Chapter 4

Segmentation, Targeting and Positioning

Answers to Think it over (p.102) 1 Compared with McDonalds customers, McCafes customers are likely to be older and have higher incomes. In terms of occupation, McCafes customers are also likely to be working adults, such as executives or professionals, whereas McDonalds customers are mainly youngsters, such as students. 2 In general, McDonalds customers prefer affordable fast food (e.g., hamburgers, French fries, soft drinks) and the food should be in greater quantity as they emphasise more value for money. They are less demanding regarding food quality. On the other hand, McCafes customers prefer finer coffee, and a wider variety of snacks (e.g., cakes like pastries and muffins) and coffee. They do not mind paying higher prices for them. In terms of the outlet environment, McCafes customers need a more relaxing and better decorated environment (e.g., with soft overhead lights, designer sofas, spacious seating arrangements, etc.) to enjoy their premium beverages and snacks. By comparison, McDonalds customers are less demanding in terms of outlet environment. A clean environment with bright lighting is fine with them. 3 McDonalds should not upgrade its existing menu to cater for both fast food consumers and coffee lovers. Since these two types of consumers have different characteristics and requirements, it would be better to serve them with two different sets of marketing mix strategies. Using a single marketing mix strategy to satisfy both segments may not be effective. This undifferentiated approach may lead to low satisfaction for each of the two consumer groups.

p.103 Teachers guide Market segmentation is customer-oriented and is consistent with the marketing concept. Teachers can remind students of the marketing concept mentioned in Chapter 1. In market segmentation, marketers first identify customers wants and needs within a smaller consumer group and then decide if it is profitable to develop a marketing mix to satisfy them. Additional information A market segment can also be defined as a subgroup of people within an entire market who: 1 have similar needs and wants; and 2 respond similarly to the same marketing appeal.

Teachers guide A marketer should first identify a customer s reason for buying. Recall the concept of the consumer market and business market in Chapter 3. It is important to segment the market into ultimate consumers and business users. As the consumer market segment and business market segment buy differently, the marketing mix will depend on which segment (consumer market or business market) the company is serving. The discussion here focuses mainly on the consumer market segment.

p.104 Teachers guide Many companies today are localising their products, advertising and promotion to fit the needs of individual regions, countries and region/cities within a country. Large companies may also give up fiercely competitive major cities to open shops in small towns. Some companies seek to explore untapped regions. Teachers can use more examples to illustrate the situation. For example, Wahaha, the Chinese beverage maker, targets less developed regions (e.g., Sichuan, Yunnan) in China. This is because the company wants to avoid direct competition with powerful foreign competitors.

p.105 A1 Teachers guide The teacher can ask students to: 1 identify the major countries that Giordano now serves; 2 analyse the differences between these countries; and 3 discuss if the company should offer different products in these countries. In general, it is believed that the larger the differences among these countries, the greater the need to offer different products.

p.106 Additional information Other variables used in demographic segmentation are family life cycle, education, race and generation, etc. Additional information Marketers must be careful when using age as a variable to segment a market. It would be easy to generate stereotypes which can lead to poor marketing decisions. For example, although some 70-year-old customers may need canes, others at this age can play golf. Age can be a poor predictor of an individuals life cycle, health, work, family status, needs, wants and purchasing power.

p.107 Answer to Discussion questions 1 High-income consumers may prefer more imported specialty items, and quality household goods, fashion and luxury accessories. They put more value on product quality and do not mind paying higher prices for quality. Because of their willingness to pay higher prices, they also expect better service quality from shop staff and a better shopping environment (e.g., more spacious, better design and lighting, etc.). 2 Since Taste targets higher income shoppers, A.S. Watson Group should open Taste outlets in areas with high-income residents or working adults (e.g., professionals, executives). In this respect, Happy Valley, the Mid-Levels, Admiralty and Central District are some potential locations. (Accept any other reasonable answers)

