia, or a nearsighted focus on the
product and its direct competitors vs. the market’s needs.
5. The selling concept maintains that marketers should sell the products they made
instead of only making products they could sell.
*****Use Key Terms production concept, product concept, marketing myopia,
selling concept Here*****
seeking employment after graduation.
Students with expertise in consumer behavior should pursue employment in three areas:
brand management, advertising, and consumer research.
CHAPTER OUTLINE
INTRODUCTION
1. Marketing is the activity, set of institutions, and processes for creating,
communicating, and delivering offerings that have value for customers, clients,
partners, and society.
2. Consumer behavior is the study of consumers’ actions during searching, evaluating,
purchasing, and using products and services that they believe would satisfy their
needs.
3. Consumer purchases are determined not by needs alone, but also by how the product
helps owners express their characteristics.
*****Use Key Terms marketing, consumer behavior Here, Use Figure #1.1
Here*****
The Marketing Concept
1. Marketing and consumer behavior stem from the marketing concept, which
maintains that marketing consists of satisfying consumers’ needs, creating value, and
retaining customers, and that companies must produce only those goods that they
have already determined would satisfy consumer needs and meet organizational
goals.
*****Use Key Term marketing concept Here, Use Learning Objective #1.1 Here; Use
Figure #1.2 Here; Use Review and Discussion Question 1.1 Here*****
2. The production concept focused on cheap, efficient production and intensive
distribution.
3. The product concept assumes consumers will buy the product that offers the most
features.
4. A product orientation may lead to marketing myopia, or a nearsighted focus on the
product and its direct competitors vs. the market’s needs.
5. The selling concept maintains that marketers should sell the products they made
instead of only making products they could sell.
*****Use Key Terms production concept, product concept, marketing myopia,
selling concept Here*****
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Market Segmentation, Targeting, and Positioning
1. Market segmentation is the process of dividing a market into subsets of consumers
with common needs or characteristics. Each subset represents a consumer group with
shared needs that are different from those shared by other groups.
2. Targeting is selecting the segments identified as prospective customers and pursuing
them with distinct offerings.
3. Positioning refers to the development of a distinct image for the product or service in
the mind of the consumer. The image should differentiate the offering from the
competition by stressing the product’s unique benefits.
*****Use Key Terms market segmentation, targeting, and positioning Here; Use
Review and Discussion Question #1.2 Here*****
4. The marketing mix consists of a company’s service and/or product offerings to
consumers and the methods and tools it selects to accomplish the exchange.
5. Four basic elements (known as the four Ps) include:
a) The product or service —features, designs, brands, packaging, post-purchase
benefits, etc.
b) The price—list price (including discounts, allowances, and payment methods).
c) The place—distribution of the product or service.
d) Promotion—advertising, sales promotion, public relations, and sales efforts
designed to build awareness of and demand for the product or service.
*****Use Key Term marketing mix (the four Ps) Here*****
Technology Benefits Consumers and Marketers
*****Use Learning Objective #1.2 Here *****
1. Technology shifted communications from a one-way process to a two-way interactive
exchange.
2. Marketers provide value to consumers via opportunities to shop more efficiently,
customize products easily, and access entertainment content and information.
3. Consumers provide value to marketers by “revealing themselves” while online, which
enables companies to market their products more efficiently and precisely.
***** Use Hands-on Assignment #1.9 Here*****
4. Marketers have been offering more personalized products.
5. Figure 1.3 illustrates that across age groups, most Americans own technological
gadgets.
6. Figure 1.4 details Americans’ most prominent online activities (percentages).
7. Marketers can target consumers based on their searches for more precise targeting.
1. Market segmentation is the process of dividing a market into subsets of consumers
with common needs or characteristics. Each subset represents a consumer group with
shared needs that are different from those shared by other groups.
2. Targeting is selecting the segments identified as prospective customers and pursuing
them with distinct offerings.
3. Positioning refers to the development of a distinct image for the product or service in
the mind of the consumer. The image should differentiate the offering from the
competition by stressing the product’s unique benefits.
*****Use Key Terms market segmentation, targeting, and positioning Here; Use
Review and Discussion Question #1.2 Here*****
4. The marketing mix consists of a company’s service and/or product offerings to
consumers and the methods and tools it selects to accomplish the exchange.
5. Four basic elements (known as the four Ps) include:
a) The product or service —features, designs, brands, packaging, post-purchase
benefits, etc.
b) The price—list price (including discounts, allowances, and payment methods).
c) The place—distribution of the product or service.
d) Promotion—advertising, sales promotion, public relations, and sales efforts
designed to build awareness of and demand for the product or service.
*****Use Key Term marketing mix (the four Ps) Here*****
Technology Benefits Consumers and Marketers
*****Use Learning Objective #1.2 Here *****
1. Technology shifted communications from a one-way process to a two-way interactive
exchange.
2. Marketers provide value to consumers via opportunities to shop more efficiently,
customize products easily, and access entertainment content and information.
3. Consumers provide value to marketers by “revealing themselves” while online, which
enables companies to market their products more efficiently and precisely.
***** Use Hands-on Assignment #1.9 Here*****
4. Marketers have been offering more personalized products.
5. Figure 1.3 illustrates that across age groups, most Americans own technological
gadgets.
6. Figure 1.4 details Americans’ most prominent online activities (percentages).
7. Marketers can target consumers based on their searches for more precise targeting.
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8. Promotional messages are more interactive, personalized and targeted.
9. Cross-screen marketing consists of tracking and targeting users across their
computers, mobile phones and tablets.
***** Use Key Term cross-screen marketing Here; Use Figures 1.5, 1.6 and 1.7 Here;
Use Review and Discussion Question 1.4 Here *****
Customer Value, Satisfaction, Trust, and Retention
*****Use Learning Objective #1.3 Here *****
1. Customer value is defined as the ratio between the customer’s perceived benefits
(economic, functional, and psychological) and the resources (monetary, time, effort,
psychological) used to obtain those benefits.
2. Customer satisfaction is the individual’s perception of the performance of the
product or service in relation to his or her expectations.
3. The overall objective of providing value to customers continuously and more
effectively than the competition is to have and to retain highly satisfied customers.
This strategy of customer retention makes it in the best interest of customers to stay
with the company rather than switch to another company.
***** Use Key Terms customer value, customer satisfaction, customer retention
Here *****
4. It is more expensive to win new customers than to retain existing ones for several
reasons:
a) Loyal customers buy more products and constitute a ready-made market for new
models of existing products as well as new ones, and also represent an
opportunity for cross-selling.
b) Long-term customers who are thoroughly familiar with the company’s products
are an important asset when new products and services are developed and tested.
c) Loyal customers are less price-sensitive and pay less attention to competitors’
advertising. Thus, they make it harder for competitors to enter markets.
d) Servicing existing customers, who are familiar with the firm’s offerings and
processes, is cheaper. It is expensive to “train” new customers and get them
acquainted with a seller’s processes and policies. The cost of acquisition occurs
only at the beginning of a relationship, so the longer the relationship, the lower
the amortized cost.
e) Loyal customers spread positive word-of-mouth and refer other customers.
f) Marketing efforts aimed at attracting new customers are expensive; indeed, in
saturated markets, it may be impossible to find new customers. Low customer
turnover is correlated with higher profits.
g) Increased customer retention and loyalty make the employees’ jobs easier and
more satisfying. In turn, happy employees feed back into higher customer
satisfaction by providing good service and customer support systems.
9. Cross-screen marketing consists of tracking and targeting users across their
computers, mobile phones and tablets.
***** Use Key Term cross-screen marketing Here; Use Figures 1.5, 1.6 and 1.7 Here;
Use Review and Discussion Question 1.4 Here *****
Customer Value, Satisfaction, Trust, and Retention
*****Use Learning Objective #1.3 Here *****
1. Customer value is defined as the ratio between the customer’s perceived benefits
(economic, functional, and psychological) and the resources (monetary, time, effort,
psychological) used to obtain those benefits.
2. Customer satisfaction is the individual’s perception of the performance of the
product or service in relation to his or her expectations.
3. The overall objective of providing value to customers continuously and more
effectively than the competition is to have and to retain highly satisfied customers.
This strategy of customer retention makes it in the best interest of customers to stay
with the company rather than switch to another company.
***** Use Key Terms customer value, customer satisfaction, customer retention
Here *****
4. It is more expensive to win new customers than to retain existing ones for several
reasons:
a) Loyal customers buy more products and constitute a ready-made market for new
models of existing products as well as new ones, and also represent an
opportunity for cross-selling.
b) Long-term customers who are thoroughly familiar with the company’s products
are an important asset when new products and services are developed and tested.
c) Loyal customers are less price-sensitive and pay less attention to competitors’
advertising. Thus, they make it harder for competitors to enter markets.
d) Servicing existing customers, who are familiar with the firm’s offerings and
processes, is cheaper. It is expensive to “train” new customers and get them
acquainted with a seller’s processes and policies. The cost of acquisition occurs
only at the beginning of a relationship, so the longer the relationship, the lower
the amortized cost.
e) Loyal customers spread positive word-of-mouth and refer other customers.
f) Marketing efforts aimed at attracting new customers are expensive; indeed, in
saturated markets, it may be impossible to find new customers. Low customer
turnover is correlated with higher profits.
g) Increased customer retention and loyalty make the employees’ jobs easier and
more satisfying. In turn, happy employees feed back into higher customer
satisfaction by providing good service and customer support systems.
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***** Use Review and Discussion Questions #1.6 & #1.7 Here; Use Hands-on
Assignment #1.11 Here*****
Technology and Customer Relationships
1. Technologies often enhance customer relationships and retention by engaging
consumers with brands.
a. Emotional bonds represent a customer’s high level of personal commitment
and attachment to the company.
b. Transactional bonds are the mechanics and structures that facilitate
exchanges between consumers and sellers.
c. Social media include means of interaction among people in which they create,
share and exchange information and ideas in virtual communities and
networks.
***** Use Key Terms emotional bonds, transactional bonds, social media Here *****
2. Emotional and transactional motives should be discerned to understand drivers of
customer satisfaction, which leads to retention and long-term relationships.
a. Determinants of customer satisfaction online include adaptation, interactivity,
nurturing, commitment, network, assortment, transaction ease, engagement,
loyalty, inertia and trust.
b. Table 1.1 applies a four-way categorization of transaction-based and
emotional bond-based customer relationships with marketers to Amazon’s
customers.
***** Use Table 1.1 Here *****
3. Customers who are highly satisfied or delighted keep purchasing the same products
and brands, provide positive and encouraging word-of-mouth to others, and often
become life-long customers.
4. With respect to customer satisfaction there might be several types of customers:
a) Loyalists—completely satisfied customers who keep purchasing.
b) Apostles—those whose experiences exceed their expectations and who provide
very positive word of mouth about the company to others.
c) Defectors—those who feel neutral or merely satisfied and are likely to stop
doing business with the company.
d) Terrorists—those who have had negative experiences with the company and
who spread negative word of mouth.
e) Hostages—unhappy customers who stay with the company because of no choice
(or other reasons).
f) Mercenaries—very satisfied customers but who have no real loyalty to the
company and may defect.
5. Companies classify customers according to profitability by tracking revenues
obtained from individual customers and categorizes them. For example:
Assignment #1.11 Here*****
Technology and Customer Relationships
1. Technologies often enhance customer relationships and retention by engaging
consumers with brands.
a. Emotional bonds represent a customer’s high level of personal commitment
and attachment to the company.
b. Transactional bonds are the mechanics and structures that facilitate
exchanges between consumers and sellers.
c. Social media include means of interaction among people in which they create,
share and exchange information and ideas in virtual communities and
networks.
