CHAPTER 2 THE ROLE OF INTEGRATED MARKETING COMMUNICATIONS IN THE MARKETING PROCESS

Chapter Overview
The purpose of this chapter is to examine the marketing process and the role of advertising and promotion in an organizations integrated marketing program. A basic model of the marketing and promotional process is presented, which can be used as a framework for analyzing how advertising and promotion fit into a companys marketing program. The chapter examines the various decision areas under each element of the marketing mix and how they influence and interact with advertising and promotional strategy. The chapter also introduces and/or refreshes the student on the concepts of target marketing, segmentation and positioning. The target marketing process is introduced, and the specific elements of this processidentifying markets with unfulfilled needs, market segmentation, selection of a target market and positioningare described in detail.

Learning Objectives
To examine the marketing process and the role of advertising and promotion in an organizations integrated marketing program. 1. To know the various decision areas under each element of the marketing mix and how they influence and interact with advertising and promotional strategy. 2. To understand the concept of target marketing in an integrated marketing communications program. 3. To recognize the role of market segmentation and its use in an integrated marketing communications program. 4. To understand the use of positioning and repositioning strategies. 5. To understand the marketing process and the role of advertising and promotion in an organizations integrated marketing program.

Chapter and Lecture Outline

I. INTRODUCTION TO MARKETING AND PROMOTIONS PROCESS MODEL

A model is presented at the beginning of the chapter (Figure 2-1) which is a useful framework for analyzing how promotion fits into an organizations marketing program. The model consists of four components: y y y y The organizations marketing strategy and analysis The target marketing process Marketing planning program development (which includes the promotional decisions) The target market

The first part of the chapter is devoted to examining the four components of this model and the role advertising and promotion play in each. As noted in the text, it is important to note that a firms

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promotional program is directed not only to the final buyer but also to channel or trade members who distribute its products/services to the ultimate customer. The role of promotion is discussed for building and maintaining demand not only in the consumer market, but among the trade as well. Professor Notes

II.

MARKETING STRATEGY AND ANALYSIS

The marketing process actually begins with the development of a marketing strategy whereby the company determines the product or services area and particular markets in which it wants to compete. A strategic marketing plan usually evolves from an organizations overall corporate strategy and serves as a guide for specific marketing programs and policies. The development of a marketing strategy is based on a situation analysis (as discussed in Chapter 1) from which a firm develops an understanding of the market, the opportunities it offers, the competition and various segments or target markets the company may wish to pursue. Steps in the Development of a Marketing Strategy A. Opportunity Analysisa careful analysis of the marketplace should lead to alternative market opportunities or areas where the company feels there are favorable demand trends, where customer needs and/or wants are not being satisfied and where it could compete effectively. Market opportunities are usually identified by examining demand trends in various market segments. The discussion can focus on how market opportunities are identified and recent examples of companies finding and exploiting them. Diversity Perspective 2-1 discusses the growth of the Hispanic market which could be an interesting point of departure for a discussion about the opportunity created by new and growing segments. Competitive Analysisin developing marketing strategies and programs a company must analyze the competition its products or services face in the marketplace. Competition can range from direct brand competition to other products and services that satisfy consumers needs and/or compete for their dollars. Competitors marketing programs have a major impact on a firms marketing strategy and must be carefully analyzed and monitored. Various aspects of advertising and promotion such as promotional spending, media and creative strategy, and sales promotion are often directly affected by competitors. An important aspect of marketing strategy development is the search for an advantage over the competition. A competitive advantage refers to something unique or special a firm does or possesses that gives it an edge over competitors. Competitive advantage can be achieved in a variety of ways, including having quality products that are differentiated from the competition and command premium prices, providing superior customer service, having the lowest production costs or dominating channels of distribution. Competitive advantage can also be achieved through having excellent advertising and promotion that creates and maintains product/service differentiation and brand equity. You might want to discuss how many companies have used advertising to achieve brand equity. It is also important to note the concerns of many advertising and marketing people that reductions in media advertising and increased spending in trade promotions may lead to losses in brand equity and competitive advantage. Target Market Selectionafter evaluating marketing opportunities for products/services in various markets, a company selects one or more as a target market for which it will develop a

B.

C.