p.108 Check Your Progress Q1 Consumers needs and wants for exercise may change with age. Younger customers can do exercises which require a higher physical fitness level. Moreover, they prefer exciting and energetic sports. Some may want to outperform others in sports and like games which are competitive in nature. (e.g., basketball, football and tennis, etc.) Older customers probably prefer sports which are less vigorous and strenuous in nature (e.g., golf, Tai Chi and lawn bowling ()). This is because they may not be physically fit enough for energetic sports. Some retirees may engage in sports during their leisure time. To them, playing sports can be a time to socialise. Moreover, their physical size might be quite different from younger customers. In this regard, Nike could use age as a base for segmenting the market. Nike should consider two factors: (i) the size of older people in Hong Kong and (ii) the number of older people who exercise regularly. These factors will directly affect its profit. Assume that Nike has conducted marketing research and found out that there exist quite a large number of older Hong Kong people who exercise regularly. As these consumers are likely to be different from younger consumers in terms of their physical size and favourite sports, it would be worthwhile for Nike to tailor some sportswear products for this aged segment. Q2 The Bank of East Asia (BEA) has used occupation to segment its credit card market. It offers specialised Visa cards for people working in selected professions (e.g., teachers, nurses, lawyers, etc.). For example, it offers a Visa card called the Law Society of Hong Kong Visa
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Card, mainly for solicitors practising in Hong Kong. Cardholders are entitled to exclusive benefits, such as access to the Hong Kong Law Societys clubhouse facilities. This strategy is appropriate as it helps the bank tailor its products and services to better satisfy the needs of solicitors. Affiliating with this elite group helps the company further enhance its corporate image. The high purchasing power of this group also represents a profitable segment for the bank. (Accept any other reasonable answers) Additional information Other variables used in psychographic segmentation are social class and personality. People in the same demographic group can be grouped according to different psychographic segments. This is because they have very different psychographic characters.

p.110 Try This Activity A2 Yes. Giordano and Giordano Concepts shops serve customer groups with different lifestyles. Giordano appears to serve people who prefer a simple and basic lifestyle. These customers are concerned with product quality. However, they are more concerned about whether the products are really value-for-money. Giordano Concepts serves consumers from relatively higher social classes. These customers focus more on taste when choosing casual wear. They do not mind paying more for finer products or services that reflect their more upscale lifestyle. A3 Teachers guide Students are expected to describe their entertainment activities, fashions in which they are interested in and opinions about buying designer labels as part of the class. Indeed, all of this information can help portray their lifestyles. They are also expected to compare their own lifestyles (in terms of the aforementioned activities, interests and opinions) with other students. This helps students realise that different individuals may have different lifestyles. If possible, teachers may ask students how their lifestyles affect their purchase decisions (e.g., school bag, watch and pencil case, etc).

p.111 Additional information Behavioural segmentation also divides buyers into groups based on their knowledge, attitude and
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product uses. Additional information Marketers can also employ user status to segment the market. Markets can be segmented into non-users, ex-users, potential users, first-time users, and regular users. For example, the Red Cross cannot rely only on regular donors. They must also recruit new first-time donors and remind ex-donors to donate blood. These two segments call for different marketing mixes.

p.113 Activity 1 Ask students to identify specific companies that practise different types of segmentation other than the examples given in the textbook. Check Your Progress Q3 Segmentation by benefits sought refers to segmenting consumers according to the benefits they seek from a product. In the case of Ocean Park, the different benefits consumers would like to seek include: fun and happiness excitement derived from exciting games and rides knowledge about animals and plants memorable moment shared with some significant others (e.g., family members, relatives and lovers, etc) Q4 Yes. A company could choose consumers with a low degree of loyalty as its target consumers. If the company wants to continue its growth, it may need to convert consumers with a low degree of loyalty to loyal customers in the long run. This is especially important for companies which have newly entered the market. If the company is able to identify the problems leading to low consumer loyalty and rectify these problems successfully, it will greatly enlarge its base of loyal customers and consequently increase its profitability.

p.114 Answers to Discussion questions 1 Since CEOs target customers want better service quality and enjoyment, some value added items are considered important in further securing their loyalty. CEO can:
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offer different wine choices

