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Consumer Behavior, 12th Edition Solution Manual

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    Consumer Behavior 12 e Leon Schiffman Joseph Wisenblit Instructor’s Resource Manual for Consumer Behavior Christy Ashley

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    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

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    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

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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.

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    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 Term s 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 Term s 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. T argeting 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 ; U se 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, a nd 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 # 1.1 1 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.

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    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.

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    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.

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    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 r eader. 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. T argeting 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, “wh at 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.

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    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?

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    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.

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    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 conce pt and two examples of business practices that contradict this concept. Explain your choices.

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    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).

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    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

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    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

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    chance to learn to work with each other and will pave the way for future group 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.

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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 Object ive 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.

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    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 c ampaign 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. P roduct p ositioning 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.

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    ***** 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 measure d 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.

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    ***** 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 (AIO s ) . 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) VALS TM focuses explicitly on explaining consumer purchasing behavior. i) VALS TM includes three primary motivations: ideals motivated, achievement motivated and self - expression motivated. ii) VALS TM also reflects a continuum in terms of resources and innovativeness (Figure 2.2) ***** Use Review and Discussion Question s # 2. 8 and #2. 9 Here; Use Table s # 2.1 and #2.2 Here; Use Figure #2.2 Here; Use Key Terms psychographics and VALS TM 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 app lication 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.

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    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. 1 3 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 r ate s egmentation 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 usag e - 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

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    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 .

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    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 com panies 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 .

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    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. Ex plain 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

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    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 i s 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

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    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” m atching 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 bu ying 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 ) Consumer s’ interests, lifestyles and personalities ( e.g. , from the contents of their blogs,

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