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marketing program(s). This target market becomes the focus of the companys marketing efforts. Selection of the target market is not only a very important part of a firms marketing strategy, but also has implications for advertising and promotional strategy and tactics. Professor Notes

III.

THE TARGET MARKETING PROCESS

The concept of target marketing is introduced, noting that there are four distinct steps involved in this processidentifying target markets with unfulfilled needs, market segmentation, selecting a target market, and positioning through marketing strategies. From this point, the chapter will go on to discuss in detail the processes required in each step. A. Identifying MarketsTarget marketing involves the identification of the needs and wants of specific groups of people (or segments), selection of one or more of these groups as targets, and the development of marketing strategies aimed at each. This approach has found increased applicability for a number of reasons. y the diversity of consumers needs y increasing use of segmentation by competitors y more managers are trained in segmentation The instructor should note that this process leads to a more homogeneous grouping of potential customers, which allows the marketer to develop more precise strategies designed to reach them. Market SegmentationOnce the marketer has identified who it is that is to be targeted; these potential customers are grouped based on the fact that they have similar needs and/or behaviors that are likely to cause them to respond similarly to marketing actions. This breaking up of the market is referred to as the market segmentation process. This process includes five distinct steps: y Finding a way to group consumers according to their needs y y y C. Finding a way to group the marketing actionsusually the products offeredavailable to the organization Developing a market-product grid to relate the market segments to the firm's products or actions Selecting the target segments toward which the firm directs its marketing actions; and

B.

y Taking these actions. A number of bases for segmentation are available to the marketer including the following: (Figure 2-4 will be helpful here.) y Geographicthe market is divided into geographic units with alternative marketing strategies targeted to each y Demographicdivision involves demographic variables such as age, sex, family size, income, education and social class among others y Psychographicmarkets are divided based on the personalities and/or lifestyles of consumers. (The instructor should note that lifestyles have become a commonly employed segmentation strategy.) Programs such as VALS and PRIZM are commonly employed by marketers for this purpose.
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D.

E.

F.

Behavioristicthis form of segmentation divides consumers into groups according to their usage, loyalties or buying responses to a product. These characteristics are then usually combined with one of the previously mentioned bases to develop segment profiles. y Benefitsspecific benefits offered by a product or service may also constitute a basis for segmentation. In many instances a variety of benefits may be derived for the same product among different groups. (For example, the instructor might ask students to suggest benefits to be derived from the purchase of a watch, noting that at certain times of the year these benefits will change based on the recipient of the watch!) The Process of Segmenting a MarketThis section concludes by reminding the student that market segmentation is indeed a process that develops over time and is a critical part of the situation analysis. Selecting a Target MarketHaving conducted the segmentation analysis, the marketer will be faced with two subsequent decisions: 1. Determining how many segments to enter 2. Determining which segments offer the most potential. The first of these decisions may lead the marketer to three potential strategies: y Undifferentiated marketing would involve the decision to ignore the segment differences and develop one product for the entire market. It should be noted that few firms pursue this strategy today. y Differentiated marketing involves the decision to compete in a number of segments, developing different marketing strategies for each. y Concentrated marketing takes place when a firm decides to concentrate its efforts on one specific segment in an attempt to capture a large share of that market. (The example of Maxwell Business Systems provided in the book will illustrate this point well.) Marketing Positioningpositioning has been defined as "the art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from the competition." 1. Approaches to Positioningthis section discusses the approaches to positioning as well as a number of strategies for developing a position. Several distinct positioning strategies are offered including: a. positioning by product attribute/benefitsetting a product apart by stressing a specific characteristic or benefit offered. b. positioning by price/qualityin this strategy price/quality characteristics are stressed. For example, some products set themselves apart by assuming a very high price/quality association, while others become "price products." c. Positioning by use or applicationhow a product is to be used may in itself lead to a positioning strategy. The shoe industry example offered in the text, and products such as Arm and Hammer baking soda and Black & Decker have capitalized on this strategy. d. positioning by product classthe Amtrak example provided in the text in reflects this strategy in which the product is positioned against others that, while not exactly the same, provide the same class of benefits. The current pork campaign ("The other white meat") is another example that might be cited. e. positioning by product userin this strategy the product is positioned at a particular group of users. The Viagra example (Exhibit 2-10) demonstrates this strategy in practice. f. positioning by competitorin many cases the competition may be used to define the positioning strategy. Companies can position their products to set themselves apart from the competition, show superiority, etc. y