***** Use Key Terms emotional bonds, transactional bonds, social media Here *****
2. Emotional and transactional motives should be discerned to understand drivers of
customer satisfaction, which leads to retention and long-term relationships.
a. Determinants of customer satisfaction online include adaptation, interactivity,
nurturing, commitment, network, assortment, transaction ease, engagement,
loyalty, inertia and trust.
b. Table 1.1 applies a four-way categorization of transaction-based and
emotional bond-based customer relationships with marketers to Amazon’s
customers.
***** Use Table 1.1 Here *****
3. Customers who are highly satisfied or delighted keep purchasing the same products
and brands, provide positive and encouraging word-of-mouth to others, and often
become life-long customers.
4. With respect to customer satisfaction there might be several types of customers:
a) Loyalists—completely satisfied customers who keep purchasing.
b) Apostles—those whose experiences exceed their expectations and who provide
very positive word of mouth about the company to others.
c) Defectors—those who feel neutral or merely satisfied and are likely to stop
doing business with the company.
d) Terrorists—those who have had negative experiences with the company and
who spread negative word of mouth.
e) Hostages—unhappy customers who stay with the company because of no choice
(or other reasons).
f) Mercenaries—very satisfied customers but who have no real loyalty to the
company and may defect.
5. Companies classify customers according to profitability by tracking revenues
obtained from individual customers and categorizes them. For example:
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a. Diamonds – customers who travelled at least 250,000 miles in first class in
one year
b. Emeralds – customers who travelled in first class, but not as frequently as the
diamonds or customers who travel very frequently in business class.
c. Sapphires – a profitable segment because they fly frequently and in business
class.
d. Elite and select – heavy flyers, mostly in premium economy.
***** Use Figure 1.5 Here *****
6. Companies must develop measures to assess customer retention strategies, which may
include:
a. Customer Valuation
b. Retention Rates
c. Analyzing Defections
Social Responsibility and Ethics
***** Use Learning Objective 1.4 Here*****
1. Socially responsible marketing suggests marketers would be better off if they
integrated social responsibility into their marketing strategies because companies
prosper when society prospers.
2. The societal marketing concept requires marketers to fulfill the needs of the target
audience in ways that improve, preserve and enhance society’s well-being while
simultaneously meeting their business objectives.
3. Some marketers ignore laws and market potentially harmful products (e.g. Monster
Beverage Corp.)
4. Some companies incorporated social goals into their mission statements because they
believe it is important for organizational effectiveness.
5. Non-profit organizations also advance causes they believe are ethically and morally
right.
*****Use Key Term societal marketing concept Here; Use Figure 1.4 Here; Use
Review and Discussion Question 1.3 Here; Use Hands-On Assignment 1.10 Here
*****
Consumer Decision-Making
***** Use Learning Objective 1.5 Here *****
1. Marketing theorists borrowed heavily from concepts developed in other scientific
disciplines to understand consumer behavior:
a) Psychology—the study of the human mind and mental factors that affect
behavior.
one year
b. Emeralds – customers who travelled in first class, but not as frequently as the
diamonds or customers who travel very frequently in business class.
c. Sapphires – a profitable segment because they fly frequently and in business
class.
d. Elite and select – heavy flyers, mostly in premium economy.
***** Use Figure 1.5 Here *****
6. Companies must develop measures to assess customer retention strategies, which may
include:
a. Customer Valuation
b. Retention Rates
c. Analyzing Defections
Social Responsibility and Ethics
***** Use Learning Objective 1.4 Here*****
1. Socially responsible marketing suggests marketers would be better off if they
integrated social responsibility into their marketing strategies because companies
prosper when society prospers.
2. The societal marketing concept requires marketers to fulfill the needs of the target
audience in ways that improve, preserve and enhance society’s well-being while
simultaneously meeting their business objectives.
3. Some marketers ignore laws and market potentially harmful products (e.g. Monster
Beverage Corp.)
4. Some companies incorporated social goals into their mission statements because they
believe it is important for organizational effectiveness.
5. Non-profit organizations also advance causes they believe are ethically and morally
right.
*****Use Key Term societal marketing concept Here; Use Figure 1.4 Here; Use
Review and Discussion Question 1.3 Here; Use Hands-On Assignment 1.10 Here
*****
Consumer Decision-Making
***** Use Learning Objective 1.5 Here *****
1. Marketing theorists borrowed heavily from concepts developed in other scientific
disciplines to understand consumer behavior:
a) Psychology—the study of the human mind and mental factors that affect
behavior.
Loading page 10...
b) Sociology—the study of the development, structure, functioning and problems
of human society.
c) Anthropology—compares human societies’ culture and development.
d) Communication—the process of imparting or exchanging information.
***** Use Key Terms psychology, sociology, anthropology, communication
Here*****
2. The process of consumer decision making can be viewed as three distinct but
interlocking stages: the input stage, the process stage, and the output stage.
a) The input stage influences the consumer’s recognition of a product need and
consists of:
i) The firm’s marketing mix (the product itself, its price, promotion, and
distribution).
ii) The external sociocultural influences on the consumer (reference groups,
family, social class, culture and subculture).
iii) Both are communicated using different communication sources.
b) The process stage focuses on how consumers make decisions.
i) The psychological factors inherent in each individual (motivation,
perception, personality, attitudes, perception) affect how the external inputs
influence the consumer’s recognition of a need, prepurchase search for
information, and evaluation of alternatives.
ii) The experience gained through evaluation of alternatives, in turn, affects the
consumer’s existing psychological attributes.
c) The output stage of the consumer decision-making model consists of two
closely-related post decision activities:
i) Purchase behavior
ii) The post-purchase evaluation
*****Use Figure #1-10 Here*****
This Book
The book is divided into five parts:
1. Part I provides an overview of marketing and consumer behavior and the
components of strategic marketing.
a) Chapter 1 explains the evolution of the marketing concept and the importance
of researching and analyzing consumers’ behavior in order to target them
effectively.
b) Chapter 2 explains market segmentation, the criteria for selecting target
markets, behavioral targeting, and differentiating offerings among competitors.
2. Part II explains the psychological factors that affect consumer behavior.
a) Chapter 3 discusses consumer motivation and the impact of personality
characteristics on consumer behavior.
b) Chapter 4 explores consumer perception/how the way we view the world around
us affects our shopping patterns.
of human society.
c) Anthropology—compares human societies’ culture and development.
d) Communication—the process of imparting or exchanging information.
***** Use Key Terms psychology, sociology, anthropology, communication
Here*****
2. The process of consumer decision making can be viewed as three distinct but
interlocking stages: the input stage, the process stage, and the output stage.
a) The input stage influences the consumer’s recognition of a product need and
consists of:
i) The firm’s marketing mix (the product itself, its price, promotion, and
distribution).
ii) The external sociocultural influences on the consumer (reference groups,
family, social class, culture and subculture).
iii) Both are communicated using different communication sources.
b) The process stage focuses on how consumers make decisions.
i) The psychological factors inherent in each individual (motivation,
perception, personality, attitudes, perception) affect how the external inputs
influence the consumer’s recognition of a need, prepurchase search for
information, and evaluation of alternatives.
ii) The experience gained through evaluation of alternatives, in turn, affects the
consumer’s existing psychological attributes.
c) The output stage of the consumer decision-making model consists of two
closely-related post decision activities:
i) Purchase behavior
ii) The post-purchase evaluation
*****Use Figure #1-10 Here*****
This Book
The book is divided into five parts:
1. Part I provides an overview of marketing and consumer behavior and the
components of strategic marketing.
a) Chapter 1 explains the evolution of the marketing concept and the importance
of researching and analyzing consumers’ behavior in order to target them
effectively.
b) Chapter 2 explains market segmentation, the criteria for selecting target
markets, behavioral targeting, and differentiating offerings among competitors.
2. Part II explains the psychological factors that affect consumer behavior.
a) Chapter 3 discusses consumer motivation and the impact of personality
characteristics on consumer behavior.
b) Chapter 4 explores consumer perception/how the way we view the world around
us affects our shopping patterns.
Loading page 11...
c) Chapter 5 explains how we learn through applying past experiences and
behavior to future purchase decisions.
d) Chapter 6 explores how attitudes influence buying behavior.
3. Part III addresses the communication and persuasion process along its components:
sender, message, media, receiver, and feedback.
a) Chapter 7 introduces the elements of the communication process and explains
how to overcome the barriers to effective communications. It examines the
differences between advertising in mass media and promoting products online
and via social media.
b) Chapter 8 explores the transition from print to broadcast media to social media
and mobile advertising.
c) Chapter 9 covers source credibility and word-of-mouth.
4. Part IV examines consumers in their social and cultural settings.
a) Chapter 10 discusses the family as a consumption unit and its standing within
the social-class structure.
b) Chapter 11 explains how culture is expressed through values, rituals, and
customs.
c) Chapter 12 describes the impact of subcultures.
d) Chapter 13 explores cross-cultural analysis, which includes the basic strategic
elements for all companies pursuing markets in countries other than the United
States.
5. Part V consists of three chapters.
a) Chapter 14 discusses the consumer decision-making process and integrates parts
II, III, IV.
b) Chapter 15 explores marketers’ social responsibility and potential ethically
questionable practices.
c) Chapter 16 describes the methodology of consumer research.
Employability
*****Use Learning Objective #1.6 Here *****
1. Students with expertise in consumer behavior should pursue employment in three
areas: brand management, advertising, and consumer research.
2. Brand management is the process of maintaining, improving, and upholding a brand
so that it is clearly differentiated from other offerings in the same product category.
3. Understanding perception is particularly important.
4. Students understand how consumers’ purchases are influenced by their peers, family,
and social standing, and their values and customs.
5. Advertising includes writing advertising copy, creating visuals, ensuring that the right
messages reach the right consumers at the right time, and determining in which media
to place ads, including when and for how long.
6. Consumer research is the process and tools used to study consumer behavior.
behavior to future purchase decisions.
d) Chapter 6 explores how attitudes influence buying behavior.
3. Part III addresses the communication and persuasion process along its components:
sender, message, media, receiver, and feedback.
a) Chapter 7 introduces the elements of the communication process and explains
how to overcome the barriers to effective communications. It examines the
differences between advertising in mass media and promoting products online
and via social media.
b) Chapter 8 explores the transition from print to broadcast media to social media
and mobile advertising.
c) Chapter 9 covers source credibility and word-of-mouth.
4. Part IV examines consumers in their social and cultural settings.
a) Chapter 10 discusses the family as a consumption unit and its standing within
the social-class structure.
b) Chapter 11 explains how culture is expressed through values, rituals, and
customs.
c) Chapter 12 describes the impact of subcultures.
d) Chapter 13 explores cross-cultural analysis, which includes the basic strategic
elements for all companies pursuing markets in countries other than the United
States.
5. Part V consists of three chapters.
a) Chapter 14 discusses the consumer decision-making process and integrates parts
II, III, IV.
b) Chapter 15 explores marketers’ social responsibility and potential ethically
questionable practices.
c) Chapter 16 describes the methodology of consumer research.
Employability
*****Use Learning Objective #1.6 Here *****
1. Students with expertise in consumer behavior should pursue employment in three
areas: brand management, advertising, and consumer research.
2. Brand management is the process of maintaining, improving, and upholding a brand
so that it is clearly differentiated from other offerings in the same product category.
3. Understanding perception is particularly important.
4. Students understand how consumers’ purchases are influenced by their peers, family,
and social standing, and their values and customs.
5. Advertising includes writing advertising copy, creating visuals, ensuring that the right
messages reach the right consumers at the right time, and determining in which media
to place ads, including when and for how long.
6. Consumer research is the process and tools used to study consumer behavior.
Loading page 12...