issue a VIP card for frequent customers. Cardholders can enjoy room upgrades or discounts. record songs sung by customers upon their request. This helps customers better remember the happy time with their significant others (e.g., friends, lovers and family members) as well as satisfy their ego need. cooperate with banks to jointly issue a credit card which offers exclusive benefits to frequent customers. (Accept any other reasonable answers) 2 When compared with Neway customers, CEO customers are likely to have higher incomes and be older. Most are working adults at the managerial or executive level. They have more financial resources to buy more expensive products and high-quality services. Compared to Neways ordinary customers, CEO Neway customers are relatively more affluent. On this basis, they are more willing to spend money to learn something more novel or upscale (e.g., pilates and golf). In this way, they can tell others that they are more trend-conscious. They associate spending with good taste. They always keep themselves updated and trendy by reading fashion magazines or attending fashion shows. As they are likely to be well-educated, they are more willing to express their opinions on all kinds of issues, such as newly-released products, government policies or economic trends. On the other hand, most of Neways ordinary customers are people from the lower or middle class. They are relatively more price-conscious and are more likely to shop during seasonal sales. Since most are more concerned with how they are perceived by others, they are more likely to follow what their friends do. In other words, they usually seek their friends opinions before making purchase decisions. As they are more concerned with social relationships, most would like to participate in group activities in order to strengthen their social bonds.

p.115 Additional information The existence of close substitutes is likely to undermine the profit potential of the segment. The emergence of strong substitutes that perform better than the existing product will also make the segment less attractive or even cause it to be phased out.

p.117 Check Your Progress Q5 The structural factors for evaluating the attractiveness of a market segment are:
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The size and growth of a segment The company should estimate the current sales, growth rates and expected profitability of the market segment for VCD/DVD rental services. The operating characteristics of a segment 1 Existence of strong and aggressive competitors: Most existing operators of VCD/DVD rental services are small, neighbourhood stores. The segment is highly fragmented instead of dominated by one or two large chain stores. Overall, the competition in this segment is not particularly keen. 2 Number of substitutes for the product: The segment is facing competition from various substitutes. These substitutes include pirated VCDs/DVDs (and thus very cheap), songs and movies that can be downloaded from the Internet (legally or illegally). All these point to the unfavourable operating environment faced by VCD/DVD rental shops. Power of suppliers: Suppliers refer to distributors of VCDs and DVDs. They usually have close relationships with large music and movie production companies. As most VCD/DVD rental shops are small in terms of financial resources and operating scale, their bargaining power may not be that strong when compared with suppliers. This represents another unfavourable factor of the segment. 4 Power of buyers: Buyers mainly refer to people who rent VCDs/DVDs for entertainment purposes. These buyers can easily switch to a substitute (or other VCD/DVD rental shops). This limits the ability of a VCD/DVD rental shop to charge high prices. Overall, this situation does not favour the operation of VCD/DVD rental shops.

Additional information In undifferentiated marketing, a company may design a product and a marketing programme that appeal to the largest number of buyers.

p.118 Additional information Differentiated marketing is also known as segmented marketing. A company must weigh increased sales against increased costs when deciding on a differentiated marketing strategy.

p.119 Teachers guide

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Highlight the major differences among undifferentiated marketing, differentiated marketing and concentrated marketing.

p.121 Activity 2 (a) Teachers can ask students to choose a company using any of the three target marketing strategies (i.e., undifferentiated marketing, differentiated marketing and concentrated marketing). (b) Ask students to examine the following conditions that facilitate the use of the three strategies: 1 Company resources 2 Product characteristics 3 Consumer preferences and requirements 4 Competitors characteristics Students should conclude whether the company is right to use such target marketing strategies.

(c)

p.122 Answers to Discussion questions 1 Ah Yee Leng Tong is able to identify a promising market niche; namely an emerging group of relatively affluent diners who like home-made Chinese soups and dishes without monosodium glutamate (MSG). 2 The major risk associated with a concentrated marketing strategy is an over-reliance on one market niche to generate profits. If the market niche grows to such an extent that it attracts the entry of other larger companies, the companys market share and profits will be adversely affected. 3 Given Caf de Coral Holdings Ltds resources, it should have competitive advantages in tailoring different sets of marketing mix strategies to satisfy different market segments. As a strong market player in the Hong Kong fast food industry, Caf de Coral Holdings Ltd can further increase its sales revenue and expand its market share by better catering for the various dining tastes of Hong Kong consumers.

Check Your Progress Q6 (i) Coca-Cola mainly used undifferentiated marketing in the 1980s. It focused on selling classic Coke. (ii) Coca-Cola has changed to differentiated marketing in the 2000s. It sells different coke products (diet Coke, Coke Zero) to different market segments.