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g. positioning by cultural symbolthe koala of Quantas Airlines, Buster Brown, the Jolly Green Giant and Chicken of the Seas mermaid are all examples of cultural icons. h. repositioningdeclining sales or changes in market conditions may lead a firm to reposition. Companies such as Sears, Montgomery Ward (Focus), and J.C. Penney are a few of the examples of companies that have attempted (both successfully and unsuccessfully) to assume a new position in the market. 2. Determining the Positioning Strategyas noted in the text, the development of a positioning strategy involves six distinct steps: y y y y y y Identifying competitors Assessing consumers' perceptions of competitors Determining competitors' positions Analyzing consumers' preferences Making the positioning decision Monitoring the decision

Professor's Notes

IV.

DEVELOPING THE MARKETING PROGRAM

The next stage of the marketing process involves combining the various elements of the marketing mix into a cohesive and effective marketing program. This requires that all elements of the marketing mix be combined effectively and that they be consistent with one another. It is important to stress that each element of the marketing mix is multidimensional in nature and includes a number of decision areas. In discussing the various elements of the marketing mix attention should be given to how each influences and interacts with promotion. A. Product Decisionsan organization exists because it has some product, service, idea or cause to offer customers. Discussion can focus on benefits or values offered by the product and the fact that products and services satisfy not only functional but social and psychological needs as well. Product decision areas of branding and packaging are particularly important from a promotional perspective because of the role the brand name and package play in communicating attributes, information and meaning to the consumer. 1. Brandingchoosing a brand name for a product is important from a promotional perspective because brand names communicate attributes and meaning. One important role of advertising in respect to branding strategies is creating and maintaining brand equity. Brand equity can be thought of as an intangible asset of added value or goodwill that results from the favorable image, impressions of differentiation, and/or the strength of consumer attachment to a company name, brand name, or trademark. 2. Packaging the role and function of packaging has changed because of the self-service emphasis of many stores and the fact that as many as two-thirds of all purchases made in the supermarket are unplanned. The Listerine PocketPaks shown in Exhibit 2-23, are an excellent example of how packaging can create new opportunitiessometimes for existing products. Price Decisionsthe price variable of the marketing mix refers to what the consumer must give up in exchange for a product or service, Marketing managers must be concerned with establishing

B.

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a price level, developing pricing policies and monitoring consumers and competitors reactions to price in the marketplace. Factors a firm must consider in determining price levels include: y costs y y demand competition

C.

D.

y perceived value Interesting findings from the PIMS project concerning the relationship between price, product quality and advertising are discussed in the text. Distribution Channel Decisionsmarketing channels or the place element of the marketing mix refers to the set of interdependent organizations involved in the process of making a product or service available to customers. Differences in direct versus indirect channel arrangements should be discussed. In discussing the latter, the importance of resellers in marketing and promotional strategy should be introduced. The Internet has become a new channel for a number of companies, and has had a demonstrable impact on the distribution system. Attention should be given to the need to develop promotional programs for the trade or resellers to encourage them to stock and promote a product. Developing Promotional Strategies: Push or Pull? When a promotional push strategy is used, the goal is to persuade the trade to stock, merchandise and promote a companys products by aggressively selling and promoting to resellers. This can be done by having the companys sales representatives call on resellers and offering special programs such as promotional allowances and cooperative advertising. Trade advertising in publications that serve the industry such as Progressive Grocer or Drug Store News may also be used as part of a push strategy. When a promotional pull strategy is used, the goal is to create demand among end users which will in turn encourage retailers to carry a brand. Heavy spending on consumer advertising and sales promotion is an important part of a pull strategy.