REVIEW AND DISCUSSION QUESTIONS
1.1 Describe the interrelationship between consumer behavior and the marketing
concept.
The term consumer behavior refers to the behavior that consumers display in
searching for, purchasing, using, evaluating and disposing of products and services
that they expect will satisfy their needs. The study of consumer behavior is the study
of how individuals make consumption-related decisions. The key assumption
underlying the marketing concept is that a company must determine the needs and
wants of specific target markets and deliver the desired satisfaction better than the
competition. The marketing concept is based on the premise that a marketer should
make what they can sell, instead of trying to sell what they have made. Thus, a
company which adopts the marketing concept must continuously research and
monitor its customers’ and potential clients’ needs and consumption-related behavior
in order to develop, effectively promote, and deliver products and services which
satisfy clients’ needs better than the competition.
Individual, Easy, 3-5 minutes
Objective 1.1: To understand the evolution of the marketing concept, what consumer
behavior is, and the components of strategic marketing.
AACSB: Reflective thinking
1.2 A company is introducing a new e-book reader. Suggest segmentation, targeting,
and positioning strategies for the new product.
The focus of the marketing concept is consumer needs. Three elements for creating a
strategic framework for discovering and analyzing those needs are market
segmentation, market targeting, and positioning. Market segmentation is the process
of dividing a market into subsets of consumers with common needs or characteristics.
Because most companies have limited resources, few companies can pursue all of the
segments identified for the company to pursue. Targeting is selecting one or more of
the segments identified for the company to pursue. Because many companies have
adopted the marketing concept, the marketplace is filled with many products and
services claiming to satisfy consumer needs. Positioning is developing a distinct
image for the product or service in the mind of the consumer, an image that will
differentiate the offering from competing ones and squarely communicate to
consumers that the particular product or service will fulfill their needs better than
competing brands.
In answering this question, students need to think about the need or want for an e-
book reader. As thought starters, the instructor may ask the students, “what segment
of the market is most interested in an e-book reader? What segment also has the
resources to purchase an e-book reader?” These questions should get the conversation
started.
1.1 Describe the interrelationship between consumer behavior and the marketing
concept.
The term consumer behavior refers to the behavior that consumers display in
searching for, purchasing, using, evaluating and disposing of products and services
that they expect will satisfy their needs. The study of consumer behavior is the study
of how individuals make consumption-related decisions. The key assumption
underlying the marketing concept is that a company must determine the needs and
wants of specific target markets and deliver the desired satisfaction better than the
competition. The marketing concept is based on the premise that a marketer should
make what they can sell, instead of trying to sell what they have made. Thus, a
company which adopts the marketing concept must continuously research and
monitor its customers’ and potential clients’ needs and consumption-related behavior
in order to develop, effectively promote, and deliver products and services which
satisfy clients’ needs better than the competition.
Individual, Easy, 3-5 minutes
Objective 1.1: To understand the evolution of the marketing concept, what consumer
behavior is, and the components of strategic marketing.
AACSB: Reflective thinking
1.2 A company is introducing a new e-book reader. Suggest segmentation, targeting,
and positioning strategies for the new product.
The focus of the marketing concept is consumer needs. Three elements for creating a
strategic framework for discovering and analyzing those needs are market
segmentation, market targeting, and positioning. Market segmentation is the process
of dividing a market into subsets of consumers with common needs or characteristics.
Because most companies have limited resources, few companies can pursue all of the
segments identified for the company to pursue. Targeting is selecting one or more of
the segments identified for the company to pursue. Because many companies have
adopted the marketing concept, the marketplace is filled with many products and
services claiming to satisfy consumer needs. Positioning is developing a distinct
image for the product or service in the mind of the consumer, an image that will
differentiate the offering from competing ones and squarely communicate to
consumers that the particular product or service will fulfill their needs better than
competing brands.
In answering this question, students need to think about the need or want for an e-
book reader. As thought starters, the instructor may ask the students, “what segment
of the market is most interested in an e-book reader? What segment also has the
resources to purchase an e-book reader?” These questions should get the conversation
started.
Loading page 13...
Individual, Moderate, 5 minutes
Objective 1.1: To understand the evolution of the marketing concept, what consumer
behavior is, and the components of strategic marketing.
AACSB: Application of knowledge
1.3 Define the societal marketing concept and discuss the importance of integrating
marketing ethics into the company’s philosophy and operations.
The societal marketing concept requires marketers to fulfill the needs of the target
audience in ways that improve, preserve, and enhance society’s well-being while
simultaneously meeting their business objectives. Not all companies focus on
society, but some companies believe socially responsible marketing is a part of
organizational effectiveness. Generally speaking, if society prospers, firms prosper,
so it is in the marketer’s best interest, in the long-run, to focus on external
stakeholders as well as profits.
Individual, Easy, 3-5 minutes
Objective 1.4: To understand marketers’ social and ethical responsibilities.
AACSB: Application of knowledge
1.4 Describe how technology enhances the exchange between marketers and
consumers.
Marketers provide value to consumers in the form of information, including
opportunities to customize products easily and entertainment content. Consumers
provide value to marketers by “revealing themselves” while online, which enables
companies to market their products more efficiently and precisely. Consumers “pay”
for the Internet’s seemingly free content by providing virtually unlimited information
about themselves to marketers, who gather, analyze, and use it to target buyers. The
information allows marketers to customize promotional messages and products.
Technology also improves the ability to compare prices, distribution, and allows
consumers with the ability to interact with the firm, which may improve satisfaction
and, ultimately, retention.
Individual, Moderate, 3-5 minutes
Skill: Concept
Objective 1.2: To understand how technology has benefited both marketers and
consumers.
AACSB: Information technology; Reflective thinking
1.5 It is often said that consumers receive “free” content online. Is this true? Why
or why not?
Objective 1.1: To understand the evolution of the marketing concept, what consumer
behavior is, and the components of strategic marketing.
AACSB: Application of knowledge
1.3 Define the societal marketing concept and discuss the importance of integrating
marketing ethics into the company’s philosophy and operations.
The societal marketing concept requires marketers to fulfill the needs of the target
audience in ways that improve, preserve, and enhance society’s well-being while
simultaneously meeting their business objectives. Not all companies focus on
society, but some companies believe socially responsible marketing is a part of
organizational effectiveness. Generally speaking, if society prospers, firms prosper,
so it is in the marketer’s best interest, in the long-run, to focus on external
stakeholders as well as profits.
Individual, Easy, 3-5 minutes
Objective 1.4: To understand marketers’ social and ethical responsibilities.
AACSB: Application of knowledge
1.4 Describe how technology enhances the exchange between marketers and
consumers.
Marketers provide value to consumers in the form of information, including
opportunities to customize products easily and entertainment content. Consumers
provide value to marketers by “revealing themselves” while online, which enables
companies to market their products more efficiently and precisely. Consumers “pay”
for the Internet’s seemingly free content by providing virtually unlimited information
about themselves to marketers, who gather, analyze, and use it to target buyers. The
information allows marketers to customize promotional messages and products.
Technology also improves the ability to compare prices, distribution, and allows
consumers with the ability to interact with the firm, which may improve satisfaction
and, ultimately, retention.
Individual, Moderate, 3-5 minutes
Skill: Concept
Objective 1.2: To understand how technology has benefited both marketers and
consumers.
AACSB: Information technology; Reflective thinking
1.5 It is often said that consumers receive “free” content online. Is this true? Why
or why not?
Loading page 14...
Consumers “pay” for the Internet’s seemingly free content by providing virtually
unlimited information about themselves to marketers, who gather, analyze, and use it
to target buyers.
Individual, Moderate, 1-2 minutes
Objective 1.2: To understand how technology has benefited both marketers and
consumers.
AACSB: Information technology
1.6 Discuss the interrelationships among customer expectations and satisfaction,
perceived value, and customer retention. Why is customer retention essential?
Perceived value is relative and subjective while customer satisfaction is the
individual’s perception of the performance of the product or service in relation to his
or her expectation. The concept of customer satisfaction is a function of customer
expectations. Customers whose experiences match expectations will be satisfied and
customers whose expectations are exceeded will be very satisfied or delighted.
The overall objective of providing value to customers continuously and more
effectively than to competition is to have and to retain highly satisfied customers.
This is called customer retention. The purpose of customer retention is to make it
the best interest of customers to stay with the company rather than switch to another
firm. The reason that customer retention is essential is that in almost all business
situations, it is more expensive to win new customers than to keep existing ones.
Individual, Moderate, 3-5 minutes
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Analytical thinking; Reflective thinking
1.7 How can marketers use technology to improve customer retention and enhance
their bonds with customers?
The Internet and cell phones have helped marketers maintain closer relations with
their consumers and have opened easier channels for the customer to contact the
company if they have questions, problems, or suggestions. Marketers also use
databases to track revenues by consumer, which allows marketers to categorize
customers based on profitability and customize benefits to consumers accordingly.
Individual, Easy, 2-3 minutes
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Reflective thinking
1.8 Discuss the role of the social and behavioral sciences in developing the consumer
decision-making model.
unlimited information about themselves to marketers, who gather, analyze, and use it
to target buyers.
Individual, Moderate, 1-2 minutes
Objective 1.2: To understand how technology has benefited both marketers and
consumers.
AACSB: Information technology
1.6 Discuss the interrelationships among customer expectations and satisfaction,
perceived value, and customer retention. Why is customer retention essential?
Perceived value is relative and subjective while customer satisfaction is the
individual’s perception of the performance of the product or service in relation to his
or her expectation. The concept of customer satisfaction is a function of customer
expectations. Customers whose experiences match expectations will be satisfied and
customers whose expectations are exceeded will be very satisfied or delighted.
The overall objective of providing value to customers continuously and more
effectively than to competition is to have and to retain highly satisfied customers.
This is called customer retention. The purpose of customer retention is to make it
the best interest of customers to stay with the company rather than switch to another
firm. The reason that customer retention is essential is that in almost all business
situations, it is more expensive to win new customers than to keep existing ones.
Individual, Moderate, 3-5 minutes
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Analytical thinking; Reflective thinking
1.7 How can marketers use technology to improve customer retention and enhance
their bonds with customers?
The Internet and cell phones have helped marketers maintain closer relations with
their consumers and have opened easier channels for the customer to contact the
company if they have questions, problems, or suggestions. Marketers also use
databases to track revenues by consumer, which allows marketers to categorize
customers based on profitability and customize benefits to consumers accordingly.
Individual, Easy, 2-3 minutes
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Reflective thinking
1.8 Discuss the role of the social and behavioral sciences in developing the consumer
decision-making model.
Loading page 15...
Consumer behavior was a relatively new field of study in the mid- to late-1960s.
Because it had no history or body of research of its own, marketing theorists
borrowed heavily from concepts developed in other scientific disciplines. These
disciplines were psychology (the study of the individual), sociology (the study of
groups), social psychology (the study of how an individual operates in groups),
anthropology (the influence of society on the individual), and economics. Many early
theories concerning consumer behavior were based on economic theory on the notion
that individuals act rationally to maximize their benefits (satisfactions) in the
purchase of goods and services. Later research discovered that consumers are just as
likely to purchase impulsively and to be influenced not only by family, friends,
advertisers, and role models, but also by mood, situation, and emotion. All of these
factors combine to form a comprehensive model of consumer behavior that reflects
both the cognitive and emotional aspects of consumer decision-making.
Individual, Easy, 3-5 minutes
Objective 1.4: To understand marketers’ social and ethical responsibilities.
AACSB: Reflective thinking
HANDS-ON ASSIGNMENTS
1.9 Locate two websites that you visit regularly and discuss how they can (and
probably do) track your behavior and enable marketers to target you more
effectively.