Q7 Travel Expert is an example of a local company using niche marketing. This company specialises in offering air tickets, hotel accommodations, and travel packages for travellers. It focuses all its resources on serving these market segments. Due to its specialisation, Travel Expert tries to enhance its reputation by emphasising its professional services. (Accept any other reasonable examples)

p.123 Additional information Competitive advantages refer to an advantage over competitors gained by offering customers greater value, either through lower prices or by providing more benefits that justify higher prices. Additional information To occupy a place in consumers minds, a product or related services must be perceived by target consumers as being differentiated from competing products. Such differentiation depends on the competitive advantages the company actually possesses. Thus, positioning begins with actually differentiating the companys market offering so that it will give customers superior value.

p.124 Additional information Products can be differentiated by features, performance, style, design, consistency, durability, reliability or repairability.

p.126 Additional information The USP (unique selling proposition) proposed by Rosser Reeves states that a brand should pinpoint one attribute in which it excels over competitors. That attribute should be one that competitors cannot or do not offer. This makes the company unique in the eyes of consumers. As a result, companies should aggressively promote only one benefit to the target market. However, some marketers think that a company should position itself on more than one attribute. Nowadays, as the mass market is fragmenting into many small market segments, companies are trying to broaden their positioning strategies to appeal to more marketing segments. However, as companies increase the number of claims for their products, customers may not believe all that they say. Eventually, the companies may lose a clear positioning.

Activity 3 (a) (b) Choose a company and ask students to search the Internet for information about this company. Then ask students to select the right competitive advantages for the company based on the seven criteria mentioned in the text.

p.128 Activity 4 Students may not be familiar with the concept of positioning in a business context. Teachers can use the school to illustrate the three steps involved in positioning. Teachers can ask students to build a position for the school by 1 identifying possible competitive advantages for the school How can the school achieve differentiation (e.g., through product differentiation, service differentiation, people differentiation, channel differentiation or image differentiation)? 2 selecting the right competitive advantages How many competitive advantages should be selected? Which competitive advantages should be selected? The teacher can remind students of the seven criteria in building a position. designing a positioning statement and communicating it to target consumers Who are the target consumers of the school? What is the brand or the product offered by the school? What is the unique benefit which the school can offer?

Check Your Progress Q8 Giordano could achieve its differentiation in the Hong Kong market through: Product differentiation: Giordano produces high quality casual wear in simple and basic styles. This helps the company project a unique and clear positioning in the mind of its customers. Service differentiation: Giordano has long focused on quality customer service. It can be regarded as a pioneer in introducing a high standard of customer service in the Hong Kong casual wear market segment. Indeed, this standard has subsequently been followed by other competitors. People differentiation: Giordano emphasises the importance of staff training to maintain its high level of customer service. As a result, all of the companys salespeople are very polite and helpful as well as well-equipped with product knowledge. Image differentiation: Through decades of effort in maintaining good product and service quality, Giordano has already built up a very favourable image (e.g., simple and basic product style with high quality, reasonable prices and good customer service) among the Hong Kong public. This hard-earned image constitutes the companys sustainable competitive advantages.
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Q9

Most Hong Kong consumers consider McDonalds as a leading fast food chain in selling hamburgers and French fries. A positioning statement for McDonalds may be: A leading multinational fast food chain store, with an unrivalled reputation for providing customers with the highest quality fast food items and friendly customer service at reasonable prices. (Accept any other reasonable answers)

Assesement Short Questions 1 Segmentation by multiple bases means segmenting the market into different segments according to a number of bases. For example, a prestigious sports car manufacturer such as Porsche may segment its customers by both income level and psychographic characteristics. The use of multiple bases (demographic and psychographic) helps the company identify its primary target market more accurately (high-income individuals who are active, enjoy outdoor activities and excitement, etc.). (Accept any other reasonable examples) 2 Bossini should target low-income customers. This is because Bossini is a widely recognised casual wear brand renowned for its comfortable, easy to mix-and-match, colourful and energetic style. It aims to provide quality products with great value-for-money for customers. Most of the products sold are inexpensive. Given the size and growth potential of the market segment, it seems that choosing low-income customers as its target market goes well with the objectives and resources of the company. 3 An undifferentiated marketing strategy means that the marketer ignores market segment differences and targets the entire market with one product. A differentiated marketing strategy means that the marketer selects several market segments as its target markets, and tailors products and marketing programmes for each of them. A concentrated marketing strategy means the company focuses its resources on satisfying only one or a few small market segments. The Caf de Coral group uses a differentiated marketing strategy. The group runs different fast food chains to satisfy different market segments. For example, it has a popular fast food restaurant chain called Caf de Coral that serves both Chinese and Western food at budget prices. It also has Spaghetti House which serves Hong Kong-style Italian cuisine mainly for
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families and tourists. Its Bravo le Cafe, a quick service restaurant chain, serves a mix of Western, Chinese and Japanese food in a bistro setting to appeal to young and upscale mobile executives. It also has a chain called Super Super Congee and Noodles that offers a wide variety of food ranging from refined Chinese and Western cuisines to local signature dishes like Congee and Cantonese noodles. In general, most of the chains dishes have been localised to suit the taste of the Hong Kong public. As it focuses on the mass market, the chain offers dishes at affordable prices. 4 The distilled water manufacturer can differentiate its offerings by:

Product differentiation: It can sell high quality and pure distilled water. Channel differentiation: It can emphasise quick and efficient delivery to offices and homes upon receiving orders. Customers can also order products on its website.

Positioning refers to the process by which a company creates an image for its product, and then projects this image in the minds of its target consumers. This process helps the target consumers better realise the unique benefits that the company can offer when compared with its competitors. Good positioning can help the company differentiate its products from other competing ones. It also helps target consumers recall the product easily and provides the company with guidelines in formulating its corresponding marketing strategies. For example, HSBC has positioned itself as an international bank but with sufficient local knowledge to serve customers from almost every part of the world (i.e., the Worlds Local Bank). This positioning helps the bank build confidence among customers in different geographic markets due to its understanding of local customers needs. It also attracts companies with international operations to use services from HSBC due to its international or global banking network. (Accept any other reasonable examples)

Both HSBC and the Bank of China occupy different positions in Hong Kong consumers minds. HSBC is positioned as an international bank but which has sufficient local knowledge to serve customers from almost every part of the world (i.e., the Worlds Local Bank). The Bank of China has positioned itself as a large-scale bank with full-fledged commercial banking services and a strong banking network in the Mainland of China. A market segment is a subset or customer group of the entire market with distinct needs, characteristics and consumption patterns. A target market is a customer group or market segment to which the company wants to appeal. For example, Bossini may first use the demographic variable of income to divide the casual wear market into different segments (i.e., low, middle and high-income segments). It may then
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consider marketing its products to the low-income segment. In this case, the low-income segment is Bossinis target market. (Accept any other reasonable examples) 8 For some product categories, it is possible for consumers to have similar needs and preferences. This is especially true if the product category refers to daily necessities. As daily necessities (e.g., salt, sugar) by nature are products commonly needed by most people, most people have similar requirements for them.

Essay Questions 9 The four types of segmentation are: Geographic segmentation: This concerns dividing the market by (i) world region, (ii) country, (iii) region/city within a country. For example, HSBC divides its global market into various regions, such as Asia-Pacific, North America, Middle East and Europe. (Accept any other reasonable examples)

Demographic segmentation: This concerns dividing the market based on major demographic variables such as age, gender, income, occupation, religion, nationality and family size, etc. For example, prestigious companies such as LV have segmented the market by income level and chosen the higher income segment as their target market. (Accept any other reasonable examples)

Psychographic segmentation: This concerns dividing the market based on consumers lifestyle characteristics. Lifestyle is related to three dimensions of individuals: (i) activities, (ii) interests and (iii) opinions. For example, Maxim MX has used consumers lifestyle characteristics to segment the market. On this basis, it has launched Chinese-style ready-made soups to target health conscious consumers (interest) who often need to work overtime (activity). (Accept any other reasonable examples)

Behavioural segmentation: This concerns dividing the market based on consumers behavioural responses to products. Marketers can divide the market by (i) occasion, (ii) benefits sought (iii) usage rate and (iv) loyalty status. For example, Hallmark cards has segmented the market by a specific behavioural
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dimension, occasion for purchase (e.g., for wedding, birthday, Christmas, etc.). It offers different types of greeting cards to satisfy the specific requirements of each segment. (Accept any other reasonable examples) 10 Advantages of niche marketing are as follows: The company can acquire deeper knowledge of consumer requirements. The company can use its resources more efficiently. Disadvantages of niche marketing are as follows:

Higher risks are involved. If the company identifies and serves a niche successfully, other large companies may be attracted to enter the niche as well. This would greatly increase the competition.

