Midterm 2 review
Chapter 8 pg.242
A market segment consists of a group of customers who share a similar set of needs and wants.
Effective Segmentation Criteria
A flexible market offering consists of two parts: a naked solution containing the product and service
elements that all segment members value, and discretionary options that some segment members value.
Homogeneous preferences exist when all consumers have roughly the same preferences
Consumers in diffused preferences vary greatly in their preferences.
Clustered preferences result when natural market segments emerge from groups of consumers with
Two Main Market Segments
Forms of Market Segmentation
1. Mass Marketing
Rarely seen today
o Competitiveness of the market
o Need to specifically address consumer needs
2. Segment Marketing
Most common form of segmentation
3. Niche Marketing
Concentrate on a smaller area to be successful
4. Individualized Marketing
Through the use of sophisticated tracking and statistical models, behaviour is predicted
Individual offers are developed
5. Local Marketing
Market Segmentation - Key to success: Balance + satisfy customer needs = profitability
Customerization combines operationally driven mass customization with customized marketing in a way
that empowers consumers to design the product and service offering of their choice.
Segmenting Consumer Markets
o Age and life cycle o Life stage
o Social class
Age cohort: a group of consumers of the same approximate age who have similar experiences
Perceived Age: You’re Only as Old as You Feel
Chronological Age: Actual number of years lived
Gerontographics: segmentation approach that divides the mature market by level of physical well-being
and social conditions (U.S. data)
Acculturation - Process of movement and adaptation to one country’s cultural environment by a person
from another country
• Five phases of adjustment:
– Culture shock
– Superficial adjustment
– Stress and depression
• Split loyals
• Shifting loyals
Segmenting for Business Markets
• Operating variable
• Purchasing approaches
• Situational factors
• Personal characteristics
Steps in Segmentation Process
• Need-based segmentation
• Segment identification
• Segment attractiveness
• Segment profitability
• Segment positioning
• Segment acid test
• Market mix strategy Megamarketing is the strategic coordination of economic, psychological, political, and public relations
skills, to gain the cooperation of a number of parties in order to enter or operate in a given market.
1. In _____ marketing, the seller engages in the production, distribution, and promotion of one
product for all buyers.
2. A _____ is a more narrowly defined customer group seeking a distinctive mix of benefits.
3. _____ marketing reflects a growing trend called grassroots marketing.
4. _____ combines operationally driven mass customization with customized marketing in a way
that empowers consumers to design the product and service offering of their choice.
5. _____ segmentation calls for dividing the market into groups based on age, family, size, family
life cycle, gender, income, etc.
6. In _____ segmentation, buyers are divided into groups on the basis of their knowledge of,
attitude toward, use of, or response to a product.
7. A _____ is a set of segments sharing some exploitable similarity.
8. In _____ specialization a firm selects a number of segments, each objectively attractive and
9. With ________ the firms makes a certain product that it sells to several different market
a. product specialization
10. A company uses _____ invasion plans to enter one segment at a time.
11. Some companies claim that mass marketing is dying and are turning to micromarketing.
12. A target market consists of a group of customers who share a similar set of needs and wants.
13. Homogeneous preferences show a market with distinct preference clusters called natural
14. The ultimate level of segmentation leads to "segments of one."
15. Psychographics is the science of using psychology and demographics to better understand
16. The VALS technique bases segments on consumer motivation and consumer resources.
17. In differentiated marketing, the firm operates in several market segments and designs the same
product for each segment.
a. False (different product for each segment.) 18. Megamarketing is the strategic coordination of economic, psychological, political, and public
relations skills to gain the cooperation of a number of parties in order to enter or operate in a
19. Socially responsible marketing calls for targeting that serves not only the company's interests,
but also the interests of those targeted.
20. The cereal industry has been heavily criticized for marketing efforts directed towards children.
21. Name the four major segmentation variables and explain what they measure.
Geographic - geographical units such as nations, states, regions, counties, cities, or
Demographic - variables such as age, family size, family life cycle, gender, income, occupation,
education, religion, race, gender, nationality, and social class.
Psychographic - divides groups on the basis of psychological/personality traits, lifestyle, or
Behavioral - divides buyers into groups on the basis of their knowledge of, attitude toward, use
of, or response to a product.
22. To be useful, market segments must rate favorable on five key criteria. Discuss these.
Market segments must be:
Measurable - in size, purchasing power and characteristics of the segments.
Substantial - large and profitable enough to serve.
Accessible - the segments can be effectively reached and served.
Differentiable - the segments are conceptually distinguishable and respond differently to
different marketing-mix elements and programs.
