Prepare Milestone 1: Segmenting and Targeting Milestone 1: is due by June 17 2020, 11:59 pm 3.1 Target Customers and Segmentation o Describe what specific benefits the target customers are seeking and explain how the determinant attributes of your products are fulfilling those benefits o Use the B2C segmentation approaches to derive the potential segments o Once the potential segments are derived, provide a descriptor/label and a brief description for each segment o Discuss what criteria for evaluating the segment attractiveness have been used to select the final/chosen segment(s), among the potential segments. Clearly substantiate the criteria that you have chosen and use available statistics on market size, market growth etc. (link to the destination market size and potential) o Who are your target customers or chosen segment(s)? o How will you target the chosen segment(s) and what targeting strategy will be used and why? Segmentation is used as a tool to efficiently and effectively target the customer groups who exhibit similar needs, preferences and characteristics that will maximize the return on investment for marketing activities. Segmenting, at its most basic, is the separation of a group of customers with different needs into subgroups of customers with similar needs and preferences. By doing this, a company can better tailor and target its products and services to meet each segment’s needs and therefore enables the company to better design its offerings and to better price and deliver them. Segmenting also allows a marketer to fine-tune its marketing program in comparison to its competitors' activities within the same segment. The determinant attributes will help identify the needs and preferences of target customers. Segmentation Approaches: Conventional B2C segmentation employs demographic, geographic, psychographic segmentation tools/approaches to dissect the market. Review the chapter readings on these topics before attempting to use these tools for this milestone. Also, follow this link for further details and examples: https://blog.alexa.com/types-of-marketsegmentation/ Using these tools, you will have to tease out the buyer characteristics that will help you to derive potential customer segments. Potential segments: A market segment includes customers who share similar wants and needs and exhibit similar characteristics. Based on the segmentation approaches, you should be able to derive the potential segments. Provide a descriptor and a brief description for each potential segment. 1 For example, “Sports car enthusiast” is a descriptor that could be used to describe a customer group who has a passionate interests in sport cars, or anything associated with them, including the industry that produces them and the culture that surrounds them—and takes great pleasure in enjoying and appreciating them for reasons beyond their basic utilitarian value of simply transporting people from Point A to Point B. So, behaviorally, they derive the enjoyment out of sport car and psychographically the lifestyle associated with it. Demographically, this customer group tends to be male dominated. You will then need to use evaluative criteria of segment attractiveness to select the chosen segments that you will target. The for choosing the chosen segments are based on: • • • • • Criteria Size: The market must be large enough to justify segmenting. If the market is small, it may make it smaller. Difference: Measurable differences must exist between segments. Money: Anticipated profits must exceed the costs of additional marketing plans and other changes. Accessible: Each segment must be accessible to your team and the segment must be able to receive your marketing messages Focus on different benefits: Different segments must need different benefits. Your targeting approach will be based your chosen segments. They are normally differentiated, undifferentiated, concentrated targeting and micromarketing. Undifferentiated marketing Undifferentiated marketing refers to an approach when a firm produces only one product or product line and targets all of its customers with a single marketing mix. Sometimes, this is called mass marketing. Meaning, the marketers do not see a difference among different target segments in terms of needs and preferences; therefore, one product can serve multiple segments. In Mass Marketing, the market coverage strategy essentially ignores the market segment differences and goes after the whole market with one offer. The idea is to maximize the exposure to the product. Examples of mass marketing products are toothpastes, which are not made especially for one consumer group or segment and are sold in huge quantities. Differentiated Marketing The differentiated marketing refers to the approach of the firms, which produce numerous products with different marketing mixes. The marketers see a different in needs and preferences among different segments. Therefore, these products are designed to satisfy the different segments. In this approach, the firm approaches the different consumer groups with products customized for each group. Most companies do this for specialization and to remain competitive. The differentiated marketing essentially requires market segmentation and incurs a higher production cost, inventory cost and marketing costs. 2 Concentrated marketing Concentrated marketing is niche marketing. A niche market is a subset of the market on which a specific product is focusing. Each niche market essentially defines specific product features such as product design, price range, production quality and the demographics that is intended to impact. In niche marketing, the firm essentially focuses. Niche marketing chooses a small segment provided it is a profitable segment. This approach is most suitable to smaller firms, which have lesser resources. Micromarketing This is the narrowest approach of targeting. It is most effective technique for small business users to sustain, build and grow their own brand. It targets the potential customer at the very basic and personal level. 