Niche marketing is more suitable for small companies that can only afford to serve a small market segment or niche. For companies with more resources, serving just a small niche may represent under-utilisation of available resources. This prevents them from making greater profits. IBM is a large multinational company. Thus, niche marketing is not suitable for IBM. 11 The factors used to evaluate the attractiveness of a market segment are: The size and growth of a segment: A market segment is regarded as attractive if it has high levels of current sales, growth rates and expected profitability. For example, the market segment of expectant mothers is not very attractive in Hong Kong. As some Hong Kong people are not interested in raising children, the birth rate has been declining in recent years. Coupled with worries about economic conditions, some couples prefer not to have children at all. The size of this segment is shrinking and its growth potential is limited. (Accept any other reasonable examples)

The operating characteristics of a segment: 1 Existence of strong and aggressive competitors: If a segment already has many strong and aggressive competitors, its attractiveness will be lower. For example, since there are already a number of large banks and financial institutions offering credit cards in Hong Kong, the credit card market segment here has become less attractive due to the presence of keen competition. (Accept any other reasonable examples) 2 Number of substitutes for the product: If there are many substitutes for the product in a segment, that segment will become less attractive.

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For example, the transportation market segment served by ferries has become less and less attractive in recent decades. This is mainly due to the emergence of many cost effective transportation substitutes, such as the MTR, buses and taxis, etc. (Accept any other reasonable examples) 3 Power of suppliers: If marketers in a segment need to deal with suppliers with strong bargaining power, that segment will be less attractive. For example, due to the strong bargaining power of large suppliers like Unilever and P&G relative to small grocery stores, it is difficult for these stores to obtain favourable terms from suppliers. This makes the segment these grocery stores serve less attractive. (Accept any other reasonable examples) 4 Power of buyers: If a market segment consists of buyers (consumers) with strong bargaining power relative to sellers, that segment will become less attractive. For example, since the Hong Kong government opened the telecommunications market in the 1990s, the number of IDD service providers has increased significantly. This has given consumers more choices and consequently higher bargaining power in this segment. This higher bargaining power has driven down IDD tariffs, and consequently made the IDD market segment less financially attractive. (Accept any other reasonable examples)

The objectives and resources of the company: For example, if operating in a segment requires a lot of resources and the payback period is long, it may not be attractive for a small company or a company aiming at only short-term returns. (Accept any other reasonable examples)

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A company can achieve differentiation through the following means: Product differentiation: This involves differentiating the company by its physical products. For example, due to its unique design and advanced multimedia technology, Apples iPod and iPhone have strong competitive advantages over other competing products.

Service differentiation: This involves differentiating the company by offering professional, speedy, convenient and reliable services. For example, IBM has differentiated itself through professional installation and repair services rendered to its clients.

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Channel differentiation: This involves differentiating the company by means of delivering products to target customers in an effective manner. For example, Amazon.com has achieved this differentiation by directly shipping ordered products to consumers promptly and reliably.

Image differentiation: This involves differentiating the company by existing corporate or brand images. This positive image represents all the hard work the companies have been doing over the years. For example, Nike has developed an image as a professional sportswear manufacturer. To reinforce this image, the company has hired many famous sports stars (e.g., Michael Jordan, Tiger Woods) as spokespeople for its products.

(Accept any other reasonable examples) 13 (a) Giordano uses differentiated marketing. The group offers both ordinary Giordano outlets and Giordano Concept outlets and uses two different sets of marketing mix strategies to serve the two different market segments. (b) San Miguel uses image differentiation to differentiate itself by its brand image. It has developed an image as the most popular Hong Kong beer brand in the minds of its target consumers. Stephen Chow has successfully fostered a subculture in Hong Kong. Since he has won the hearts of many Hong Kong people, the TV advertisement will appeal to most of them. Additional information Stephen Chow is a heavyweight in fostering the Mo Lei Tau () subculture in Hong Kong. This subculture was largely developed in modern films. Its humour arises from the complex interplay of cultural factors significant in Hong Kong, including nonsensical parodies, juxtaposition of contrasts, sudden surprises in spoken dialogue and action. (c) Kung Tak Lam uses niche marketing as it employs one marketing mix to serve a small and unique market segment. (d) Yakult uses undifferentiated marketing as it employs one marketing mix to serve the entire market.