Instructor’s Discussion
In order to answer this question, students should take notice of the use of information
technology, databases, interactive communications, and usage of satisfaction surveys.
Students might also wish to be aware of how technology’s impact on our
understanding of and interactions with consumers might be relevant to the exercise.
The idea behind targeting is related to customer value, since collecting information
should allow marketers to provide more attractive offerings based on their
understanding of your preferences. Note that customer value is defined as being the
ratio between the customer’s perceived benefits (economic, functional, and
psychological) and the resources (monetary, time, effort, and psychological) used to
obtain those benefits.
Individual, Moderate, 10-15 minutes, Outside of Class
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Application of knowledge
1.10 Locate two examples (one advertisement and one article) depicting practices
that are consistent with the societal marketing concept and two examples of
business practices that contradict this concept. Explain your choices.
Because it had no history or body of research of its own, marketing theorists
borrowed heavily from concepts developed in other scientific disciplines. These
disciplines were psychology (the study of the individual), sociology (the study of
groups), social psychology (the study of how an individual operates in groups),
anthropology (the influence of society on the individual), and economics. Many early
theories concerning consumer behavior were based on economic theory on the notion
that individuals act rationally to maximize their benefits (satisfactions) in the
purchase of goods and services. Later research discovered that consumers are just as
likely to purchase impulsively and to be influenced not only by family, friends,
advertisers, and role models, but also by mood, situation, and emotion. All of these
factors combine to form a comprehensive model of consumer behavior that reflects
both the cognitive and emotional aspects of consumer decision-making.
Individual, Easy, 3-5 minutes
Objective 1.4: To understand marketers’ social and ethical responsibilities.
AACSB: Reflective thinking
HANDS-ON ASSIGNMENTS
1.9 Locate two websites that you visit regularly and discuss how they can (and
probably do) track your behavior and enable marketers to target you more
effectively.
Instructor’s Discussion
In order to answer this question, students should take notice of the use of information
technology, databases, interactive communications, and usage of satisfaction surveys.
Students might also wish to be aware of how technology’s impact on our
understanding of and interactions with consumers might be relevant to the exercise.
The idea behind targeting is related to customer value, since collecting information
should allow marketers to provide more attractive offerings based on their
understanding of your preferences. Note that customer value is defined as being the
ratio between the customer’s perceived benefits (economic, functional, and
psychological) and the resources (monetary, time, effort, and psychological) used to
obtain those benefits.
Individual, Moderate, 10-15 minutes, Outside of Class
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Application of knowledge
1.10 Locate two examples (one advertisement and one article) depicting practices
that are consistent with the societal marketing concept and two examples of
business practices that contradict this concept. Explain your choices.
Loading page 16...
Instructor’s Discussion
The societal marketing concept is described as being one where the marketer is
required to adhere to the principles of social responsibility in the marketing of their
goods and services; that is, they should endeavor to satisfy the needs and wants of
their target markets in ways that preserve and enhance the well-being of consumers
and society as a whole. Thus, the restructured definition of the marketing concept
calls on marketers to fulfill the needs of the target audience in ways that improve
society as a whole, while fulfilling the objectives of the organization. A serious
deterrent to widespread implementation of the societal marketing concept is the short-
term orientation embraced by most business executives in their drive for increased
market share and quick profits.
Students should be clear as to why examples fit the pro and con approaches. Open the
discussion with a clear definition of what the societal marketing concept is (see
above). Next, match this concept to the supplied advertisements or articles. Conclude
the discussion with comments on the applicability of the concept to modern business.
Individual, Moderate, 15-20 minutes, Outside of Class
Objective 1.4: To understand marketers’ social and ethical responsibilities.
AACSB: Application of knowledge
1.11 Locate two examples of technological innovations designed to enhance customer
retention and discuss them.
Instructor’s Discussion
Student examples may vary. Take the opportunity to remind students how the
examples relate to satisfaction, which contributes to retention, and review the
advantages of customer retention. Also, ask students to differentiate between
technological innovations that facilitate emotional bonds from those that facilitate
transactional bonds.
Individual, Moderate, 5-10 minutes
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Application of knowledge
S.T.A.R. PROJECTS
Ethical Issues in Consumer Behavior
S.T.A.R. Project #1
H&R Block is the 500-pound gorilla of individual income tax preparation. The company
has a significant presence in the U.S. market (especially during the spring tax season).
The societal marketing concept is described as being one where the marketer is
required to adhere to the principles of social responsibility in the marketing of their
goods and services; that is, they should endeavor to satisfy the needs and wants of
their target markets in ways that preserve and enhance the well-being of consumers
and society as a whole. Thus, the restructured definition of the marketing concept
calls on marketers to fulfill the needs of the target audience in ways that improve
society as a whole, while fulfilling the objectives of the organization. A serious
deterrent to widespread implementation of the societal marketing concept is the short-
term orientation embraced by most business executives in their drive for increased
market share and quick profits.
Students should be clear as to why examples fit the pro and con approaches. Open the
discussion with a clear definition of what the societal marketing concept is (see
above). Next, match this concept to the supplied advertisements or articles. Conclude
the discussion with comments on the applicability of the concept to modern business.
Individual, Moderate, 15-20 minutes, Outside of Class
Objective 1.4: To understand marketers’ social and ethical responsibilities.
AACSB: Application of knowledge
1.11 Locate two examples of technological innovations designed to enhance customer
retention and discuss them.
Instructor’s Discussion
Student examples may vary. Take the opportunity to remind students how the
examples relate to satisfaction, which contributes to retention, and review the
advantages of customer retention. Also, ask students to differentiate between
technological innovations that facilitate emotional bonds from those that facilitate
transactional bonds.
Individual, Moderate, 5-10 minutes
Objective 1.3: To understand providing value and satisfaction and how technology
has enhanced customer loyalty and retention.
AACSB: Application of knowledge
S.T.A.R. PROJECTS
Ethical Issues in Consumer Behavior
S.T.A.R. Project #1
H&R Block is the 500-pound gorilla of individual income tax preparation. The company
has a significant presence in the U.S. market (especially during the spring tax season).
Loading page 17...
H&R Block has always been an aggressive competitor in this highly competitive market.
A trade organization for accountants believes that H&R Block became too aggressive
when it ran an ad campaign that showed a consumer running in a dark alley confronted
with neon signs flashing “Prestige CPA,” “Taxes Here,” and “Tax Consortium.” The
consumer appears confused and frightened. At the end of the alley a solution to the fear
and confusion appeared in the form of a warm and friendly H&R Block sign that
promised that consumers do not have to pay until they are completely satisfied. Non-
Block CPA professionals question whether H&R Block has fairly represented their
businesses and consumer policies.
a. Is this form of advertising ethical? Why or why not?
b. With respect to what you have learned about the societal marketing concept in the
chapter, what suggestions do you have for H&R Block?
Instructor’s Discussion
The H&R Block case is a good example of aggressive marketing that might exceed
acceptable limits. The ad is much different than the H&R Block approach used on their
Web site (see www.hrblock.com). Could a code of ethics help H&R Block? Possibly.
CPA professionals do not see themselves as neon sign merchants nor do they believe that
the average citizen has complaints with their preparation practices or guarantees. When
does innuendo and appearance become unethical? This should be an interesting issue for
the students to discuss. It will also be a good way to introduce the concept of a code of
ethics. (See the exercise below for more work on a code of ethics.)
S.T.A.R. Project #2
Many consumers trust their medical supply needs to Johnson & Johnson. Johnson &
Johnson is very clear as to its mission and commitment to the health and safety of its
customers. The company is often cited as an example of how to do things right with
respect to relations with customers and the public. Johnson & Johnson has gone so far as
to construct a company credo that it features on its Web site (see www.jnj.com : Our
Company: Our Credo Values).
a. Assume that you have just been hired as a customer relations expert by Johnson &
Johnson to answer a growing number of complaints that JNJ products are over-
priced and have lost their sense of value for the consumer. The complainants cite
lower priced private labels and store brands as illustrations of frustrations with JNJ.
As one consumer states, “A band aid is just a band aid after all!” What would be
your response?
b. How could you use the Johnson & Johnson Credo to aid you in your response?
Instructor’s Discussion
First, all students should read the JNJ Credo. The credo itself can be the discussion in this
question. Next, students must carefully think about the scenario that has been presented.
How could the company use its commitment to quality as an answer? How could the
company comment without disparaging the competition? How can the company focus on
A trade organization for accountants believes that H&R Block became too aggressive
when it ran an ad campaign that showed a consumer running in a dark alley confronted
with neon signs flashing “Prestige CPA,” “Taxes Here,” and “Tax Consortium.” The
consumer appears confused and frightened. At the end of the alley a solution to the fear
and confusion appeared in the form of a warm and friendly H&R Block sign that
promised that consumers do not have to pay until they are completely satisfied. Non-
Block CPA professionals question whether H&R Block has fairly represented their
businesses and consumer policies.
a. Is this form of advertising ethical? Why or why not?
b. With respect to what you have learned about the societal marketing concept in the
chapter, what suggestions do you have for H&R Block?
Instructor’s Discussion
The H&R Block case is a good example of aggressive marketing that might exceed
acceptable limits. The ad is much different than the H&R Block approach used on their
Web site (see www.hrblock.com). Could a code of ethics help H&R Block? Possibly.
CPA professionals do not see themselves as neon sign merchants nor do they believe that
the average citizen has complaints with their preparation practices or guarantees. When
does innuendo and appearance become unethical? This should be an interesting issue for
the students to discuss. It will also be a good way to introduce the concept of a code of
ethics. (See the exercise below for more work on a code of ethics.)
S.T.A.R. Project #2
Many consumers trust their medical supply needs to Johnson & Johnson. Johnson &
Johnson is very clear as to its mission and commitment to the health and safety of its
customers. The company is often cited as an example of how to do things right with
respect to relations with customers and the public. Johnson & Johnson has gone so far as
to construct a company credo that it features on its Web site (see www.jnj.com : Our
Company: Our Credo Values).
a. Assume that you have just been hired as a customer relations expert by Johnson &
Johnson to answer a growing number of complaints that JNJ products are over-
priced and have lost their sense of value for the consumer. The complainants cite
lower priced private labels and store brands as illustrations of frustrations with JNJ.
As one consumer states, “A band aid is just a band aid after all!” What would be
your response?
b. How could you use the Johnson & Johnson Credo to aid you in your response?
Instructor’s Discussion
First, all students should read the JNJ Credo. The credo itself can be the discussion in this
question. Next, students must carefully think about the scenario that has been presented.
How could the company use its commitment to quality as an answer? How could the
company comment without disparaging the competition? How can the company focus on
Loading page 18...
value? Take the two to three best responses and read them in class. An additional aid is to
download the JNJ credo and prepare it as a handout. What does the JNJ credo say about
the company’s commitment to ethical behavior?
Small Group Projects
S.T.A.R. Project #3
Who designed the chicken sandwich? According to information provided on the Chick-
fil-A Web site (www.chick-fil-a.com) it was Chick-fil-A founder Truett Cathy. Mr.
Cathy is also known for his unique approach to the fast food business. This unique
approach has at its center an appreciation of family values (the restaurants are closed on
Sundays and all children’s toys emphasize values rather than gimmicks or cartoon
characters). After visiting the company Web site, your group’s assignment is to list the
ways that Chick-fil-A provides customer value, satisfaction, and retention for its
customers.
Instructor’s Discussion
The student group should not have a problem listing the ways that Chick-fil-A provides
customer value and satisfaction. Retention may take longer. By making the attempt,
however, students will appreciate the chapter comments more fully. After the list is
complete, the second assignment sounds easy. Students should, however, observe that
Chick-fil-A matches both of the two concepts rather well. The astute student will see that
Chick-fil-A may still have some way to go with respect to technological application to
the business, databases, and customer segmentation.