Professors Notes

Teaching Suggestions
This chapter is designed to provide the student with an overview of the overall marketing process and the role advertising and promotion play in the marketing program. The chapter may be somewhat of a review for some students, particularly those who have had a basic marketing course. However, we feel that this chapter is more than just a review of marketing principles or fundamentals. We have written the chapter to show the role advertising and promotion play in the marketing process as well as how promotional strategy is influenced by and interacts with marketing strategy and the various elements of the marketing program. Students will benefit from the discussion of the marketing mix from a promotional strategy perspective even if they have had an introductory marketing course. We have found that the model of the marketing and promotion process is a very good framework for analyzing how promotion fits into an organizations marketing program. The three components of the model cover the basic areas of marketing and the model shows that promotional programs must be developed for the trade as well as for the ultimate customer in the target market. It is important to stress to students the important role resellers play and the need to develop promotional programs to motivate the trade to get them to stock, merchandise and promote a companys products. You might point out to students that the recent trends in the allocation of promotional budgets have seen a shift in monies away
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from media advertising and toward trade promotions. Another shift in budgets has been affected by the advent of the Internet. Students will see that the Internet has both benefited and negatively impacted traditional media. These issues are discussed is considerable detail in the sales promotion and Internet chapters.

Answers to Discussion Questions

1. Recently, some marketers have noted that it is easier to develop communications programs to Generation X members than Generation Y. Briefly describe the characteristics of Gen X and Gen Y and whether or not you believe this to be true. There is some debate as to whether Gen Xers (born between 1965-1978) or Gen Yers (1978 to 1986) is more easily targeted by marketers. Each of these groups has their own identifying characteristics. Generation X consumers are typically characterized as self-confident, yet distrustful of those of previous generations (and of marketing practices). They also tend to be less optimistic than their Gen Y counterparts. They are demanding consumers, less concerned with brand names and image and more concerned with quality. Gen Y consumers love to spend. They process information quickly, are quick to adopt new technologies and are more optimistic about the future. In the eyes of some, they are shameless consumers. Compared to Gen X they are less rooted in social mores, and buy because they like to do so. While marketers may argue that Gen X is hard to relate to and more cynical and skeptical than the Yers, once you have their trust, they will become loyal and remain somaking them an attractive segment. The key is getting their trust. On the other hand, reaching Gen Y is not as hard. They will buy based on wants rather than needs, focus on image and brands, and consume as a way of life. They are easier to reach given a proliferation of mediaparticularly the Internetand a much improved cable selection. They may not stay loyal, but there is always someone behind them with money to spend. So on the one hand it is brand loyalty versus spontaneous buying on image and appeal. For Gen X all you have to do it get their trustnot an easy task. For Gen Y, all that is required is to have a strong brand, create one, or develop an appealing image. This is not easy either. There are many more issues that might argue for either sides being more easily reached. The one thing that is for sure is that both offer attractive options, with a combined purchasing power in the hundreds of billions of dollars. 2. The text discusses Samsungs attempt to reposition to be competitive with companies like Sony. Discuss what factors might promote and/or inhibit their success in this endeavor. While creating a position in the market is often a difficult task, repositioning is an even greater undertaking. Once a brand has been associated with a position, it is difficult to change those perceptionsparticularly, if the brand is trying to move up, to a higher quality level position. An example of this is GoldStara Korean manufacturer of appliances like TVs, stereos, etc. While the company manufactured good productsparticularly for the pricethey were priced at the low end of the price range. The goods became associated with low price. When GoldStar attempted to reposition upward, they found great resistance from consumers, who continued to maintain the low price image.