Case Analysis
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(a)

China is very large and different regions of the country vary significantly in terms of their telecommunications development, stage of economic development, and consumer purchasing power. Hence, consumers from different regions may also vary considerably in their demand for mobile phones. This means geographic segmentation may be a possible method for segmenting the market. Moreover, as consumers incomes definitely affect their purchase of mobile phones or replacement of their old mobile phones with new ones, General Electric may consider using the demographic variable of income to segment the market (e.g., high, middle, low income segments). This means demographic segmentation may also be one possible method for market segmentation. General Electric can segment its market using multiple bases. It may segment its consumers by both region and income level.

(b)

The factors used to evaluate the attractiveness of a market segment are: The size and growth of a segment: A market segment is regarded as attractive if it has high levels of current sales, growth rates and expected profitability.

The operating characteristics of a segment: 1 Existence of strong and aggressive competitors: If a segment already has many strong and aggressive competitors, its attractiveness will be lower. 2 Number of substitutes for the product: If there are many substitutes for the product in a segment, that segment will become less attractive. 3 Power of suppliers: If marketers in a segment need to deal with suppliers who have strong bargaining power, that segment will be less attractive. 4 Power of buyers: If a market segment consists of buyers (consumers) with strong bargaining power relative to sellers, that segment will become less attractive. The objectives and resources of the company: if operating in a segment requires a lot of resources and the payback period is long, it may not be attractive for a small company or a company aiming at only short-term returns.

(c)

Based on the discussion in (a), the company may target high-income residents who live in Chinas first-tier cities (e.g., Shanghai, Guangzhou, Beijing and other coastal cities, etc.). There may be two major problems associated with the introduction of Chinese dumplings: Whether Delicious Burgers has the expertise to produce delicious Chinese dumplings: Chinese dumplings originated in China and Chinese people are used to eating them. As such, they are expected to be very picky. Hence, the companys dumplings must
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(a)

be of a very high standard.

Whether consumers may confuse the positioning or image of Delicious Burgers: In other words, if most consumers already perceive the group as an expert in providing Western fast food (i.e., burgers), the addition of some completely different items (such as Chinese dumplings) may blur its global image in the minds of consumers. Consumers may wonder if a Western fast food chain is really good at making Chinese dumplings. They will also get confused about the companys real specialisation (i.e., burgers or dumplings?).

(b)

Provided that the company can make delicious Chinese dumplings, it is worth adding this food item to the two Beijing outlets to test the actual responses of the market. This is because this added item can be tailored for the unique needs of Beijing customers. Teachers guide: The teacher can quote more examples to illustrate the situation. As a recent example, Starbucks has also offered tea at its Taiwanese outlets.

(c)

The company may also consider introducing Chinese food items like noodles or rice over the longer term as these items represent basic staple food for Chinese people.

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(a)

In order to differentiate its services, FedEx should identify the possible competitive advantages it can use to build its position. The following are factors to be considered in order to select the competitive advantages of building a position: Distinctive: Competitors do not have this advantage. Preemptive: The advantage should deliver a benefit that cannot be easily copied by competitors. When distinctive and preemptive are considered, FedEx can use image differentiation. Founded in 1971, FedEx has a long history in the courier service industry. It was also the first cargo handling company to computerise package routing. Moreover, the company has long been regarded as being a very professional and reliable courier service provider worldwide. All these constitute the companys very good image in the minds of consumers. Important: The advantage must deliver a benefit that is highly valued by target consumers. For example, FedEx clients receive professional and personalised services from the company. They can also easily track the delivery of their shipments online. Superior: Consumers find it difficult to obtain the same benefit by other means. With its 275,000 well-trained employees and advanced computerised package routing system, FedEx can emphasise the professional and personalised services it offers to customers.
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Communicable: The advantage should deliver a benefit that can be easily communicated to target consumers. FedEx can promote its courier services with a slogan. Affordable: Target consumers can afford to pay for the benefit. FedEx should develop services which are affordable for consumers. In other words, consumers should find it worthwhile to pay for the services. Profitable: The company can deliver the benefit to target consumers in a profitable way.

(b)

The positioning statement may be like this: FedEx is a long-established US courier service provider, with an unrivalled international reputation for offering clients highly professional and personalised courier services, and helping them deliver their cargos to every part of the world promptly and reliably.

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