S.T.A.R. Project #4
Nike is not just for males. This shoe giant has made great strides in market segmentation,
customization, and customer relationship development. The result is that Nike is also a
premier female shoe company. Your group assignment is split your team and analyze
Nike. To do this, one team should review the www.nike.com Web site and analyze its
contents based on its appeals to the male market segment (i.e., styles, language, colors,
celebrity endorsers, games, customer relationships, etc.). The second team should analyze
the Web site based on its appeals to the female segment (i.e., styles, language, colors,
celebrity endorsers, games, customer relationships, etc.). The two teams should now
match their findings and write a summary report. What has Nike learned about market
segments and market targets? How do the two sections of the nike.com Web site assist
Nike in its marketing efforts?
Instructor’s Discussion
This exercise gives two small groups within a larger group the chance to explore Nike’s
marketing efforts to two distinct market segments. If you would like to add additional
comparison criteria, feel free to do so. Be sure to ask students what they have learned
about consumer behavior from the Nike Web site. This exercise will also give groups a
download the JNJ credo and prepare it as a handout. What does the JNJ credo say about
the company’s commitment to ethical behavior?
Small Group Projects
S.T.A.R. Project #3
Who designed the chicken sandwich? According to information provided on the Chick-
fil-A Web site (www.chick-fil-a.com) it was Chick-fil-A founder Truett Cathy. Mr.
Cathy is also known for his unique approach to the fast food business. This unique
approach has at its center an appreciation of family values (the restaurants are closed on
Sundays and all children’s toys emphasize values rather than gimmicks or cartoon
characters). After visiting the company Web site, your group’s assignment is to list the
ways that Chick-fil-A provides customer value, satisfaction, and retention for its
customers.
Instructor’s Discussion
The student group should not have a problem listing the ways that Chick-fil-A provides
customer value and satisfaction. Retention may take longer. By making the attempt,
however, students will appreciate the chapter comments more fully. After the list is
complete, the second assignment sounds easy. Students should, however, observe that
Chick-fil-A matches both of the two concepts rather well. The astute student will see that
Chick-fil-A may still have some way to go with respect to technological application to
the business, databases, and customer segmentation.
S.T.A.R. Project #4
Nike is not just for males. This shoe giant has made great strides in market segmentation,
customization, and customer relationship development. The result is that Nike is also a
premier female shoe company. Your group assignment is split your team and analyze
Nike. To do this, one team should review the www.nike.com Web site and analyze its
contents based on its appeals to the male market segment (i.e., styles, language, colors,
celebrity endorsers, games, customer relationships, etc.). The second team should analyze
the Web site based on its appeals to the female segment (i.e., styles, language, colors,
celebrity endorsers, games, customer relationships, etc.). The two teams should now
match their findings and write a summary report. What has Nike learned about market
segments and market targets? How do the two sections of the nike.com Web site assist
Nike in its marketing efforts?
Instructor’s Discussion
This exercise gives two small groups within a larger group the chance to explore Nike’s
marketing efforts to two distinct market segments. If you would like to add additional
comparison criteria, feel free to do so. Be sure to ask students what they have learned
about consumer behavior from the Nike Web site. This exercise will also give groups a
Loading page 19...
chance to learn to work with each other and will pave the way for future group
participation projects.
participation projects.
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CHAPTER 2
Market Segmentation and Real-Time Bidding
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able:
2.1 To understand how to segment markets along demographics, lifestyles, product benefits and
usage, and media exposure.
2.2 To understand how to identify, select, and reach target markets.
2.3 To understand real-time bidding as compared with market segmentation.
CHAPTER SUMMARY
Learning Objective 2.1: To understand how to segment markets along demographics,
lifestyles, product benefits and usage, and media exposure.
Market segmentation is dividing a market into subsets of consumers with common needs or
characteristics. Each subset represents a consumer group with shared needs that are different
from those shared by other groups. After dividing the market into distinct groups, the company
must select segments that are profitable and reachable, and feasibly targetable within its
objectives and resources.
Demographic segmentation divides consumers according to age, gender, ethnicity, income and
wealth, occupation, marital status, household type and size, and geographical location. Two other
segmentation factors are based on demographics. Family life cycle details the phases that most
families go through, each stage representing a viable target segment to marketers of many
products.
Social class is the division of members of a society into a hierarchy of distinct status classes—
most often based on income, education, and occupation—so that members of each class have
relatively the same status and members of all other classes have either higher or lower status.
Because they are so versatile, psychographics are widely used, mostly together with
demographics, providing marketers with richly descriptive profiles of target markets.
Geodemographics are based on the premise that people who live close to one another are likely
to have similar financial means, tastes, preferences, lifestyles, and consumption habits—as the
adage states, “Birds of a feather flock together.” The most popular combination of demographics
and geographic locations is called PRIZM—grouping American households into 66 segments
based on socioeconomic ranking, consumer behavior, and media exposure
Benefit segmentation is based on the benefits that consumers seek from products and services.
These benefits represent unfilled needs, whereas buyers’ perceptions that a given brand delivers
a unique and prominent benefit result in loyalty to that brand.
Market Segmentation and Real-Time Bidding
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able:
2.1 To understand how to segment markets along demographics, lifestyles, product benefits and
usage, and media exposure.
2.2 To understand how to identify, select, and reach target markets.
2.3 To understand real-time bidding as compared with market segmentation.
CHAPTER SUMMARY
Learning Objective 2.1: To understand how to segment markets along demographics,
lifestyles, product benefits and usage, and media exposure.
Market segmentation is dividing a market into subsets of consumers with common needs or
characteristics. Each subset represents a consumer group with shared needs that are different
from those shared by other groups. After dividing the market into distinct groups, the company
must select segments that are profitable and reachable, and feasibly targetable within its
objectives and resources.
Demographic segmentation divides consumers according to age, gender, ethnicity, income and
wealth, occupation, marital status, household type and size, and geographical location. Two other
segmentation factors are based on demographics. Family life cycle details the phases that most
families go through, each stage representing a viable target segment to marketers of many
products.
Social class is the division of members of a society into a hierarchy of distinct status classes—
most often based on income, education, and occupation—so that members of each class have
relatively the same status and members of all other classes have either higher or lower status.
Because they are so versatile, psychographics are widely used, mostly together with
demographics, providing marketers with richly descriptive profiles of target markets.
Geodemographics are based on the premise that people who live close to one another are likely
to have similar financial means, tastes, preferences, lifestyles, and consumption habits—as the
adage states, “Birds of a feather flock together.” The most popular combination of demographics
and geographic locations is called PRIZM—grouping American households into 66 segments
based on socioeconomic ranking, consumer behavior, and media exposure
Benefit segmentation is based on the benefits that consumers seek from products and services.
These benefits represent unfilled needs, whereas buyers’ perceptions that a given brand delivers
a unique and prominent benefit result in loyalty to that brand.
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Media exposure patterns can be used to segment markets. As more and more forms of media
emerge, marketers must study the benefits that specific consumer segments seek from adopting
these communication tools, so that they can advertise in these media effectively.
Usage-rate segmentation reflects the differences among heavy, medium, and light users, and
nonusers of a specific product, service, or brand. Rate of usage is strongly related to product
awareness status, which is the degree of a consumer’s awareness of the product and its features,
and whether or not he or she intends to buy it reasonably soon. A related factor is product
involvement, which reflects the degree of personal relevance that the product holds for
the consumer. Usage-occasion segmentation recognizes that consumers purchase some products
for specific occasions. Marketing studies have shown that consumers are increasingly skeptical
about assigning foods to specific times of the day or places. Marketers have been responding by,
for example, trying to convince consumers to snack on Greek-style yogurt and candy while
watching the Super Bowl.
Learning Objective 2.2: To understand how to identify, select, and reach target markets.
All consumers are not alike. They have different needs, wants, and desires, and different
backgrounds, education levels, and experiences. Therefore, marketers must offer alternatives that
correspond to the needs of different consumer groups or segments. Not every company is
interested in or has the means to reach every market segment. In addition to being identifiable,
the segment(s) chosen must be profitable and accessible.
To be a viable market, a segment must consist of enough consumers to target it profitably, as
well as be stable and growing. Additionally, the number of segments targeted and their profiles
must be congruent with the company’s objectives and resources. Marketers target consumer
segments that are relatively stable in terms of lifestyles and consumption patterns (and are also
likely to grow larger and more viable in the future) and avoid “fickle” segments that are
unpredictable.
To be targeted, a segment must be accessible, which means that marketers must be able to
communicate with its consumers effectively and economically. With the diversification of
magazines (and their online versions), the emergence of TV channels that target narrowly
defined interests, and the growth of new media (e.g., sending ads to cell phones), marketers have
significantly more avenues for reaching unique segments and can also do so with customized
products and promotional messages.
Marketers can also target customers on their mobile devices. For example, customers frequently
engage in showrooming, which occurs when consumers use smartphones to scan the bar codes of
products displayed in physical stores and then check the items’ prices online in order to purchase
them at the lowest prices. In order to combat showrooming, some physical stores started
geofencing, which consists of sending promotional alerts to the smartphones of customers who
opted into this service, when the customers are near or enter the store.
Learning Objective 2.3: To understand real-time bidding as compared with market
segmentation.
emerge, marketers must study the benefits that specific consumer segments seek from adopting
these communication tools, so that they can advertise in these media effectively.
Usage-rate segmentation reflects the differences among heavy, medium, and light users, and
nonusers of a specific product, service, or brand. Rate of usage is strongly related to product
awareness status, which is the degree of a consumer’s awareness of the product and its features,
and whether or not he or she intends to buy it reasonably soon. A related factor is product
involvement, which reflects the degree of personal relevance that the product holds for
the consumer. Usage-occasion segmentation recognizes that consumers purchase some products
for specific occasions. Marketing studies have shown that consumers are increasingly skeptical
about assigning foods to specific times of the day or places. Marketers have been responding by,
for example, trying to convince consumers to snack on Greek-style yogurt and candy while
watching the Super Bowl.
Learning Objective 2.2: To understand how to identify, select, and reach target markets.
All consumers are not alike. They have different needs, wants, and desires, and different
backgrounds, education levels, and experiences. Therefore, marketers must offer alternatives that
correspond to the needs of different consumer groups or segments. Not every company is
interested in or has the means to reach every market segment. In addition to being identifiable,
the segment(s) chosen must be profitable and accessible.
To be a viable market, a segment must consist of enough consumers to target it profitably, as
well as be stable and growing. Additionally, the number of segments targeted and their profiles
must be congruent with the company’s objectives and resources. Marketers target consumer
segments that are relatively stable in terms of lifestyles and consumption patterns (and are also
likely to grow larger and more viable in the future) and avoid “fickle” segments that are
unpredictable.
To be targeted, a segment must be accessible, which means that marketers must be able to
communicate with its consumers effectively and economically. With the diversification of
magazines (and their online versions), the emergence of TV channels that target narrowly
defined interests, and the growth of new media (e.g., sending ads to cell phones), marketers have
significantly more avenues for reaching unique segments and can also do so with customized
products and promotional messages.
Marketers can also target customers on their mobile devices. For example, customers frequently
engage in showrooming, which occurs when consumers use smartphones to scan the bar codes of
products displayed in physical stores and then check the items’ prices online in order to purchase
them at the lowest prices. In order to combat showrooming, some physical stores started
geofencing, which consists of sending promotional alerts to the smartphones of customers who
opted into this service, when the customers are near or enter the store.