Actionable - effective programs can be formulated for attracting and serving the segments.
1. _____ has four levels: segments, niches, local areas, and individuals.
a. Micro marketing
2. _____ preferences show a market with scattered consumer preferences.
3. Hallmark targets narrowly defined market segments. This is an example of _____.
a. niche marketing
4. When Hilton Hotels customizes its rooms according to location, they are using a _____
5. PRIZM clusters are a form of _____ segmentation.
6. A husband is looking for a new treadmill for his wife's birthday present. The husband seeks
information from his best friend who has a treadmill. The friend is taking on what role in the
buying decision process?
7. A bank may not only identify a group of wealthy retired adults, but within that group, distinguish
several segments depending on current income, assets, savings, and risk reference. This has led
some marketers to use _____ segmentation.
a. needs-based 8. Estee Lauder, the cosmetics firm, offers many market brands that cater to various men and
women of different tastes. Estee Lauder is practicing _____ marketing.
9. Johnson & Johnson broadened its target market for its baby shampoo to include adults. This is
an example of _____.
10. After Coca-Cola left India, Pepsi used _____ to enter the Indian market.
11. To practice market segmentation, the marketer must first create market segments.
a. False (they identify segments)
12. A naked solution contains the product and service elements that some, but not all, segment
13. A discretionary option contains the product and service elements that all segment members
a. False (these are naked solutions)
14. VALS is a tool used to segment consumers into groups based on psychographics.
15. Psychographic techniques do not vary by culture.
16. To be useful, market segments must be measurable, substantial, accessible, differentiable, and
17. Undifferentiated marketing is "the marketing counterpart to standardization and mass
production in manufacturing."
18. Differentiated marketing typically creates less total sales than undifferentiated marketing.
19. Colgate's ad promoting features designed to get children to brush more often is an example of
socially responsible marketing.
20. Groups such as "Stop Commercial Exploitation of Children" welcome schools' endorsement of
products and welcome free resources from commercial entities for children.
a. False (they feel that preschoolers are susceptible to advertising.)
21. Name and describe the four "brand loyalty groups".
Hard-core loyals - consumers who buy only one brand all the time.
split loyals - consumers who are loyal to two or three brands.
shifting loyals - consumers who shift loyalty from one brand to another.
switchers - consumers who show no loyalty to any brand.
22. Discuss the five patterns of target market selection a company might consider.
Single-segment concentration - concentrate on small market.
Selective specialization - firm selects a number of segments, each objectively attractive and
Product specialization - the firm makes a certain product that it sells to several different market
Market specialization - the firm concentrates on serving many needs of a particular customer
group. Full market coverage - the firm attempts to serve all customer groups with all the products they
Strategic Brand Management
• Identifying and establishing brand positioning
• Planning and implementing brand marketing
• Measuring and interpreting brand performance
• Growing and sustaining brand value
A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those of competitors.
Role of Brands
• Identify the maker
• Simplify product handling
• Organize accounting
• Offer legal protection
• Signify quality
• Create barriers to entry
• Serve as a competitive advantage
• Secure price premium
Branding is endowing products and services with the power of the brand.
Brand equity is the added value endowed on products and services, which may be reflected in the way
consumers, think, feel, and act with respect to the brand.
Customer-based brand equity is the differential effect that brand knowledge has on consumer response
to the marketing of that brand.
Advantages of Strong Brands
• Improved perceptions of product performance
• Greater loyalty
• Less vulnerability to competitive marketing actions
• Less vulnerability to crises
• Larger margins
• More inelastic consumer response
• Greater trade cooperation
• Increased marketing communications effectiveness
• Possible licensing opportunities
Brand knowledge consists of all the thoughts, feelings, images, experiences, beliefs, and so on that
become associated with the brand.
A brand promise is the marketer’s vision of what the brand must be and do for consumers.
Brand Equity Models
Brand Asset Valuator
o Differentiation - measures the degree to which a brand is seen as different from others. o Energy - measures the brand's sense of momentum
o Relevance - measures the breadth of a brand's appeal
o Esteem - measures how well the brand is regarded and respected
o Knowledge - measures how well the brand is regarded and respected
o Brand identity
o Core identity elements
o Extended identity elements
o Brand essence
o Brand salience is how often an-d how easily customers think of the brand under various
purchase or consumption situations.
o Brand performance is how well the product or service meets customers' functional needs.
o Brand imagery describes the extrinsic properties of the product or service, including the ways in
which the brand attempts to meet customers' psychological or social needs.
o Brand judgments focus on customers' own personal opinions and evaluations.
o Brand feelings are customers' emotional responses and reactions with respect to the brand.
o Brand resonance refers to the nature of the relationship customers have with the brand and the
extent to which they feel they're "in sync" "with it.