3 School of Business MBUS 303 Group Project Overview You will work with the group to develop the Segmentation, Targeting, and Positioning for the company and product. Information about the product and company will be provided on a separate document. There are three deliverable – two milestones and one final project. The milestones are solely for feedback, they are not graded. The final written project is worth 200 points or 20% of the total grade. You will be part of a group of 4 students. You will be assigned into your group. This project enables individual members to assume responsibility for portions and contribute equally to the project. It is the group’s responsibility to ensure that the final product integrates all components and will be presented as one single professional product. A “collective” group evaluation will be taken into consideration when assigning project marks at the end of the semester. You must meet regularly in person as a group, do not rely solely on conducting group project in the cyberspace. Keep a record of all your group interactions and work submission for proof of your active participation and contribution. GROUP PROJECT Your group will be given details about a product and a company called Chevrolet Corvette. For purposes of this project, you will be required to conduct additional secondary research to evaluate potential customer groups and market size and growth potential. Then, your group will use the concepts and knowledge learned to prepare a Segmentation, Targeting and Positioning research paper as your final project. Your project is about Chevrolet Corvette. So, please read the document entitled Chevrolet Corvette Product Description and Market Trends before attempting to do the milestones. The report will include three deliverables: 1. Milestone 1: By June 17, 11:59 pm, Milestone 1: Segmentation, and Targeting is due Segmentation and Targeting o Describe what specific benefits the target customers are seeking and explain how the determinant attributes of your products are fulfilling those benefits o Use the B2C segmentation approaches to derive the potential segments o Once the potential segments are derived, provide a descriptor/label and a brief description for each segment o Discuss what criteria for evaluating the segment attractiveness have been used to select the final/chosen segment(s), among the potential segments. Clearly substantiate the criteria that you have chosen and use available statistics on market size, market growth etc. (link to the destination market size and potential) o Who are your target customers or chosen segment(s)? o How will you target the chosen segment(s) and what targeting strategy will be used and why? 2. Milestone 2: By June 24, Milestone 2: Positioning is due Positioning o Develop a perceptual map using the key determinant attributes that are important to your target customers for making purchasing decisions o Discuss the perceptual map and determine whether the product is currently at the ideal point o If the product is at the ideal point, what would be your positioning strategy and why? o If the product is not at the ideal point, what would be your repositioning strategy and why? o Either way, come up with a positioning statement. The positioning statement should include the target audience, the category in which the brand competes, the point of difference or differentiation, and the convincing proof that the brand delivers what it promises. 2 3. Final Project: By July 3 2020, Friday by 11:59 pm, the Final Project is due o Add a cover page with title of the paper, and names of all contributors in alphabetically order based on last name o Update and combine Milestones 1 and 2 o Insert one copy of the “collective” team evaluation at the end of the final report Requirements for Submission • • • • • • Please appoint a team leader to submit all milestones and final project on behalf of the entire team. Only one copy of the milestones and the final project is submitted for the entire team into the slots provided for milestones and final project submission. The e-copy should always be in Microsoft Word format only. Please label the attachment(s) using this example of the protocol (e.g. MBUS 303, Final Project, Last name of the person submitted it). Please include and arrange all contributing group members’ names alphabetically by last name on the cover page. Please include the completed “collective” team evaluation form (one form for the entire group) at the end of the final report only. Checklist before Submitting the Paper Following the instructions/guidelines provided for each section and make sure you answered all requirements. Use headings and subheadings to facilitate comprehension, enhance paper presentation, and ensure that you answer all requirements for each section. Keep the paragraphs short and easy to read. Use bullet points sparingly, and use them only for listing similar items. Use the editor in Microsoft to check the document before submission. The body of the final written report will be maximum 6 pages, 1.5 space, Times Roman font 12 or equivalent, excluding cover page, table of contents, appendices, and references. References should be in APA format and appropriately referenced in the body. Plagiarism is not tolerated and subject to discipline. You can use referencing feature from Microsoft Word. Please follow this link: https://support.office.com/en-us/article/Create-a-bibliography-17686589-4824-4940-9c69342c289fa2a5 3 Alternatively, Zotero is a Mason-developed bibliographic management tool that lets you organize your resources, share them with others, and create citations and bibliographies directly in your written work. Download it and learn how to use it from this: https://www.zotero.org/ All written reports should be professionally presented, neatly typed, and free of errors in grammar and spelling. Reports should have a title page showing a title for the report, course name and number, date due and the students’ names. GROUP CONTRACT A group contract is a document that a group creates to formalize the expectations of group members. A group contract should contain the following: • • • • • • • Group members’ names and contact information Expectations (ground rules) regarding preparation for and attendance at group meetings, frequency and duration of meetings, and communication. The contract should focus on behaviors that will be expected of all group members and should only include those behaviors that are crucial to the group's effectiveness. Groups could aim for fiveseven ground rules. Assignment of specific tasks, roles, and responsibilities along with due dates. The group can itemize the tasks to be completed for the project and provide a space for each group member to sign up for that task. Outline of the specific process for dealing with unmet expectations or other problems that might arise. An agreed-upon method for peer feedback during the project so that problems can be addressed before the project ends. A place for each group member to sign, indicating their agreement to the contract. A place for group members to sign once the project is completed to indicate whether they agree that all group members contributed as expected and, therefore, earn the group grade. Why use a group contract? Explicitly discussing the benefits of group contracts will help establish good faith in the process among your students. So, what are the benefits? The benefits of small-group learning are well known — group work is associated with deeper learning, strong information retention, and the acquisition of valuable communication and groupwork skills (Oakley, Felder, Brent, & Elhaji, 2004). On top of this, because group contracts allow you to take an active role in setting the tone for group interaction, group contract can help "motivate ownership of learning". Writing group contracts can also: • • help students identify expectations of one another, communicate those expectations, and practice articulating their expectations. facilitate student reflection on their past experiences and communications practices, important transferable skills for future work and personal relationships. 4 • increase a sense of community in the class as students get to know and work with one another. 5 GROUP CONTRACT Group Name: ____________________________________________ Date:_____________________________ GOALS: What are our group goals for this project? What do we want to accomplish? EXPECTATIONS: What do we expect of one another regarding attendance at meetings, participation, frequency of communication, the quality of work, etc.? POLICIES & PROCEDURES: What rules can we agree on to help us meet our goals and expectations? CONSEQUENCES: How will we address non-performance regarding these goals, expectations, policies, and procedures? 6 We share these goals and expectations, and agree to these policies, procedures, and consequences. • Group member name and Signature • Group member name and Signature • Group member name and Signature • Group member name and Signature • Group member name and Signature 7 Individual Score Your individual score will be calculated based on the grading rubric. Your individual score = the group project score times the % of the overall group evaluation score. So, it pays to participate in and contribute actively to your group project throughout the semester. Group Evaluation As a group, please collectively discuss and complete only ONE form for the entire group. See the attached group evaluation form on the next page for example. A blank form is also available on the blackboard for you to download separately later in the semester, along with the submission of the final product. There is a blank group evaluation on the last page of this handout, and you can also download it from the blackboard to prepare the “collective” group evaluation. As a group, you will fill out only one “collective” group evaluation to be included at the end of the final project. Please also make sure that the names of all the students who have contributed to your group project or assignment/presentation are alphabetically listed on the cover page of your project. To ensure each contributing member is evaluated fairly, it is imperative that the group evaluate the individual member based on the facts corresponding to the evaluative criteria listed in the Group Evaluation. Each individual member must keep record of their interactions including phone messages, email, and other online communications. You must always keep a version of your individual work submission to the group as evidence. The group must keep a record of each meeting including attendance and the details of the discussions took place in each meeting (for both online and face-to-face meeting.) A modified meeting minutes template is included here for your benefits: https://templates.office.com/en-nz/Meeting-minutes-TM00002073 8 Meeting Minutes Call to order A meeting of [Project or team name] was held at [Location] on [Date]. Attendees Attendees included [list attendee names]. Members not in attendance Members not in attendance included [list names]. Approval of minutes [Record approval of last meeting minutes here.] Reports [Provide an overview of the current meeting. List in bullet points of key discussions.] Tasks for Next Meeting [Add tasks to be accomplished for next meeting.] Announcements [Add your text here.] Secretary Date of approval 9 GROUP EVALUATION Group Topic ___________________________________________________ EVALUATION: Please enter the names of your group members in the first row and complete the following evaluation. 