Learning Objective 2.3: To understand real-time bidding as compared with market
segmentation.
Loading page 22...
Real-time bidding (RTB) takes place when advertisers buy inventories of customers—termed
impressions or eyeballs—on a per-impression basis, via programed instantaneous auction. An
impression is a term for a customer that becomes available for realtime bidding online. Detailed
profiles for the impressions are compiled from online navigation, demographics, geographic
locations, and possessions and purchases.
Predictive analytics are measures that foresee consumers’ future purchases on the bases of past
buying information and other data, and also evaluate the impact of personalized promotions
created from these predictions. These measures are also designed to notice significant changes in
consumers’ buying behavior because such variations provide marketers with targeting prospects.
The inventories become available for bidding in ad exchanges such as eXelate, BlueKai, Google,
and DoubleClick. An ad exchange is a big pool of ad impressions. Publishers—that is,
websites—paste their ad impressions into the pool, hoping someone will buy them. Buyers then
bid on the impressions they wish to purchase and the outcomes are determined in milliseconds.
In traditional media buying, advertisers prepay for the space and do not get money back
regardless of whether any consumer who had seen their ads ends up buying the product or at
least became more interested and aware of their brands. With RTB, an advertiser competes in an
auction with a multitude of other advertisers, all bidding at different rates for each impression, in
real time.
Real-time bidding enables advertisers to optimize their expenditures by increasing the level of
certainty that an ad campaign will reach a reasonable volume of the type of customers that
marketers wish to reach. In contrast, many consumers reached via direct buys are unlikely to
become customers because the groups reached by TV, magazines, and newspapers are broadly
defined. With RTB, rather than buying a large inventory, marketers pay premium prices to
secure inventories of the right customers, reach them where they are, and advertise their products
to the most promising prospects.
CHAPTER OUTLINE
INTRODUCTION
1. Market segmentation is the process of dividing a market into subsets of consumers with
common needs or characteristics.
2. Companies select the segments that are profitable, reachable, and feasibly targeted given the
firm’s objectives and resources.
3. Product positioning is the process by which a company creates a distinct image and identity
for its products, services and brands in consumers’ minds.
4. Product repositioning means changing and “refreshing” a brand’s portrayal.
5. Usage-occasion segmentation is a segmentation strategy based on the fact that many
products are purchased and used in the context of specific occasions.
impressions or eyeballs—on a per-impression basis, via programed instantaneous auction. An
impression is a term for a customer that becomes available for realtime bidding online. Detailed
profiles for the impressions are compiled from online navigation, demographics, geographic
locations, and possessions and purchases.
Predictive analytics are measures that foresee consumers’ future purchases on the bases of past
buying information and other data, and also evaluate the impact of personalized promotions
created from these predictions. These measures are also designed to notice significant changes in
consumers’ buying behavior because such variations provide marketers with targeting prospects.
The inventories become available for bidding in ad exchanges such as eXelate, BlueKai, Google,
and DoubleClick. An ad exchange is a big pool of ad impressions. Publishers—that is,
websites—paste their ad impressions into the pool, hoping someone will buy them. Buyers then
bid on the impressions they wish to purchase and the outcomes are determined in milliseconds.
In traditional media buying, advertisers prepay for the space and do not get money back
regardless of whether any consumer who had seen their ads ends up buying the product or at
least became more interested and aware of their brands. With RTB, an advertiser competes in an
auction with a multitude of other advertisers, all bidding at different rates for each impression, in
real time.
Real-time bidding enables advertisers to optimize their expenditures by increasing the level of
certainty that an ad campaign will reach a reasonable volume of the type of customers that
marketers wish to reach. In contrast, many consumers reached via direct buys are unlikely to
become customers because the groups reached by TV, magazines, and newspapers are broadly
defined. With RTB, rather than buying a large inventory, marketers pay premium prices to
secure inventories of the right customers, reach them where they are, and advertise their products
to the most promising prospects.
CHAPTER OUTLINE
INTRODUCTION
1. Market segmentation is the process of dividing a market into subsets of consumers with
common needs or characteristics.
2. Companies select the segments that are profitable, reachable, and feasibly targeted given the
firm’s objectives and resources.
3. Product positioning is the process by which a company creates a distinct image and identity
for its products, services and brands in consumers’ minds.
4. Product repositioning means changing and “refreshing” a brand’s portrayal.
5. Usage-occasion segmentation is a segmentation strategy based on the fact that many
products are purchased and used in the context of specific occasions.
Loading page 23...
*****Use Discussion Questions #2.1 and #2.2 Here; Use Key Terms market segmentation,
positioning, repositioning, and usage-occasion segmentation Here; Use Figure #2.1
Here*****
Market Segmentation
1. Segmentation divides the market for a product into relatively homogeneous groups that share
characteristics different from those of other groups.
2. Marketers segment consumers along quantitative and cognitive factors.
a) Quantitative factors include consumer-intrinsic attributes (like demographics) and
consumption-based factors (determined numerically).
b) Cognitive factors are psychological abstracts that include consumer-intrinsic factors
(like personality traits and values) and consumption-specific attitudes and preferences.
*****Use Learning Objective #2.1 Here *****
3. Demographics determine consumers’ needs for products and the ability to buy them;
psychographics explain buyers’ purchase decisions and choices.
***** Use Key Terms demographic segmentation and family life cycle Here*****
4. Demographic segmentation divides consumers according to age, gender, ethnicity, income
and wealth, occupation, marital status, household type and size, and geographic location.
a) The core of almost all segmentations is demographics because:
i. Demographics are the easiest and most logical way to classify people and can
be measured more precisely than other segmentation bases.
ii. Demographics offer the most cost-effective way to locate and reach specific
segments because most of the secondary data compiled about any population
stems from demographics.
iii. Demographics enable marketers to identify business opportunities in the form
of shifts in age, income distribution, and populations of various regions.
iv. Many consumption behaviors, attitudes, and media exposure patterns are
directly related to demographics.
*****Use Review and Discussion Question #2.4 Here*****
b. Age: product needs often vary with consumers’ age, and marketers commonly target
age groups.
c. Gender is a factual distinguishing segmentation variable, and many products and
services are inherently designed for either males or females. However, sex roles have
become blurred.
d. Households: segmentation is based on the premise that many families pass through
similar phases in their formation, growth, and final dissolution. At each phase in the
family life cycle, the family unit needs different products and services.
positioning, repositioning, and usage-occasion segmentation Here; Use Figure #2.1
Here*****
Market Segmentation
1. Segmentation divides the market for a product into relatively homogeneous groups that share
characteristics different from those of other groups.
2. Marketers segment consumers along quantitative and cognitive factors.
a) Quantitative factors include consumer-intrinsic attributes (like demographics) and
consumption-based factors (determined numerically).
b) Cognitive factors are psychological abstracts that include consumer-intrinsic factors
(like personality traits and values) and consumption-specific attitudes and preferences.
*****Use Learning Objective #2.1 Here *****
3. Demographics determine consumers’ needs for products and the ability to buy them;
psychographics explain buyers’ purchase decisions and choices.
***** Use Key Terms demographic segmentation and family life cycle Here*****
4. Demographic segmentation divides consumers according to age, gender, ethnicity, income
and wealth, occupation, marital status, household type and size, and geographic location.
a) The core of almost all segmentations is demographics because:
i. Demographics are the easiest and most logical way to classify people and can
be measured more precisely than other segmentation bases.
ii. Demographics offer the most cost-effective way to locate and reach specific
segments because most of the secondary data compiled about any population
stems from demographics.
iii. Demographics enable marketers to identify business opportunities in the form
of shifts in age, income distribution, and populations of various regions.
iv. Many consumption behaviors, attitudes, and media exposure patterns are
directly related to demographics.
*****Use Review and Discussion Question #2.4 Here*****
b. Age: product needs often vary with consumers’ age, and marketers commonly target
age groups.
c. Gender is a factual distinguishing segmentation variable, and many products and
services are inherently designed for either males or females. However, sex roles have
become blurred.
d. Households: segmentation is based on the premise that many families pass through
similar phases in their formation, growth, and final dissolution. At each phase in the
family life cycle, the family unit needs different products and services.
Loading page 24...
*****Use Key Term family life cycle Here*****
e. Social class can indicate an ability or inability to pay for a product model or brand,
and consumers of different social classes vary in terms of values, product preferences
and buying habits.
i. Income is combined with other demographic variables to define target
markets.
ii. Income, education, and occupation tend to be closely correlated.
iii. Social class can be measured as a weighted index of education, occupation
and income
f. Ethnicity: Marketers segment some populations on the basis of cultural heritage and
ethnicity due to shared values, beliefs, and customs. African Americans, Hispanic
Americans and Asian Americans are important subcultural market segments in the
U.S.
***** Use Key Terms social class and psychographics Here*****
5. Lifestyles, also known as psychographics, consist of activities, interests, and opinions
(AIOs).
a) The interests and opinions portions are cognitive constructs, which can be measured via
surveys but are not evidence-based.
b) A psychographic study includes a battery of statements selected from a psychographic
inventory and usually accompanied by Likert scales on which respondents are asked to
indicate their level of agreement or disagreement with each statement (Table 2.6)
c) Because of their versatility, psychographics are widely used in segmentation and are
part of almost any hybrid segmentation framework.
d) VALS (an acronym for “values and lifestyles”) is the most popular segmentation
system combining lifestyles and values.
e) VALSTM focuses explicitly on explaining consumer purchasing behavior.
i) VALSTM includes three primary motivations: ideals motivated, achievement
motivated and self-expression motivated.
ii) VALSTM also reflects a continuum in terms of resources and innovativeness (Figure
2.2)
*****Use Review and Discussion Questions #2.8 and #2.9 Here; Use Tables #2.1 and #2.2
Here; Use Figure #2.2 Here; Use Key Terms psychographics and VALSTM Here *****
6. Geodemographics: Where a person lives determines some aspects of consumption behavior,
so marketers frequently use geodemographics, a hybrid segmentation scheme based on the
premise that people who live close to one another are likely to have similar financial means,
tastes, preferences, lifestyles, and consumption habits, in strategic targeting.
a) The primary commercial application of this technique is PRIZM, offered by Nielsen’s
MyBestSegments. This system uses the ZIP + 4 postal system to classify all of the
nation’s households into 66 segments.
e. Social class can indicate an ability or inability to pay for a product model or brand,
and consumers of different social classes vary in terms of values, product preferences
and buying habits.
i. Income is combined with other demographic variables to define target
markets.
ii. Income, education, and occupation tend to be closely correlated.
iii. Social class can be measured as a weighted index of education, occupation
and income
f. Ethnicity: Marketers segment some populations on the basis of cultural heritage and
ethnicity due to shared values, beliefs, and customs. African Americans, Hispanic
Americans and Asian Americans are important subcultural market segments in the
U.S.
***** Use Key Terms social class and psychographics Here*****
5. Lifestyles, also known as psychographics, consist of activities, interests, and opinions
(AIOs).
a) The interests and opinions portions are cognitive constructs, which can be measured via
surveys but are not evidence-based.
b) A psychographic study includes a battery of statements selected from a psychographic
inventory and usually accompanied by Likert scales on which respondents are asked to
indicate their level of agreement or disagreement with each statement (Table 2.6)
c) Because of their versatility, psychographics are widely used in segmentation and are
part of almost any hybrid segmentation framework.
d) VALS (an acronym for “values and lifestyles”) is the most popular segmentation
system combining lifestyles and values.
e) VALSTM focuses explicitly on explaining consumer purchasing behavior.
i) VALSTM includes three primary motivations: ideals motivated, achievement
motivated and self-expression motivated.
ii) VALSTM also reflects a continuum in terms of resources and innovativeness (Figure
2.2)
*****Use Review and Discussion Questions #2.8 and #2.9 Here; Use Tables #2.1 and #2.2
Here; Use Figure #2.2 Here; Use Key Terms psychographics and VALSTM Here *****
6. Geodemographics: Where a person lives determines some aspects of consumption behavior,
so marketers frequently use geodemographics, a hybrid segmentation scheme based on the
premise that people who live close to one another are likely to have similar financial means,
tastes, preferences, lifestyles, and consumption habits, in strategic targeting.
a) The primary commercial application of this technique is PRIZM, offered by Nielsen’s
MyBestSegments. This system uses the ZIP + 4 postal system to classify all of the
nation’s households into 66 segments.
