Notes on the Interactive Exercise

NOTES ON THE INTERACTIVE EXERCISE

Overviewof Interactive Exercise on Product-Market Definitions

The purpose of this exercise is to help students see the product-market definitions behind products that are advertised. Print ads are provided for three different products; students are challenged to identify the correct components of the product-market definition for each one.

Concept Review

A marketis a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or services. As pointed out in the text, marketers should not just focus on products that they sell in defining the market. They need to be able to distinguish different levels of the market. Doing so will help to identify opportunities and potential threats.

A generic marketis a market with broadly similar needs and sellers offering various ways of satisfying those needs. Defining the market broadly can help the marketer to uncover some potential new opportunities. The marketer can then narrow down to specific product-markets.

A product-market is a market with very similar needs and sellers offering various close substitute ways of satisfying those needs.A complete product-market definition includes four parts:

• Product type--the type of good and/or service offered.
• Customer need--refers to the need(s) of the customer (user) that are being met by the product.
• Customer type--identifies who specifically is using the product.
• Geographic area--identifies where the market is located.

Using the Exercise

Initial Screen

1. This screen introduces the product-market definition exercise.
2. The professor can begin the exercise by clicking on one of the ads.
3. The exercise will automatically transition to the next screen.

Next Screen

2.The first ad chosen is shown in larger size. An enlargement icon appears in the bottom of the screen so that the ad can be made bigger.

1. The professor reads the key elements of the ad copy to the class.
2. The professor then clicks the advance button at the bottom of the screen to advance to the next screen.

Next Screen

3.On the left-hand side, there are boxes containing the four main elements of the product-market definition. On the right-hand side, there are four possibilities for each of the elements of the product-market definition.

1. For each element of the product-market definition, the professor asks the class which possibility on the right-hand side best fits the advertised product. The professor then clicks on the box containing the choice, and holding down the left-hand mouse button, drags the box over to the corresponding element of the product-market definition. When the choice is correctly positioned on top of the element of the product-market definition, the professor releases the mouse button.
2. If the choice is incorrect, a “negative” sound will be heard and the choice will return to the right-hand side of the screen. If the choice is correct, a “positive” sound will be heard. For details related to right and wrong answers, refer to the ANSWERS AND EXPLANATION section below.
3. The selection process is repeated until all elements of the product-market definition have been identified.
4. At this point, it would be fruitful for the professor to reinforce the difference between a product-market definition and a generic market definition (the generic market definition has no product type).
5. It would also be helpful if the professor asked the students to brainstorm examples of opportunities that might be available if the marketer developed: (1) a narrower product-market definition; or (2) a broader generic market definition.
6. This is also a good point for reinforcement of the types of market opportunities that are discussed in Chapter 2: market penetration; market development; product development; or diversification. The students can brainstorm how these types of opportunities are linked to the market definitions used.
7. Clicking the “NEXT” button will transition to the next screen, where the professor can select the next advertised product to discuss.
8. The professor repeats the selection process described in step 2 until each of the three advertised products has been explored.

Final Screen

4.The final screen matches each advertised product to the elements of its product-market definition. The professor clicks the “X” icon in the upper right corner of the screen to end the exercise.

Answers and Explanations

PRODUCT 1: SMARTPAD

PRODUCT TYPE CORRECT ANSWER: Electronic Notepad

The product’s advertisement clearly illustrates the product type is an electronic notepad. Although the product is a companion to a personal digital assistant (PDA), it is not a PDA itself, in that it is not a stand-alone product. Nor does it perform the functions of a calculator or provide Internet access. A PDA might be able to do these things, but not the SmartPad.

CUSTOMER TYPE CORRECT ANSWER: Working Professional Adults

These are the consumers who are most likely to be the targets for the SmartPad. One could make the argument that elementary school children, senior citizens, or “blue collar workers” could be consumers or users of the SmartPad. However, the main target audience is working professional adults.

CUSTOMER NEED CORRECT ANSWER: Electronic Notetaking

This product provides a solution to a common problem plaguing PDA users: how to take notes and enter text or sketches in an efficient way. It does not, by itself, meet the needs of consumers for remote Internet access, multimedia production, or digital photography.

GEOGRAPHIC AREA CORRECT ANSWER: Industrialized Nations

Although the SmartPad would probably have some users in agricultural areas or less-developed countries, its main market would be in industrialized nations, because more PDA users would be found there. What about fast-growing countries? As is discussed in Chapter 5, many fast-growing countries are less-developed nations, and so they would not fit the product-market definition as well as industrialized nations.

PRODUCT 2: RESCUE

PRODUCT TYPE CORRECT ANSWER: Fuel Additive

The product’s label clearly states that the product is a fuel additive. It has nothing to do with the windshield washer, the tires, or the engine lubrication.

CUSTOMER TYPE CORRECT ANSWER: Automobile Owners

Middle school children are not the primary consumers of this product, because they do not drive or make decisions about automotive products of this type. They could be indirect beneficiaries if they were passengers in a car in which the product was used, but they are not the main target audience. Professional truck drivers typically use diesel fuel, not gasoline, so the product would not be marketed to them. Auto racing teams would have no use for the product. Everyday automobile owners are the intended audience.

CUSTOMER NEED CORRECT ANSWER: Safety

This product’s advertisement indicates that this product provides safety against running out of fuel. It does not enhance engine performance, provide better fuel economy, or reduce exhaust emissions.

GEOGRAPHIC AREA CORRECT ANSWER: Industrialized Nations

Like the previous example, this product would probably have some users in agricultural areas, less-developed countries, or fast-growing countries. Its main market would be in industrialized nations, because more car owners would be found there, along with more sophisticated road and highway infrastructure.

PRODUCT 3: FLASH PLAYER

PRODUCT TYPE CORRECT ANSWER: Internet Plug-In

The product is a plug-in device usually downloaded for free from its producer’s Internet site. It is not an Internet browser or music download service, although it may work in conjunction with them. It is not a word processor.

CUSTOMER TYPE CORRECT ANSWER: Internet Users

Because the product could be useful to anyone who accesses the Internet, a broad customer type definition is needed here. Senior citizens, “blue collar” workers, and single parents also use the Internet, but any one of those groups alone is not large enough to capture the breadth of the customer type.

CUSTOMER NEED CORRECT ANSWER: Web-Based Media Playback

The main need satisfied by this product for most users is that the product makes Web browsers more functional. The Flash Player is not a production tool for multimedia or computer-aided design, and it does not provide e-mail capability.

GEOGRAPHIC AREA CORRECT ANSWER: World

The Flash Player is a plug-in that would be useful to Internet users the world over, not simply in one country.