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Like GoldStar, Samsungs products in the consumer market were primarily low-end, copy products. Like GoldStar, they will have to overcome this image. At the same time, Sonys original entry into the U.S. market was at the low end. By building better quality products, and sticking with their desire to reposition, Sony was successful. There is nothing to preclude Samsung from doing the same thing. Samsungs strength in a number of product categories will be helpful in extending this image to their consumer line. However, changing the product along will not be enough. As noted, Samsung will change the distribution system as well, pulling out of lower end stores. The significant expenditures on advertising will also help create the new brand image. The Sanyo brand name itself, while a negative for the new positioning, may have not had as close an association with the new product categories that Samsung is competing in. As noted, unless you owned a microwave, you may not have heard of the brandand probably never associated it with Samsung. It has often been said that it is easier to create a brand image than change one and if this is true, then Sony may be in trouble. 3. As companies increase their efforts to target the Hispanic segment, they are likely to encounter differences from other sub-cultural groups. Discuss some of the differences they might expect to notice in the Hispanic sub-culture. Perhaps the most difficult factor in considering the Hispanic market is the fact that it is not one subculture, but many subcultures within a subculture. The Hispanic subculture includes Mexicans, Cubans, Puerto Ricans, and Colombians, among others. While all Hispanic, these groups may be as different as they are alike. Thus, while they all may share some similar valuesfor example, the strong focus on familythey may also have specific needs and wants that must be addressed. Consider the example provided in Diversity Perspective 2-1 about the Sears stores in Southern California. While both in the same city (Los Angeles) and within 20 miles of each otherand both in Hispanic oriented areasthey have very different clientele. The result is that different product mixes, different ad campaigns and other marketing strategies may be necessary to reach each subgroup effectively. In some ways, being able to group consumers into segments based on subcultures may be an effective way to market. On the other hand, assuming too broad of generalizations about these groups may cause problems. Essentially, all Hispanics are not the same. All GenXers are not the same. The grouping may be helpful as a broad paint of the brush, but to be successful, marketers will also have to go a little deeper into the segments to fine tune the communications to be successful. 4. Changing lifestyles can create both opportunities and threats for the marketer. Provide an example of a changing lifestyle that poses a threat to marketers and one that provides an opportunity. Give an example of a product or brand that has been affected in both of these ways. Changing lifestyles result in different needs and wants that provide both opportunities and threats to marketers. For example, when students graduate, they will have more money to buy things, providing more opportunities for automobile manufacturers, clothing companies, etc. The types of clothes they purchase may lead to opportunities for business clothing manufacturers, but threats to more casual product lines. As they get married and start families, needs and wants will change again, and then much later when they become empty nesters, new opportunities and threats will arise. Consider the ski industry. A review of Simmons or MRI will show that the typical skier is young (less than 34), single, and upscale. Interestingly, participation in this sport drops off significantly in the 30+ age group, and when families are started. This poses both an opportunity and a threat to those in the ski industry. As a threat, they must figure out new ways to keep people skiing. New equipment,

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new clothing, promotions, etc. need to be used to keep the sport of interest to the participant, preventing them from leaving. At the same time, opportunities are created. Some ski resorts run family packageskids stay at the hotels and ski free. Others offer free ski lessons. Hotels at some ski resorts have kids stay free packages, babysitting services, etc. Some resorts have also become successful by positioning themselves as kid friendly or family destinations. Successful marketers learn to adapt to changing lifestyles, finding a way to turn a threat into an opportunity. Changing lifestyles will always create threats for some products and opportunities for others. One thing is certain, the successful marketer must monitor the market, watch for changing lifestyles and adapt. They cannot sit still, or they will lose their market share. 5. The text discusses the positioning of JetBlue and their success so far. Describe some of the things that JetBlue has done effectively to lead to their success. What will JetBlue need to do in the future to maintain this success? Focusing on marketing factors, JetBlues success is due in large part to their positioning. Having taken the position that flying can be fun, the airline has positioned themselves as upscale like Virgin airlines at an affordable price (like Southwest). Importantly, the product offering also supports this positioning. Wide, leather seats, satellite TV at each seat, friendly, and fun-loving flight attendants all continue to reinforce the positioning. In other words, JetBlue is not just advertising a position; they are building an overall IMC strategy to support it. JetBlue has been very successful in differentiating itself from its competitors by focusing on the inexpensiveyet important things, like courtesy, comfort and being punctual. It doesnt cost a lot to be friendly, yet some airlines seem to have trouble understanding the concept. Satisfaction is also a key to the airlines success. In addition to the above factors, JetBlue takes extra efforts to maintain customer satisfaction, hoping to get future bookings from travelers, and building up brand loyalty. Like the airline itself, the website is easy to navigate, functional, and user-friendly. The overall attitude of the airline is that it is trying to work hard to please travelers in every aspect of the flying experience. So long as this attitude permeates the entire JetBlue experience, the company will remain successful. To remain successful, JetBlue will need to maintain its present program. In a time when travel is down, and costs are up, it will be tempting to the airline to start to try to save money by cutting costs. Should it pursue this course, it will be the beginning of the end of their success. JetBlue has established a unique positioning, and supports this positioning through all of their offerings, service, etc. So long as they continue along this track they will remain successful. 6. Some marketers contend that demographics is not really a basis for segmentation, but a descriptor of the segment. Discuss examples to support both positions. While by far the most commonly employed method of segmenting a market, many marketers feel that demographic segmentation is really more of a descriptor than a segmentation basis. For example, the most commonly sought demo in television is the 25-49 year old female. Besides the fact that this demo is too broadly defined, some would argue that the fact that one falls into these two demographic categories is not the reason why one purchases, it just happens to be a common descriptor of the purchaser. Or they would argue that using demographic segmentation for other products and services may be misleading as well. For example, the most frequent users of ATM cards are those under 35. Those of the age 60+ are very low users. Does this mean that once one turns 60 they will quit using their cards? The answer is probably no. And if they do, it will not be because of their age but because

