| Customer-Driven Marketing Strategy: Creating Value for Target Customers 219
Chapter 7 | Customer-Driven Marketing Strategy: Creating Value for Target Customers 219
come cheap; prices range from $87,900 to $106,000. Before
2. Using the chain ratio method described in Appendix 2, bringing it to market, however, the company needs to identify its
estimate the market potential for the Fisker Karma sports car. target market and estimate the market potential in this segment.
Search the Internet for reasonable numbers to represent the
1. Identify an appropriate market segment for this product. factors you identified in the previous question. Assume each Discuss variables the company should consider when
buyer will purchase only one automobile and that the estimating the potential number of buyers for the high-
average price of automobiles in this market is $100,000. performance Fisker Karma sports car. (AACSB:
(AACSB: Communication; Use of IT; Analytical Reasoning) Communication; Reflective Thinking)
VIDEO Case
Meredith has developed a product mix designed to meet various needs of The Meredith Corporation has developed an expertise in building
women. This creates multiple touch points as individual women customer relationships through segmentation, targeting, and po-
engage with more than one magazine, as well as with specialty sitioning. Amazingly, however, it has done this by focusing on only
books and Web sites.
half of the population—the female half. Meredith has developed After viewing the video featuring Meredith, answer the follow- the largest database of any U.S. media company and uses that
ing questions about segmenting, targeting, and positioning: database to meet the specific needs and desires of women.
1. On what main variables has Meredith focused in segmenting Meredith is known for leading titles such as Better Homes and
its markets?
Gardens, Family Circle, and Ladies’ Home Journal. But that list has grown to a portfolio of 14 magazines and more than 200 special
2. Which target marketing strategy best describes Meredith’s interest publications. Through these magazines alone, Meredith
efforts? Support your choice.
regularly reaches about 30 million readers. By focusing on core
3. How does Meredith use its variety of products to build categories of home, family, and personal development, Meredith
relationships with the right customers?
COMPANY Case
Starbucks: Just Who Is from a mug of hot java. Growth routinely averaged 20 percent
or more each year. And Starbucks made investors happy with a
the Starbucks Customer?
25 percent annual increase in the value of its stock for more than
a decade. Schultz confidently predicted that there was no end in By now, you should be familiar with the Starbucks story. After a trip
sight for the Starbucks boom. Just a few years ago, he announced to Italy in the early 1980s, Howard Schultz was inspired to transform
his intentions to open 10,000 new stores in just four years and Starbucks—then just a handful of coffee shops in Seattle—into a
then push Starbucks to 40,000 stores.
chain of European-style coffeehouses. His vision wasn’t based on But not long after Schultz shocked Wall Street and the industry selling only gourmet coffees, espressos, and lattes, however. He
with his projections, Starbucks’ steam engine of growth started to wanted to provide customers with what he called a “third place”—
slow. Then it started running in reverse. By the end of 2008, the 20
a place away from home and work. As CEO of Starbucks, Schultz percent annual growth had dropped to 10 percent, with existing- developed what became known as the Starbucks Experience, built
store sales decreasing by 3 percent. Total company profits dropped around great coffee, personal service, and an inviting ambiance.
by a scalding 53 percent for the year. And for a second year in a row, Starbucks’ stock value dropped by 50 percent to around $10 a share.
WHAT GOES UP . . .
The weakened economy certainly played a role. But for years, It wasn’t long before Starbucks became a household word—a
many industry observers had worried that the company was grow- powerhouse premium brand in a category that previously con-
ing too fast. Revenue and traffic at Starbucks began slowing more sisted of only cheaper commodity products. In 20 years time,
than a year before anyone uttered the word recession. In a sign of Schultz grew the company to almost 17,000 stores in dozens of
recognizing a problem, Schultz cut back on the number of new countries. From 1995 to 2005, Starbucks added U.S. stores at an
store openings. Then he did what had previously seemed unthink- annual rate of 27 percent, far faster than the 17 percent annual
able. In 2008, he announced store closures—first 600, then 300 growth of McDonald’s in its heyday. At one point, Starbucks
more. In fact, as Starbucks trimmed its 2009 forecast for new store opened over 3,300 locations in a single year—an average of 9 per
openings to 310, it projected a decrease in its number of outlets day. In one stretch of crowded Manhattan, a person could get
for the first time ever.