Drivers of Brand Equity
• Brand elements
• Marketing activities
• Meaning transference
• Brand names
Brand Element Choice Criteria
Brand contact is any information-bearing experience, whether positive or negative, a customer or
prospect has with the brand, the product category, or the market that relates to the marketer's product
Designing Holistic Marketing Activities
• Internalization Integration marketing is about mixing and matching marketing activities to maximize their individual
and collective effects
Internal Branding - is activities and processes that help to inform and inspire employees
• Choose the right moment
• Link internal and external marketing
• Bring the brand alive for employees
Measuring Brand Equity
• Brand audits - is a consumer-focused series of procedures to assess the health of the brand,
uncover its sources of brand equity, and suggest ways to improve and leverage its equity
• Brand tracking - Brand-tracking studies collect quantitative data from consumers on a routine
basis over time to provide marketers with consistent, baseline information about how their
brands and marketing programs are performing on key dimensions
• Brand valuation - estimating the total financial value of the brand
Managing Brand Equity
• Brand reinforcement
• Brand revitalization
• Brand crises
Devising a Branding Strategy
• Develop new brand elements
• Apply existing brand elements
• Use a combination of old and new
• Brand line - consists of all products-original as well as line and category extensions-sold under a
• Brand mix - (or brand assortment) is the set of all brand lines that a particular seller makes
available to buyers
• Brand extension - uses an established brand to introduce a new product
• Sub-brand - combine a new brand with an existing brand
• Parent brand - existing brand that gives birth to a brand extension or sub-brand
• Family brand - parent brand is already associated with multiple products through brand
• Line extension - parent brand covers a new product within a product category it currently serves
• Category extension - parent brand is used to enter a different product category from the one it
• Branded variants - specific brand lines supplied to specific retailers or distribution channels
• Licensed product - is one whose brand name has been licensed to other manufacturers that
actually make the product
• Brand dilution
• Brand portfolio - is the set of all brands and brand lines a particular firm offers for sale in a
particular category or market segment.
Brand Naming • Individual names
• Blanket family names
• Separate family names
• Corporate name/individual name combo
Reasons for Brand Portfolios
• Increasing shelf presence and retailer dependence in the store
• Attracting consumers seeking variety
• Increasing internal competition within the firm
• Yielding economies of scale in advertising, sales, merchandising, and distribution
Brand Roles in a Brand Portfolio
• Flankers - positioned with respect to competitors' brands so that more important (and more
profitable) flagship brands can retain their desired positioning.
• Cash cows - Some brands may be kept around despite dwindling sales because they still manage
to hold on to enough customers and maintain their profitability with virtually no marketing
• Low-end, entry-level - The role of a relatively low-priced brand in the portfolio often may be to
attract customers to the brand franchise.
• High-end prestige - The role of a relatively high-priced brand often is to add prestige and
credibility to the entire portfolio
1. _____ is endowing products and services with the power of a brand.
2. _____ is the added value endowed to products and services.
a. Brand equity
3. ______ are those trademarked devices that serve to identify and differentiate the brand.
a. Brand elements
4. A ________ is any information-bearing experience, whether positive or negative, a customer has
with a brand.
a. brand contact
5. _________ marketing is the practice of marketing to consumers only after obtaining their
6. _____ occurs when customers experience the company as delivering on its brand promise.
a. Brand bonding
7. A _____ is a consumer-focused exercise that involves a series of procedures to assess the health
of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its
a. brand audit
8. When a firm uses an established brand to introduce a new product it is called a _____.
a. brand extension
9. A _____ product is one whose brand name has been licensed to other manufacturers who
actually make the product.
10. _____ occurs when consumers no longer associate a brand with a specific product or highly
similar products and start thinking less about the brand. a. Brand dilution
11. A brand is a "name, term, sign, symbol, or design, or a combination of these that identifies the
goods and services of a seller."
12. Brand equity is the unique set of brand associations that represent what the brand stands for
and promises to customers.
a. False (this is brand identity.)
13. The brand resonance model views brand building as an ascending, sequential series of steps.
14. Personalizing marketing is about making sure that the brand and its marketing are as relevant as
possible to as many customers as possible.