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of a change in lifestyles (more time available). Finally, while Doans pills are most commonly used by those 60+ the real basis for segmentation is benefit segmentation (relief of backache) not age. Its just that backache is more common among those 60+. On the other hand, demographics can be a basis for segmentation. Womens products are one example. Another is income. Buyers of Mercedes, BMW and Porsche must be able to afford these automobiles. Thus income does become a useful basis for segmentation. The key here is that one realizes that demographics may be a useful segmentation criterion in some instances, but in others it is merely a descriptor. The astute marketer must be able to make this determination. 7. Establishing brand image is often difficult for new companies. Explain what companies must do to establish a strong brand image. Establishing a brand image has proven to be a difficult endeavor for many companies, and an almost insurmountable task for Internet companies. While not an easy goal to accomplish, creating a brand image requires a designed strategy. As noted in the chapter, developing an image requires positioning. The chapter notes that there are six questions that must be answered to develop a positionand image. In reviewing these, it becomes obvious that to create an image, the organization must determine what it wants to be, how it is different from competitors, and whether or not it can claim and maintain that image. The image then must be supported by an integrated marketing communications program, with each element designed to reinforce the image. Many companies fail to achieve a distinct image in the marketplace for a variety of reasons. First, all communications efforts do not support this image, due to inconsistencies. Secondly, the brand or corporate identity does not contribute to the overall image. For example, ConAgra and Navistar do really not translate directly for consumers, whereas some others may. Most importantly, building an image takes time. Companies that have been successful in building and/or changing their images have invested much time and effort into this endeavor, and have stayed with one consistent strategy through thick and thin. For Internet companies, many which have only been in operation a few years, have names that dont reflect their business, and who have not devoted much time and resources to image creation, it should not be surprising that such an image has not been established. 8. More and more business to business companies have gone away from purely trade advertising to advertising in consumer media. Is this likely to be a successful strategy? Why or why not? Trade advertising provides the business to business marketer with an effective means of reaching the target audience given that the viewers of these trade media are generally more qualified prospects. In other words, one is not likely to read the Brandweek if they have no interest in marketing, nor are they likely to read Progressive Grocer if they are not in any way involved in this business. The high cost of trade advertising, and the limited reach, however, are just two of the characteristics of trade advertising that may limit its appeal. As a result, more and more business to business companies are turning to broader audience media in an attempt to reach customers and potential customers more effectively and efficiently. While these media may not be as specifically targeted as trade media, the business to business companies are finding that they can purchase media with a great deal of waste coverage and still hit their target audiences more cost efficiently than through traditional trade publications. A number of changes in the media themselves have aided in this cause. For example, cable TV has made it possible to become