their caffeine fix at any of five Starbucks outlets in less than a block and a half. In fact, cramming so many stores so close together
THE EVOLUTION OF THE STARBUCKS
caused one satirical publication to run this headline: “A New Star-
CUSTOMER
bucks Opens in the Restroom of Existing Starbucks.” There was no shortage of armchair CEOs willing to give their opin- For many years, new store growth was what kept Starbucks
ions as to what had gone wrong that led to Starbucks’ fall from percolating. As it grew, company sales and profits rose like steam
perpetual growth. One issue often mentioned was that Starbucks
Parts
» | Marketing: Creating and Capturing Customer Value 3
» | Marketing: Creating and Capturing Customer Value 11
» | Marketing: Creating and Capturing Customer Value 13
» | Marketing: Creating and Capturing Customer Value 25
» | Marketing: Creating and Capturing Customer Value 29
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 37
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 41
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 43
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 51
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 55
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 57
» | Company and Marketing Strategy: Partnering to Build Customer Relationships 63
» | Analyzing the Marketing Environment 65
» | Analyzing the Marketing Environment 71
» | Analyzing the Marketing Environment 73
» | Analyzing the Marketing Environment 77
» | Analyzing the Marketing Environment 79
» | Analyzing the Marketing Environment 81
» | Analyzing the Marketing Environment 85
» | Analyzing the Marketing Environment 87
» | Analyzing the Marketing Environment 89
» | Managing Marketing Information to Gain Customer Insights 97
» | Managing Marketing Information to Gain Customer Insights 99
» | Managing Marketing Information to Gain Customer Insights 103
» | Managing Marketing Information to Gain Customer Insights 109
» | Managing Marketing Information to Gain Customer Insights 111
» | Managing Marketing Information to Gain Customer Insights 113
» | Managing Marketing Information to Gain Customer Insights 115
» | Managing Marketing Information to Gain Customer Insights 127
» | Managing Marketing Information to Gain Customer Insights 131
» | Consumer Markets and Consumer Buyer Behavior 133
» | Consumer Markets and Consumer Buyer Behavior 137
» | Consumer Markets and Consumer Buyer Behavior 141
» | Consumer Markets and Consumer Buyer Behavior 143
» | Consumer Markets and Consumer Buyer Behavior 159
» | Consumer Markets and Consumer Buyer Behavior 163
» | Business Markets and Business Buyer Behavior 165
» | Business Markets and Business Buyer Behavior 175
» | Business Markets and Business Buyer Behavior 179
» What is Eaton’s value proposition?
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 189
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 193
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 197
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 203
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 205
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 207
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 209
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 211
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 213
» | Customer-Driven Marketing Strategy: Creating Value for Target Customers 219
» | Products, Services, and Brands: Building Customer Value 223
» | Products, Services, and Brands: Building Customer Value 225
» | Products, Services, and Brands: Building Customer Value 229
» | Products, Services, and Brands: Building Customer Value 237
» | Products, Services, and Brands: Building Customer Value 245
» | Products, Services, and Brands: Building Customer Value 247
» | Products, Services, and Brands: Building Customer Value 249
» | Products, Services, and Brands: Building Customer Value 251
» | Products, Services, and Brands: Building Customer Value 257
» | New Product Development and Product Life-Cycle Strategies 259
» | New Product Development and Product Life-Cycle Strategies 271
» | New Product Development and Product Life-Cycle Strategies 273
» | New Product Development and Product Life-Cycle Strategies 279
» | New Product Development and Product Life-Cycle Strategies 281
» | Pricing: Understanding and Capturing Customer Value 289
» | Pricing: Understanding and Capturing Customer Value 291
» | Pricing: Understanding and Capturing Customer Value 295
» | Pricing: Understanding and Capturing Customer Value 299
» | Pricing: Understanding and Capturing Customer Value 305
» | Pricing: Understanding and Capturing Customer Value 307
» | Marketing Channels: Delivering Customer Value 339
» | Marketing Channels: Delivering Customer Value 347
» | Marketing Channels: Delivering Customer Value 351
» | Marketing Channels: Delivering Customer Value 367
» | Retailing and Wholesaling 373
» | Retailing and Wholesaling 377
» | Retailing and Wholesaling 379
» | Retailing and Wholesaling 393
» | Retailing and Wholesaling 395
» | Retailing and Wholesaling 397
» | Retailing and Wholesaling 401
» | Retailing and Wholesaling 405
» | Communicating Customer Value: Integrated Marketing Communications Strategy 407
» | Communicating Customer Value: Integrated Marketing Communications Strategy 411
» | Communicating Customer Value: Integrated Marketing Communications Strategy 413
» | Communicating Customer Value: Integrated Marketing Communications Strategy 415
» | Communicating Customer Value: Integrated Marketing Communications Strategy 429
» | Communicating Customer Value: Integrated Marketing Communications Strategy 433
» | Advertising and Public Relations 435
» | Advertising and Public Relations 439
» | Advertising and Public Relations 441
» | Advertising and Public Relations 443
» | Advertising and Public Relations 445
» | Advertising and Public Relations 447
» | Advertising and Public Relations 449
» | Advertising and Public Relations 453
» | Personal Selling and Sales Promotion 463
» | Personal Selling and Sales Promotion 469
» | Personal Selling and Sales Promotion 471
» | Personal Selling and Sales Promotion 481
» How is the sales force at Nestlé Waters structured? outsells its top competitors.
» | Direct and Online Marketing: Building Direct Customer Relationships 495
» | Direct and Online Marketing: Building Direct Customer Relationships 499
» | Direct and Online Marketing: Building Direct Customer Relationships 507
» | Direct and Online Marketing: Building Direct Customer Relationships 509
» | Direct and Online Marketing: Building Direct Customer Relationships 515
» | Direct and Online Marketing: Building Direct Customer Relationships 525
» | Creating Competitive Advantage 527
» | Creating Competitive Advantage 529
» | Creating Competitive Advantage 537
» | Creating Competitive Advantage 549
» | The Global Marketplace 551
» | The Global Marketplace 553
» | The Global Marketplace 561
» | The Global Marketplace 573
» | Sustainable Marketing: Social Responsibility and Ethics 581
» | Sustainable Marketing: Social Responsibility and Ethics 583
» | Sustainable Marketing: Social Responsibility and Ethics 587
» | Sustainable Marketing: Social Responsibility and Ethics 595
» | Sustainable Marketing: Social Responsibility and Ethics 603
» | Sustainable Marketing: Social Responsibility and Ethics 605
» | Marketing by the Numbers A21
» | Marketing by the Numbers A27
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