Loading page 25...
b) Nielsen also uses P$YCLE (based on household wealth) and ConneXions (based on
household receptivity to new technologies.
***** Use Hands-on Assignment #2.16 Here; Use Key Term geodemographics Here*****
7. Benefit segmentation is based on the benefits consumers seek from products and services.
a) Many believe benefits sought are the core of all segmentation strategies.
b) Sought benefits represent unfilled consumer needs whereas buyers’ perceptions that a
given brand delivers a unique and prominent benefit result in loyalty to the brand.
*****Use Hands-on Assignment #2.13 Here; Use Figure 2.3 Here; Use Key Term benefit
segmentation Here *****
8. Media exposure considers the benefits consumers seek from adopting communication tools.
***** Use Table #2.4 and Figure 2.4 Here *****
9. Usage rate segmentation stems from differences among heavy, medium and light users, and
nonusers of a specific product, service, or brand.
a) Marketers have found that within some product categories that a relatively small group
of heavy users account for a disproportionately large percentage of total product usage.
b) Targeting heavy users is a common marketing strategy, and it can be more profitable
than targeting other user categories.
c) However, since all competitors are likely to target the same heavy users, trying to attract
these buyers requires a lot of expensive advertising.
d) Some marketers prefer to target light and medium users with products that are distinct
from those preferred by heavy users.
e) A sophisticated approach to usage rate involves identifying the factors that directly
impact the usage behavior.
f) Understanding nonusers is essential.
g) Consumers can also be segmented in terms of their awareness status and also level of
involvement.
h) Product involvement is also a segmentation factor.
10. The occasion or situation often determines what consumers will purchase or consume, so
marketers sometimes use usage-occasion segmentation. Many products are promoted for
special usage occasions.
*****Use Review and Discussion Question #2.5 Here; Use Key Terms product involvement,
usage-occasion segmentation Here *****
Selecting Target Markets
household receptivity to new technologies.
***** Use Hands-on Assignment #2.16 Here; Use Key Term geodemographics Here*****
7. Benefit segmentation is based on the benefits consumers seek from products and services.
a) Many believe benefits sought are the core of all segmentation strategies.
b) Sought benefits represent unfilled consumer needs whereas buyers’ perceptions that a
given brand delivers a unique and prominent benefit result in loyalty to the brand.
*****Use Hands-on Assignment #2.13 Here; Use Figure 2.3 Here; Use Key Term benefit
segmentation Here *****
8. Media exposure considers the benefits consumers seek from adopting communication tools.
***** Use Table #2.4 and Figure 2.4 Here *****
9. Usage rate segmentation stems from differences among heavy, medium and light users, and
nonusers of a specific product, service, or brand.
a) Marketers have found that within some product categories that a relatively small group
of heavy users account for a disproportionately large percentage of total product usage.
b) Targeting heavy users is a common marketing strategy, and it can be more profitable
than targeting other user categories.
c) However, since all competitors are likely to target the same heavy users, trying to attract
these buyers requires a lot of expensive advertising.
d) Some marketers prefer to target light and medium users with products that are distinct
from those preferred by heavy users.
e) A sophisticated approach to usage rate involves identifying the factors that directly
impact the usage behavior.
f) Understanding nonusers is essential.
g) Consumers can also be segmented in terms of their awareness status and also level of
involvement.
h) Product involvement is also a segmentation factor.
10. The occasion or situation often determines what consumers will purchase or consume, so
marketers sometimes use usage-occasion segmentation. Many products are promoted for
special usage occasions.
*****Use Review and Discussion Question #2.5 Here; Use Key Terms product involvement,
usage-occasion segmentation Here *****
Selecting Target Markets
Loading page 26...
1. Real-time bidding (RTB) takes place when advertisers buy inventories of customers –
termed impressions or eyeballs – on a per-impression basis, via programmed instantaneous
auction.
2. RTB facilitates optimization of advertising expenditures by considering inventory per
impression or placing premium bids on access to consumers that are particularly valuable to
them.
3. The profile of impressions is determined by data brokers.
4. Web crawlers capture content across the internet and transmit it to the data broker’s servers.
*****Use Learning Objective 2.3 Here; Use Key Terms real time bidding and web crawlers
Here *****
5. Predictive analytics measures are designed to predict consumers’ future purchases.
Marketers base predictions on past buying information and other data and evaluate the
impact of personalized promotions stemming from the predictions.
***** Use Key Term predictive analytics Here; Use Figure 2.6 Here*****
6. Behavioral biometrics - originally called identity verification - chart unique patterns in the
way people perform activities like swiping a screen
7. The application programming interface is the pie that announces each impression
individually as it becomes available online.
8. A cookie is a software code sent from a website and stored on the user’s computer we
browser while the user is online.
9. An ad exchange is a big pool of ad impressions.
10. RTB also enables cross-channel campaigns.
termed impressions or eyeballs – on a per-impression basis, via programmed instantaneous
auction.
2. RTB facilitates optimization of advertising expenditures by considering inventory per
impression or placing premium bids on access to consumers that are particularly valuable to
them.
3. The profile of impressions is determined by data brokers.
4. Web crawlers capture content across the internet and transmit it to the data broker’s servers.
*****Use Learning Objective 2.3 Here; Use Key Terms real time bidding and web crawlers
Here *****
5. Predictive analytics measures are designed to predict consumers’ future purchases.
Marketers base predictions on past buying information and other data and evaluate the
impact of personalized promotions stemming from the predictions.
***** Use Key Term predictive analytics Here; Use Figure 2.6 Here*****
6. Behavioral biometrics - originally called identity verification - chart unique patterns in the
way people perform activities like swiping a screen
7. The application programming interface is the pie that announces each impression
individually as it becomes available online.
8. A cookie is a software code sent from a website and stored on the user’s computer we
browser while the user is online.
9. An ad exchange is a big pool of ad impressions.
10. RTB also enables cross-channel campaigns.
Loading page 27...
REVIEW AND DISCUSSION QUESTIONS
2.1 What is market segmentation? How is market segmentation related to the marketing
concept?
Market segmentation is the process of dividing a potential market into distinct subsets of
consumers with common needs or characteristics and selecting one or more segments to
target with a distinct marketing mix. Before the widespread adoption of the marketing
concept, most companies practiced mass marketing, that is, offering the same product and
marketing mix to all consumers. The marketing concept states that a company must
determine the needs and wants of specific market segments and satisfy them better than
competition. Thus, companies who adopt the marketing concept must segment their markets
and develop products or services targeting different consumer groups. For example, Marriott
operates Fairfield Inns (short stay) and Residence Inns (apartment-like accommodations for
extended stays) for the value- or budget-oriented traveler, Courtyard for the price-conscious
businessperson, Marriott Hotel for full-service business travelers, Marriott Resorts for leisure
and vacation guests, and Marriott Senior Living environments for elderly people.
Individual, Easy, 3-5 minutes
Objective 2.1: To understand how to segment markets along demographics, lifestyles,
product benefits and usage, and media exposure.
AACSB: Reflective thinking
2.2 How are market segmentation, targeting, and positioning interrelated?
Market segmentation consists of subdividing the market into homogeneous clusters, and it
is the first step in a three-phase market strategy. After segmenting the market, the marketer
must select one or more segments to target (targeting) with a specific marketing mix. The
third step is to position (positioning) the product so that it is perceived by the target market
to satisfy its needs better than other competitive offerings. For example, a toothpaste
manufacturer can segment the market according to the benefits that consumers look for in the
product. The firm may select one segment, such as those consumers who are primarily
concerned with plaque prevention, as its target market. Then, the company must position the
product so that it is perceived as providing better plaque prevention than other toothpaste
brands on the market.
Individual, Moderate, 5-7 minutes
Objective 2.1: To understand how to segment markets along demographics, lifestyles,
product benefits and usage, and media exposure.
AACSB: Analytical thinking
2.3 Discuss the advantages and disadvantages of using demographics as a basis for
segmentation. Can demographics and psychographics be used together to segment
markets? Illustrate your answer with a specific example.
2.1 What is market segmentation? How is market segmentation related to the marketing
concept?
Market segmentation is the process of dividing a potential market into distinct subsets of
consumers with common needs or characteristics and selecting one or more segments to
target with a distinct marketing mix. Before the widespread adoption of the marketing
concept, most companies practiced mass marketing, that is, offering the same product and
marketing mix to all consumers. The marketing concept states that a company must
determine the needs and wants of specific market segments and satisfy them better than
competition. Thus, companies who adopt the marketing concept must segment their markets
and develop products or services targeting different consumer groups. For example, Marriott
operates Fairfield Inns (short stay) and Residence Inns (apartment-like accommodations for
extended stays) for the value- or budget-oriented traveler, Courtyard for the price-conscious
businessperson, Marriott Hotel for full-service business travelers, Marriott Resorts for leisure
and vacation guests, and Marriott Senior Living environments for elderly people.
Individual, Easy, 3-5 minutes
Objective 2.1: To understand how to segment markets along demographics, lifestyles,
product benefits and usage, and media exposure.
AACSB: Reflective thinking
2.2 How are market segmentation, targeting, and positioning interrelated?
Market segmentation consists of subdividing the market into homogeneous clusters, and it
is the first step in a three-phase market strategy. After segmenting the market, the marketer
must select one or more segments to target (targeting) with a specific marketing mix. The
third step is to position (positioning) the product so that it is perceived by the target market
to satisfy its needs better than other competitive offerings. For example, a toothpaste
manufacturer can segment the market according to the benefits that consumers look for in the
product. The firm may select one segment, such as those consumers who are primarily
concerned with plaque prevention, as its target market. Then, the company must position the
product so that it is perceived as providing better plaque prevention than other toothpaste
brands on the market.
Individual, Moderate, 5-7 minutes
Objective 2.1: To understand how to segment markets along demographics, lifestyles,
product benefits and usage, and media exposure.
AACSB: Analytical thinking
2.3 Discuss the advantages and disadvantages of using demographics as a basis for
segmentation. Can demographics and psychographics be used together to segment
markets? Illustrate your answer with a specific example.
Loading page 28...
Demographic information is the most accessible and cost effective way to identify a target
market. Demographics are easier to measure than other segmentation variables. Most
secondary data (e.g., census data) are expressed in demographic terms and most media
develop demographic profiles of their audiences. Also, demographic trends reveal shifts in
age and income that signal business opportunities for marketers. Demographics, however,
tend to be one-dimensional because it provides information on the potential for usage but not
on why a particular brand is used or exactly who uses it. Thus, demographics help locate a
target market, although psychological and sociocultural characteristics help describe who its
members are, how they think, feel, and behave.
Individual, Moderate, 7-10 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Reflective thinking; Analytical thinking; Application of knowledge
2.4 Does your lifestyle differ significantly from your parents’ lifestyle? If so, how are the
two lifestyles different? What factors cause these differences?
This is an interesting way to illustrate similarities and differences between the activities,
interests, and opinions of two distinct groups, as the factors that determine one’s lifestyle.