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more targeted in a broadcast medium than previously was possible. A number of print media, for example Advertising Age and Business 2.0 are read by both business professionals and a more general audience, allowing for greater reach. Changes in message strategies have also led to the adoption of more consumer oriented media. Creating a brand or corporate image may be easier to do through TV than print, for example. Creating brand or corporate awareness may be more effectively accomplished in nontraditional business to business media. What will determine if a company is able to use consumer media is a function of a number of factors: (1) the nature of the audiencethat is, how many users and potential users are likely to see the ad in a nontrade medium; (2) the nature of the messagewhat is the communication goal? If it is to create awareness and interest, the broader based media may work, if it is narrowly focused, trade media may be required; (3) the medium itselfhow much waste coverage is involved? While media buyers can live with some waste coverage, at some point, there may be too many from outside the target audience to warrant the buy; and (4) cost factorswhile the cost may be less expensive on a basis of total reach, when one considers the reach to the target audience, the relative cost may increase significantly. In addition, the total cost of the consumer medium may be too much to allow for the necessary frequency to achieve the communications goal. 9. A number of approaches to segmentation have been cited in the text. Provide example of companies and/or brands that employ each. Figure 2-4 lists a number of criteria for segmenting the market. Some examples of the various types of segmentation and companies employing this strategy include: Geographic General Foodsdifferent strengths of coffee for areas of the US. Automobile companiesimport cars are purchased more in certain states or regions of the country; Cell phonesurbanites are more prone to adopt than rural dwellers. Age: Doan Pills; Viagra; Geritol Sex: Secret and Soft & Dry Deodorants; Virginia Slims Cigarettes; Right Guard Deodorant; 212 Cologne for men and 212 for women Psychographic Alloy, Lucky Brands and Tommy Hilfiger targeting Gen Y. Burton targeting snowboarders; Rossignol targeting skiers. Benefits DSL companies offering more speed on the Internet Volvo offering safety; Kia low cost Satellite TV offering better quality than cable. Usage Lexus and Infinity targeting previous lower cost Toyota and Nissan brands Computer companies targeting nonusers, first time and more sophisticated users Demographics (business markets) Sprint segments the market by size of company

Demographic

Others segment by outlet type, department stores v. specialty stores, etc.

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10. Describe how the positioning strategy adopted for a brand would need to be supported by all other elements of the marketing mix. Positioning requires consistency among all marketing mix elements. For example, it is difficult for the consumer to perceive that the very best brand/product can also be the least expensive. A high priced perfume or cologne would certainly lose some of its image if distributed in a K-Mart. High quality, high priced products advertised in low cost media (for example, local Pennysavers, NickelMarts, etc) might find that their image suffers. For most consumers, high quality usually means a higher price (and vice versa), upscale (selective or exclusive) distribution, and quality representation in advertising. Trying to go away from these consistencies may lead to confusion and detraction from the positioning platform. The same holds true for products at other ends of the price/quality spectrum. To maintain margins, intensive distribution may be required, price discounts, coupons, and other deals may be used more frequently, and less expensive media may be employed. The JetBlue example cited in the text exemplifies what is required to support the positioning effort. The price, product, promotions and every day interactions must be consistent with the positioning. JetBlue does this throughout its offerings, and does so effectively.

Additional Discussion Questions (not in text)

11. Discuss the concept of target marketing. Why is it so important to marketers? Marketers often develop different marketing strategies to satisfy the needs of various market segments. The process by which marketers do this involves four steps: (1) identifying markets with unfulfilled needs, (2) segmenting the market, (3) targeting specific segments and (4) positioning the product or service. Target marketing is important in that all firms have limited budgets. As a result, it is often not feasible to develop products/services that might appeal to all segments. A choice will be made as to which segments to compete in or to target. The Henry Ford strategy of undifferentiated products and services is not likely to work in todays marketplace. Thus, by target marketing, organizations can focus their marketing efforts on those segments likely to return the most rewards, and develop their marketing strategies more precisely to meet these segments needs and wants. Todays media offerings facilitate the opportunity to target market. Televisionessentially a mass mediumhas now become more targeted through the advent of cable, allowing the marketer to reach groups of viewers with specific needs, wants and/or interests. Consider for example, the golf channel, the travel channel, or the history channel. For a marketer with products or services to offer to these viewers, it is now quite feasible to target these groups, with a minimum of wasted monies on those persons that might not be interested in these offerings. The marketer can now reach specific segments with more targeted offerings, and at a much lower cost. Companies that could not previously enter the mass market can now do so due to cost efficiencies. The Internet offers yet another medium available to marketers to target specific interest groups with cost effectiveness. 12. What is meant by positioning? Discuss the various approaches to positioning and give examples of companies or brands that use each approach. Positioning has been defined as the art and science of fitting the product or service to one or more segments of the broad market in such a way as to set it meaningfully apart from competition. A number of approaches to positioning are available:

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Positioning by product attributes and benefitssetting the product apart based on specific characteristics or benefits offered. For example, Volvo-safety; Mercedes-luxury; Apple-ease of use, etc. Positioning by price/qualitypositioning the brand on the basis of high quality and or as a price product (though positioning on price still requires quality) Examples include: Rolex watches (quality); Motorola (quality); GoldStar (price) and Kia (price) Positioning by use or applicationassociating the product with a specific use or application. For example, Black & Decker SnakeLight; WD-40, Windex Outdoor Window Cleaner. Positioning by product classrather than positioning against another brand, a different product class (which may be a competitor) is compared against. Examples: Yogurt (fruit), pork (white meat); potatoes (vegetables); Amtrak (airlines) Positioning by product userAssociating the product with a particular group of users (Applegraphics users); Nokon (expert camera users); BMW (Yuppiesthough not by desire or design!) Positioning by competitorPositioning against a specific brand in the product class. Examples: Apple-IBM; Mercedes-Infinity; Crest-Colgate. Positioning by cultural symbolCultural symbols differentiate brandsChiquita Banana; The Jolly Green Giant, Quantas Koala, etc. 13. What factors would lead a marketer to the use of a repositioning strategy. Find a product or service that has been repositioned recently and analyze the strategy. Probably the most common factors leading to repositioning would be a loss of sale, a growing market, and/or the entry of a new product into the marketplace. Other factors might include an erosion of the product image, a desire to enter new markets and/or even management desires. A number of companies have tried to repositionmost with limited or no success. Sears, K-Mart, and Penneys have all done so, with varying degrees of success. GoldStar has attempted to reposition upwards to be perceived as more of a quality product. Porsche has repositioned to be even more of an expensive, serious sports car drivers car, and Holiday Inn has become the new Holiday Inn. Some of the more successful efforts were expended by Ford and Motorolaboth putting quality back in. A current example is that of LaCoste clothing. Once perceived as a quality brand, much of the quality image was lost as new distribution outlets were added eroding the upscale image. The clothing line was literally being worn by too many people, not just those upscale. A recent move to reposition the product back to its original high quality image led to the reduction of distribution outlets, more upscale advertising, and higher prices to attempt to re-establish the original quality perceptions. 14. Discuss the process involved in segmenting a market. What are some factors one must consider in determining how to segment the market? The market segmentation process involves five distinct steps:(1) finding ways to group consumers according to their needs; (2) finding ways to group the marketing actions (3) developing a marketproduct grid to relate the market segments to the firms products or actions;(4) selecting the target segments toward which the firm directs its marketing actions; and (5) taking marketing actions to reach target segments. A number of factors must be considered in the segmentation process. The more the market is segmented, the more precise is the marketers understanding of it. However, the more segmented it becomes, the less individuals there are in each segment. Marketers must determine how far to take this process. Secondly, the marketer must consider whether the segment will support a marketing effort. There is always a trade-off between knowledge and specialized program offerings and the

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ability of the market to support such efforts. Marketers must also determine if the segment is accessible. That is can the segment be reached with a communications program, can the organization offer such a program, and can it afford to do so? Finally, once a segment has been determined, the marketer must establish the basis upon which it will compete in that market. A number of segmentation strategies might be considered. 15. Discuss the differences between a promotional push and a promotional pull strategy. What factors influence a firms decision to use either a push or a pull strategy? A promotional push strategy is one whereby a company has a program to encourage channel members to stock and promote its products. The goal of this strategy is to push the product through the channels of distribution by aggressively selling and promoting to resellers. A promotional pull strategy creates demand on the consumer end by spending monies on advertising and promotion directed at the ultimate consumer. The goal of this strategy is to pull the product through the channels as favorable demand from consumers will motivate the trade to stock and promote it. Decisions as to whether to emphasize a push or pull strategy depend on a number of factors including the companys relation with the trade, the promotional budget and demand for the product. Companies with favorable channel relationships often use a promotional push strategy and work closely with channel members to encourage them to stock and promote their products. Firms with limited promotional budgets may not have the funds for advertising and promotion that are required for an effective pull strategy and may find it more feasible to target their efforts to the trade. Products with favorable demand resulting from unique benefits, superior advantages and/or popularity among consumers may use a pull strategy.

IMC Exercise
The text discusses a number of efforts by marketers to reach diverse market segments by targeting various ethnic groups and subcultures. Have students find ads targeted to specific ethnic groups or subcultures. They should bring these ads to class and discuss which market segment is being targeted, the type of appeal used in the ad, and whether they feel the targeting effort will be successful.

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