5 = Excellent, 4 = Good, 3 = Acceptable, 2 = Marginal, 1 = Unacceptable Name of group member Attendance - group meetings Cooperation and support Submitted quality work Completed work on time Overall contribution: Calculate total score (by adding all scores within the same column for each member) The specific individual contribution to the group project and presentation (in bullet points): Name of contributor(s) Product Section (bullet points if necessary) Market Trends (bullet points if necessary) Segmentation and Targeting (bullet points if necessary) Positioning (bullet points if necessary) Marketing Mix (bullet points if necessary) If you fail (Score for overall contribution of 14/20 or less) anyone in your group in terms of his/her overall contribution to the project, please explain the reasons behind: Additional Comments: 10 1 2020 Chevrolet Corvette Lieberman, J. (2019, November 19). The Chevrolet Corvette is the 2020 MotorTrend Car of the Year. Retrieved February 5, 2020, from https://www.motortrend.com/news/chevrolet-corvette-c8-2020-car-of-the-year/ Before you attempt to do Milestones 1 and 2, read this document about the product attributes, benefits to customers, and determinant attributes. Market trends are also provided for you. 2 Product Attributes vs Benefits to Customers Product attributes reside in the product, while benefits reside in the customer. Product attributes tend to be concrete, but they can also be abstract. for example, of a fast microprocessor. A computer can have a microprocessor with a fast processing speed (a concrete attribute) and provide the benefit of being able to get the job done faster. There is a more abstract way of thinking of this attribute by using the term "performance." Benefits to customers are always abstract, and they are often the result of a cluster of product attributes, some of which may be abstract attributes. For example, think of car safety. There is a cluster of concrete product attributes -- air bags, brakes, and body construction -- that give rise to the more abstract concept of the benefit of safety. So, you must first translate product features and attributes into benefits to the customers. Determinant attributes: Determinant attributes in marketing are those benefits to customers or aspects about products and services that determine why consumers buy products. These attributes may vary among different types of products, depending on which industry a small company is in. However, most determinant attributes usually fall under specific categories, such as quality and service. A market trend analysis is an analysis of past and current market behavior and dominant patterns of the market and consumers. An important aspect of conducting a trend analysis for an organization is to obtain insights on the market scenario, consumer preferences, and the macroeconomic environment. Marketing research methods, such as surveys, interviews, and observations of consumer behavior, help in understanding the trends and behavior in the market. While determining future objectives for a product or service, trend analysis is used as a basis on which future market projections are made. Market trend analysis involves analyzing the following areas: • Trends in Consumer Needs and Behavior—A business that is able to identify a specific trend in changing consumer needs and behavior may be able to cater to these needs and project higher growth rates. • Shifts in Consumer Perception of Value—Trend analysis involves timely analysis of consumer needs and positioning of the product or service in the consumer’s mind. An aspect of a product or service, which would at one point in time have contributed to the consumer’s perception, may later lose value if the competition replicates it. 3 • Trends in Industry Cost Drivers—Be aware of changes in composition of the cost drivers and also innovations that lead to lower cost alternatives. Companies that are able to find better alternatives, which are more economical or offer additional features, can gain a competitive advantage and achieve higher objectives. • Change and Evolution of the Industry—Companies continuously analyze trends in terms of product innovations, competitor product features, and new operation and delivery methods. Such analysis helps the business stay ahead of the curve to understand changing market trends and project objectives accordingly. 4 Product Description The 2020 Chevrolet Corvette is the eight generation of corvette models (C8), but it is the first generation to have its engine placed right behind the cabin of where the driver and passenger sit. This is Chevrolet’s most impressive corvette yet due to its peak performance, significant visual appeal and aesthetic, and its affordability. Product Features Product features in terms of engine, structure, trim levels, styling, and interior are available at this site: https://www.caranddriver.com/news/a28409341/2020-chevy-corvette-c8-mid-engine-photos-info/ Benefits to Customers The product features and then translated to benefits to target customers in terms of performance, appeal, and price, which in turn became the determinant attributes when considering purchasing decisions for this product class. 1. Performance: This year’s model performs significantly better than models from prior years and is able to stiffly compete with other exotic luxury cars produced by Ferrari, Lamborghini, and McLaren. 2. Appeal: Not only does this model perform outstandingly, but its appearance has been modified to be more aerodynamic and simply looks like an exotic sports car. Along with the clean exterior of the car comes an interior that looks just as interesting to match its outside. 3. Price: Lastly, the pricing of the 2020 Corvette is set at $60,000. This is the “biggest bang for your buck” you can purchase as it is able to look and perform like other exotic sports cars that are priced over a hundred thousand dollars. 