With respect to presenting or discussing the results (if time is a problem), select the
individuals that seem to have performed the exercise the best and have the students present
results to class as a whole. Be sure to probe students as to mechanisms used to determine
their parents (and their own) lifestyles. How could marketers use this information?
Individual, Moderate, 20-25 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Analytical thinking; Application of knowledge
2.5 Combine at least two segmentation bases for targeting each of the following products.
Explain your choices: (a) men’s sneakers; (b) women’s cocktail dresses; (c) hybrid cars;
(d) e-readers.
Student responses will vary. The bases of segmentation may include demographics,
geodemographics, “green”-ness, personality traits, psychographics/lifestyles, benefits, media
usage, usage rate, and usage occasion.
Individual, Moderate, 10-15 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge
2.6 Some marketers consider benefit segmentation as the segmentation approach most
consistent with the marketing concept. Do you agree or disagree with this view? Why?
Benefit segmentation is built upon the premise that consumers are basically purchasing needs,
wants, and satisfactions. Thus, it is entirely consistent with the marketing concept. Benefit
segmentation allows marketers to position various brands within the same product category
market. Demographics are easier to measure than other segmentation variables. Most
secondary data (e.g., census data) are expressed in demographic terms and most media
develop demographic profiles of their audiences. Also, demographic trends reveal shifts in
age and income that signal business opportunities for marketers. Demographics, however,
tend to be one-dimensional because it provides information on the potential for usage but not
on why a particular brand is used or exactly who uses it. Thus, demographics help locate a
target market, although psychological and sociocultural characteristics help describe who its
members are, how they think, feel, and behave.
Individual, Moderate, 7-10 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Reflective thinking; Analytical thinking; Application of knowledge
2.4 Does your lifestyle differ significantly from your parents’ lifestyle? If so, how are the
two lifestyles different? What factors cause these differences?
This is an interesting way to illustrate similarities and differences between the activities,
interests, and opinions of two distinct groups, as the factors that determine one’s lifestyle.
With respect to presenting or discussing the results (if time is a problem), select the
individuals that seem to have performed the exercise the best and have the students present
results to class as a whole. Be sure to probe students as to mechanisms used to determine
their parents (and their own) lifestyles. How could marketers use this information?
Individual, Moderate, 20-25 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Analytical thinking; Application of knowledge
2.5 Combine at least two segmentation bases for targeting each of the following products.
Explain your choices: (a) men’s sneakers; (b) women’s cocktail dresses; (c) hybrid cars;
(d) e-readers.
Student responses will vary. The bases of segmentation may include demographics,
geodemographics, “green”-ness, personality traits, psychographics/lifestyles, benefits, media
usage, usage rate, and usage occasion.
Individual, Moderate, 10-15 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge
2.6 Some marketers consider benefit segmentation as the segmentation approach most
consistent with the marketing concept. Do you agree or disagree with this view? Why?
Benefit segmentation is built upon the premise that consumers are basically purchasing needs,
wants, and satisfactions. Thus, it is entirely consistent with the marketing concept. Benefit
segmentation allows marketers to position various brands within the same product category
Loading page 29...
by stressing those benefits/desired satisfactions appropriate to each segment served. For
example, in the toothpaste market, Close-up is marketed by using a social appeal that stresses
bright teeth and is targeted to young people; Aim is targeted to parents as a good tasting
toothpaste that will encourage children to brush longer; Viadent is targeted to adults as a
means to remove tartar (cosmetic benefit) and plaque (health benefit).
Individual, Easy, 3-5 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Reflective thinking
2.7 How can a marketer for a chain of health clubs use the VALS™ segmentation profiles
to develop an advertising campaign? Which segments should be targeted? How should
the health club be positioned to each of these segments?
The best prospects (note that opinions on the following may vary) for health clubs appear to
be the Actualizers and Achievers because members of these groups are interested in growth,
control of their lives, self-discovery, and self-expression. Many of them are probably already
involved in some form of physical activity; however, a health club that is positioned as, say,
“for people who are in the best shape they have ever been in but still aren't satisfied” will
appeal to them. The health club should be portrayed as a mechanism which will help these
people control an additional aspect of their lives—their health and physical well-being—
through exercise. Normally, the Experiencers and Makers are not good prospects for a health
club because they are interested in outdoor sports and recreation. If, however, seasonal
weather prevents such endeavors, the health club could be presented as an alternative. The
Believers are probably too set in their ways to join a health club, and the Strivers and
Strugglers do not have the financial resources to join one. The Fulfilled represent a good
target market because they are mature, educated, and financially secure individuals who
might want to broaden their horizons. To them, the health club should be positioned as a
new, highly fulfilling, and beneficial experience; value should be stressed in the promotion
because these consumers are practical and concerned with the functionality of their
purchases.
Individual or Group, Moderate, 7-10 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge
2.8 Regent Seven Seas Cruises and Royal Caribbean International are two companies in
the vacation and travel industry. After looking at their websites, describe the kind of
consumers that each company is seeking to attract. Also, describe how either company
can use demographics and psychographics to identify TV shows and magazines in
which to place its advertisements.
Regent Seven Seas Cruises is owned by Prestige Cruise Holdings. According to their web
site, Prestige is the market leader in the Upper Premium and Luxury segments of the cruise
industry. The company is trying to attract wealthy, upscale consumers who can afford luxury
and personalized cruise itineraries. Royal Caribbean makes it clear that their cruises are for
example, in the toothpaste market, Close-up is marketed by using a social appeal that stresses
bright teeth and is targeted to young people; Aim is targeted to parents as a good tasting
toothpaste that will encourage children to brush longer; Viadent is targeted to adults as a
means to remove tartar (cosmetic benefit) and plaque (health benefit).
Individual, Easy, 3-5 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Reflective thinking
2.7 How can a marketer for a chain of health clubs use the VALS™ segmentation profiles
to develop an advertising campaign? Which segments should be targeted? How should
the health club be positioned to each of these segments?
The best prospects (note that opinions on the following may vary) for health clubs appear to
be the Actualizers and Achievers because members of these groups are interested in growth,
control of their lives, self-discovery, and self-expression. Many of them are probably already
involved in some form of physical activity; however, a health club that is positioned as, say,
“for people who are in the best shape they have ever been in but still aren't satisfied” will
appeal to them. The health club should be portrayed as a mechanism which will help these
people control an additional aspect of their lives—their health and physical well-being—
through exercise. Normally, the Experiencers and Makers are not good prospects for a health
club because they are interested in outdoor sports and recreation. If, however, seasonal
weather prevents such endeavors, the health club could be presented as an alternative. The
Believers are probably too set in their ways to join a health club, and the Strivers and
Strugglers do not have the financial resources to join one. The Fulfilled represent a good
target market because they are mature, educated, and financially secure individuals who
might want to broaden their horizons. To them, the health club should be positioned as a
new, highly fulfilling, and beneficial experience; value should be stressed in the promotion
because these consumers are practical and concerned with the functionality of their
purchases.
Individual or Group, Moderate, 7-10 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge
2.8 Regent Seven Seas Cruises and Royal Caribbean International are two companies in
the vacation and travel industry. After looking at their websites, describe the kind of
consumers that each company is seeking to attract. Also, describe how either company
can use demographics and psychographics to identify TV shows and magazines in
which to place its advertisements.
Regent Seven Seas Cruises is owned by Prestige Cruise Holdings. According to their web
site, Prestige is the market leader in the Upper Premium and Luxury segments of the cruise
industry. The company is trying to attract wealthy, upscale consumers who can afford luxury
and personalized cruise itineraries. Royal Caribbean makes it clear that their cruises are for
Loading page 30...
everyone, from families, couples, family reunions to corporate events. Royal Caribbean
offers activities that range from “mild to wild.” Obviously, both companies rely on
demographics in segmenting their markets. Within each of the demographic groups listed
above, the companies should identify additional socioeconomic factors (i.e., income,
education, occupation) of consumers to whom their cruises may appeal. Both companies
should identify the psychographics of consumers in the different segments, combine
demographics and psychographics, and create several profiles of its likely customers. Then,
both Regent Seven Seas Cruises and Royal Caribbean International should identify TV
shows and magazines that have “audience profiles” matching its customers’ profiles and
place its advertisements in such media.
Individual, Moderate, 7-10 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge
2.9 Choose one of the VALS segments as a potential target market for each of the following
offerings and explain your choices: (a) SUVs; (b) financial retirement plans; (c) a new
smartphone model.
Student responses will vary. When students describe the segments, they should make sure
they are discussing issues related to both demographics and behaviors. Look for the
responses to include why they selected the segments.
Individual, Moderate, 10-15 minutes, Out of class
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge; Information technology
2.10 Explain the differences between segmentation and real-time bidding.
Behavioral targeting consists of sending consumers personalized and prompt offers and
promotional messages based on marketers’ tracking of one or more of the following factors:
online navigation, current geographic location, and purchase behavior. The idea is to reach
the right customers at the right time. Predictive analytics are methods for predicting
consumers’ future purchases on the bases of past buying information and other data and
evaluating the impact of personalized promotions stemming from the predictions. Collecting
the right data and analyzing it strategically are essential to effective behavioral targeting.
Individual, Moderate, 5-7 minutes
Objective 2.3: To understand real-time bidding as compared with market segmentation.
AACSB: Information technology; Analytical thinking
2.11 Explain how marketers can employ each of the following data in predictive
analytics: (a) the website’s consumers visit; (b) consumers’ levels of engagement with
visited websites (i.e. the pages viewed, lengths of visits, return to site frequency); (c)
Consumers’ interests, lifestyles and personalities (e.g., from the contents of their blogs,
offers activities that range from “mild to wild.” Obviously, both companies rely on
demographics in segmenting their markets. Within each of the demographic groups listed
above, the companies should identify additional socioeconomic factors (i.e., income,
education, occupation) of consumers to whom their cruises may appeal. Both companies
should identify the psychographics of consumers in the different segments, combine
demographics and psychographics, and create several profiles of its likely customers. Then,
both Regent Seven Seas Cruises and Royal Caribbean International should identify TV
shows and magazines that have “audience profiles” matching its customers’ profiles and
place its advertisements in such media.
Individual, Moderate, 7-10 minutes
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge
2.9 Choose one of the VALS segments as a potential target market for each of the following
offerings and explain your choices: (a) SUVs; (b) financial retirement plans; (c) a new
smartphone model.
Student responses will vary. When students describe the segments, they should make sure
they are discussing issues related to both demographics and behaviors. Look for the
responses to include why they selected the segments.
Individual, Moderate, 10-15 minutes, Out of class
Objective 2.2: To understand how to identify, select, and reach target markets.
AACSB: Application of knowledge; Information technology
2.10 Explain the differences between segmentation and real-time bidding.
Behavioral targeting consists of sending consumers personalized and prompt offers and
promotional messages based on marketers’ tracking of one or more of the following factors:
online navigation, current geographic location, and purchase behavior. The idea is to reach
the right customers at the right time. Predictive analytics are methods for predicting
consumers’ future purchases on the bases of past buying information and other data and
evaluating the impact of personalized promotions stemming from the predictions. Collecting
the right data and analyzing it strategically are essential to effective behavioral targeting.
Individual, Moderate, 5-7 minutes
Objective 2.3: To understand real-time bidding as compared with market segmentation.
AACSB: Information technology; Analytical thinking
2.11 Explain how marketers can employ each of the following data in predictive
analytics: (a) the website’s consumers visit; (b) consumers’ levels of engagement with
visited websites (i.e. the pages viewed, lengths of visits, return to site frequency); (c)
Consumers’ interests, lifestyles and personalities (e.g., from the contents of their blogs,
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