15. Permission marketing presumes that a consumer knows what they want.
16. Brand tracking studies collect information from consumers on a routine basis over time.
17. Brand equity is an estimate of the total financial value of a brand.
18. The branding strategy for a firm reflects the number and nature of common and distinctive
brand elements applied to the different products sold by the firm.
19. In a category extension the parent brand is used to enter a different product category from that
currently served by the parent brand.
20. The family brand consists of the set of all brands and brand lines a particular firm offers for sale
to buyers in a particular category.
a. False (this is a brand portfolio.)
21. Describe the functions a brand provides for the firm.
Brands simplify product handling or tracing. Brands help to organize inventory and accounting records.
Brands also offer the firm legal protection for unique features or aspects of the product. Finally, brands
signal a certain level of quality so that satisfied buyers can easily choose the product again.
22. What are the two basic approaches to measuring brand equity?
The indirect approach assesses potential sources of brand equity by identifying and tracking consumer
brand knowledge structures. The direct approach assesses the actual impact of brand knowledge on
consumer responses to different aspects of the marketing.
1. _____ measures the degree to which a brand is seen as different from others.
2. _____ measures the breadth of a brand's appeal.
3. Brand ________ are customers' emotional responses and reactions with respect to a brand.
4. Nike has the distinctive "swoosh" logo, the "Just Do It" slogan, and the "Nike" name based on a
mythological goddess. These devices are called _____.
a. brand elements
5. ________ marketing is about mixing and matching marketing activities to maximize their
individual and collective effects.
a. Integration 6. Burton, a maker of snowboards, is introducing a new snowboard called "The Dominator." This
snowboard will be associated and identified with top professional riders. What marketing
strategy is Burton using?
a. leveraging secondary association
7. Nivea, a strong European brand, has expanded its scope from a skin-cream brand to a skin-care
and personal-care brand through carefully designed and implemented brand extensions. This is
an example of _____.
a. brand reinforcement
8. Dannon Yogurt offers several types of new yogurts, Fruit on the Bottom, Natural Flavors, and
Fruit Blends to name a few. This is an example of a _____.
a. line extension
9. Honda uses the company name to cover different products such as automobiles, motorcycles,
snowblowers, and snowmobiles. This is an example of a _____.
a. category extension
10. A _____ brand may be kept around despite dwindling sales because they still manage to hold on
to a sufficient number of customers and maintain profitability with little or no marketing
a. cash cow
11. Brand equity consists of all the thoughts, feelings, images, experiences, beliefs and so on that
become associated with the brand.
12. Brand salience relates to how often and easily the brand is evoked under various purchase or
13. Brands are not built by advertising alone.
14. Holistic marketers emphasize personalization, integration, and internalization.
15. The activities and processes that help to inform and inspire employees is called brand bonding.
16. Brand equity may be created by linking the brand to other information in memory that conveys
meaning to consumers.
17. In managing brand equity, it is important to recognize the trade-offs between those marketing
activities that fortify the brand and those that attempt to leverage or borrow from existing
18. A branded variant is when specific brand lines are supplied to specific retailers or distribution
19. Development costs are lower with individual branding than with blanket family branding.
20. Blanket family names are sometimes referred to as a "branded house".
21. What are the six criteria used to choose brand elements? Explain each of these.
Memorable - how easily the brand element is recalled and recognized. Meaningful - the extent to which the brand element is credible and suggestive of the corresponding
Likeability - how aesthetically appealing consumers find the brand element.
Transferable - the extent to which a brand element can be used to introduce new products in the same
or different products.
Adaptable - how adaptable and updatable is the brand element.
Protectible - the extent to which the brand element is legally protectible.
22. Discuss the four general strategies used in choosing a brand name. What are the advantages to
each of these strategies?
First, a company can use an individual name strategy. This way the company does not tie its reputation
to the product's. If the product fails or appears to have a low quality the company's image is not hurt. A
second strategy is to use blanket family names. By, using this strategy, there is no need for "name"
research or heavy advertising to create brand-name recognition; this reduces initial development costs.
A third strategy is to use separate family names for all products. This works best for companies that
produce quite different products and one blanket family name is not desirable. Finally, a company can
use the corporate name combined with individual product names as a branding strategy. The company
name legitimizes and the individual name individualizes the new product.
Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the
mind of the target market.
Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they
could not find to the same extent with a competitive brand
Associations that are not necessarily unique to the brand but may be shared with other brands
Conveying Category Membership
• Announcing category benefits
• Comparing to exemplars
• Relying on the product descriptor
Consumer Desirability Criteria for PODs
Deliverability Criteria for PODs
Addressing negatively correlated PODs and POPs
• Present separately
• Leverage equity of another