5 Brand Perception: Perception: Chevrolet as a brand is perceived and recognized as a general US car manufacturer that specializes in day-to-day average cars, such as trucks, sedans, and SUVs. However, whenever people hear words like “Camaro” or “Corvette,” they think of a more elite tier of cars manufactured by the same brand. The brand is essentially split into two columns of thought, the first one being “general cars and trucks,” while the second column of thought being “higher-end performance cars.” Measurement: According to the 2019 Brand Index Rankings, Chevrolet is placed at rank 3 in the global ranking for US carmakers. It is scored at 23.2, behind Toyota at 34.7 and Honda at 29.3, but ahead of Ford at 22.9 and Subaru at 19.6. https://www.brandindex.com/ranking/us/2019-index/category/car-makers Unique Value Proposition When debating on buying this product, the three main determinant attributes customers look at are the performance of the vehicle, how attractive it looks, and the product’s overall price point. Comparing it to direct competitors, such as McLaren and Lamborghini, the statistics regarding performance (0-60mph as an example) hardly vary between one another. Corvette has always had a competitive advantage regarding prices, but it has developed a new design to look more attractive in comparison with other exotic brands. Chevrolet’s 2020 Corvette provides an elite and unique driving experience thanks to its performance statistics, overall design, and dramatic affordability in the sports car market. This model will allow its drivers to compete with other famous exotic car brands while costing a fraction of their price. 6 Marketing Trends Current and Emerging Marketing Trends • • • • • Eco-Friendly: Pressure is increasing in the market for “greener” options within brands. Driving Experience: Consumers want to feel like the car is specific to them through interior customizable options, decisions in how the exterior looks, and unique personalization, such as connecting their phone to the vehicle wirelessly (Newman, 2019). Foreseeable Maintenance: More and more customers are taking into account the cost and difficulty of maintenance when they purchase a vehicle. Exterior Camera/Sensors: Drivers are growing to rely on rear back-up cameras to aid them in reverse driving along with exterior sensors that help drivers by alerting them of other vehicles or obstacles around them when driving. Regenerative Braking: This upcoming trend is focused on using technology to harness the kinetic energy that cars expend while braking. Since cars use so much energy bringing their heavy frame to stop, engineers have been researching ways to store this energy as opposed to just depleting it. For example, Toyota’s Prius slightly recharges its battery as it brakes (Payne, 2020) The relevant opportunities and threats for the Company and this product: Potential Opportunities 1. Performance and design of the Corvette can capitalize on consumer desires for a personal and unique driving experience 2. Potential to make a more stylish looking fuel-efficient vehicle to compete with brands like Tesla’s various models 3. Capitalize on cheaper maintenance costs in comparison with other luxury brands, such as McLaren Potential Threats 1. Research and development costs may increase due to high demand for “greener” options and efficient use of the vehicle’s energy conservation 2. “Efficient” brand competitors such as Tesla and Toyota already have experience in this market Product Innovation and Development In order to adjust and reach the demand of the upcoming automotive trends, incorporation of energy conservation with the style of the new Corvette will grant access to an entirely new customer base. Since most fuel-efficient cars, such as Toyota’s Prius aren’t viewed as “cool,” Chevrolet can adapt eco-friendly features like fuel efficiency to give that market a more stylish option. Along with these features, innovation in regenerative braking should be pursued in order to obtain a competitive advantage on other stylish, eco-friendly competitors, such as Tesla or BMW’s i8 model. 7 References 2019 Index Rankings: US Car Makers: YouGov. (n.d.). Retrieved February 16, 2020, from https://www.brandindex.com/ranking/us/2019-index/category/car-makers 2020 Chevrolet Corvette Review, Pricing, and Specs. (2020, April 1). Retrieved April 9, 2020, from https://www.caranddriver.com/chevrolet/corvette 2020 McLaren 600LT Review, Pricing, and Specs. (2020, April 1). Retrieved April 9, 2020, from https://www.caranddriver.com/mclaren/600lt Griffith, T. (2019, September 19). Will a New Corvette Appeal to Younger Buyers? Retrieved April 4, 2020, from https://blog.cargurus.com/2017/02/01/will-a-new-corvette-appeal-toyounger-buyers Lieberman, J. (2019, November 19). The Chevrolet Corvette is the 2020 MotorTrend Car of the Year. Retrieved February 5, 2020, from https://www.motortrend.com/news/chevroletcorvette-c8-2020-car-of-the-year/ Newman, D. (2019, December 21). Top 9 Digital Transformation Trends In Automotive For 2020. Retrieved February 25, 2020, from https://www.forbes.com/sites/danielnewman/2019/12/20/top-9-digital-transformationtrends-in-automotive-for-2020/#4c59d6736b59 Payne, S. (n.d.). Dreamcar 2020: Turning 10 Trends in Design into the Car of The Future. Retrieved March 11, 2020, from https://www.thecoolist.com/car-of-the-future-automotive-design/ Pund, D. (2020, April 1). See the Mid-Engined 2020 Chevy Corvette from Every Angle. Retrieved from https://www.caranddriver.com/news/g28410220/2020-chevy-corvette-c8photos-info-gallery/?slide=19 Seaman, K. (2020, February 5). 2020 Chevrolet Corvette Review, Pricing, and Specs. Retrieved February 16, 2020, from https://www.caranddriver.com/chevrolet/corvette Sports Cars - United States: Statista Market Forecast. (n.d.). Retrieved April 4, 2020, from https://www.statista.com/outlook/1080000/109/sports-cars/united-states
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