INTERNET EXERCISES

Chapter 4: The Market Segmentation Process

Exercise 1 – The Market Segmentation Process

Vignette: Apparel sales in Canada have been sluggish for several years and retailers have generally been slow to recognize a burgeoning segment: plus-size clothing.

Segmentation Can Rejuvenate a Flagging Market
The plus-size clothing segment has a 20–25% share of the total women’s apparel market. This segment grew +8.3% in 2001 while the total women’s apparel market only grew +2.6%. Industry watchers say that the plus-size segment is dramatically under-represented in stores, with just over 5% of retail space devoted to larger clothing sizes. Specialty retailers such as Penningtons and Addition-Elle have opened to meet the needs of the plus-size segment, but other retailers don’t seem to recognize that the segment exists or to find out what these shoppers are looking for. These retailers need to use the segmentation process to see the women’s apparel market with new eyes, and thus possibly improve their sluggish sales of women’s clothing.

Activity

1. Tour the featured Web site for Addition-Elle. Different marketers define the plus-size segment in different ways. Is it size 20+? Is it large and extra-large sizes? Is it loose-fitting or baggy clothes? How does Addition-Elle define the plus-size segment? Suppose Addition-Elle’s segmentation analysis assumed that there are four segments in the total women’s apparel market. Given their definition of the plus-size segment, how do you think they define the other three segments?
   

2. The second stage of the segmentation process involves profiling each of the segments in the market. Without reference to the Addition-Elle Web site, do a brief profile of each of the four segments in the total women’s apparel market. Think particularly in terms of each segment’s demographics and psychographics.
   

3. The third and fourth stages of the segmentation process involve forecasting the market potential and probable market share of each segment in a market. Review the statistical data and other information provided in the opening case in the text. What is your assessment of the market potential for the plus-size segment over the next few years? What share of the total women’s apparel market do you think the plus-size segment is capable of achieving? If you think its share will increase, which of the other three segment(s) of the market will decrease as a result?
   

4. Tour the Addition-Elle and Toni Plus Web sites, then compare and contrast the two companies’ positioning strategies.

Resources

Other plus-size clothing outlets:

Better Half Fashions: a Canadian outlet featuring ladies’ plus, plus petite, and super size apparel – includes a body types chart
Daphne Larger Sizes: an American outlet for very fashion-oriented plus-size women
Lane Bryant: a U.S. retailer of plus-size fashions that claims to be a “style leader”

Companies that specialize in segmenting markets for client companies:

The Market Segmentation Company: a British firm that specializes exclusively in conducting market segmentation studies – includes an explanation of market mapping
Foundation Pricing and Revenue Consultants: a U.S. company that offers market segmentation as one of its specialty services – includes an explanation of this company’s segmentation methodology
National Analysts Research and Consulting: another U.S. company that offers market segmentation as one of its specialty services – includes an explanation of their LINK tool (under the Marketing ? Marketing Tools tabs)

Segmentation studies available on the Internet:

The Ontario Ministry of Tourism and Recreation: includes complete segmentation reports focusing on the touring market, the outdoor market, and the culture and entertainment market

Exercise 2 – Segmentation in the Airline Industry

Segmentation Allows Smaller Companies to Succeed in Big Markets
The airline industry in North America and around the world is highly competitive, with major firms like Air Canada, American Airlines, and British Airways finding it difficult to be profitable. Nevertheless, there are some smaller operations that are very successful. Two of the best-known examples in North America are WestJet and Southwest Airlines. Although both companies have expanded over the years, they started out with limited fleets, seeking to satisfy the needs of a specific segment of travelers.

Activity

1. Visit the featured Web sites for WestJet and Southwest Airlines. Look at the information provided on their histories. Both companies were set up to appeal to the same segment of airline passengers. What is this segment? Working back from this information, how would they have segmented the airline travel market to arrive at this particular segment to focus on?
   

2. Although the two companies target the same segment of people, they are positioned somewhat differently. What are their positioning strategies and how are they different?

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