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Case 3: Segmentation and Targeting
Firms commonly segment customers by their lifestyles and further profile identified segments
using demographic variables. In this case, we will follow this common approach to segment the
sneaker market. Use the “Sneakers Data” on Canvas and perform the following analyses.
First, we use only the lifestyle variables to segment the market as follows:
1. Use the lifestyle variables (d001-d022) as the input for a hierarchical cluster analysis.
You should (a) include the respondent ID in the first grey column of your data and the
lifestyle variables from the first white column and (b) standardize your input data. Your
input data should look like this:
Report the dendrogram and scree plot in the appendix with a clear title. Discuss how
many segments you would like to proceed with and why you chose the number. (0.5%)
2. Suppose you decided to proceed with N segments in Question (1). Conduct a
nonhierarchical cluster analysis with N segments. Report the segment size and the
segment description in the appendix with a clear title. (0.5%)
3. Conduct a nonhierarchical cluster analysis again with N+1 segments. Report the
segment size and the segment description in the appendix with a clear title. (0.5%)
4. Based on your results from Questions 1 to 3, what is the optimal number of market
segments in this case? Why? Please consider the dendrogram or scree plot (i.e., the
statistic fit), whether you can interpret the results and whether the results make sense (i.e.,
the managerial relevance), and whether at least one segment is targetable in terms of its
size and accessibility (i.e., the targetability). (0.5%)
5. Name and describe every market segment you identified in Question (4) based on the
segment description results corresponding to the optional number of segments. You are
encouraged to use a table or paragraphs to present your answer. (1.2%)
6. Based on your results in Question (5), to which segment does the fourth respondent (i.e.,
ID = 4) belong? (0.2%)
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You have identified different market segments. Next, we want to check whether we can use
demographic variables to discriminate these segments. Demographics that can statistically
discriminate those segments can be used to further profile (or describe the distinct characteristics
of) those segments.
7. We need to create data for a discriminant analysis using the demographic variables
(e001-e004). The first column of your discriminant data is the respondent ID. The
second one is a dummy variable = 1 if the respondent is a male. The third one is a
dummy variable = 1 if the respondent is 24 years old or younger. The fourth one is a
dummy variable = 1 if the respondent lives in an urban area. The last one is a dummy
variable = 1 if the respondent is a student. Overall, your discriminant data (in Excel)
should look like this:
Report the first 10 rows of your discriminant data in the appendix with a clear title.
(0.5%)
8. Conduct a discriminant analysis for the segments you described in Question (5) with
data you created in Question (7). Report the results regarding the descriptors in the
appendix with a clear title. Use the results to describe each segment in terms of
demographic variables. Hint: you can rely on those showing significant differences
among segments. (0.8%)
Now is your time to offer your marketing recommendation based on your findings:
9. Suppose you are going to present your results to the marketing manager of Reebok.
Which marketing segment(s) would you suggest that Reebok should target? Why? To
answer this question, you may also want to consider the following quotes about Reebok
from a news report (https://wwd.com/business-news/mergers-acquisitions/let-reebok-bereebok-is-abgs-mantra-for-the-brand-1235108227/.
“Reebok is one of the few super brands that has the permission to play in any space. Its
position at the intersection of fashion, sports and culture allows Reebok to be elastic
while staying true to its celebrated ethos and unmistakable DNA.”
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“Reebok’s marketing will also reflect its new ethos. The company just launched “Life Is
Not a Spectator Sport” campaign for spring [2023], a reboot of its original campaign
from the ’80s, featuring a series of short films starring former basketball star Allen
Iverson as well as a lineup of athletes and artists.” (0.8%)
Requirement
This is a group report. A list of group members who contribute to the report should be provided.
If any group member does not contribute to the assignment at all, the other group member
can remove the name of the particular member from the report. You will have an
opportunity to conduct the self and peer evaluation for this assignment.
Your report cannot exceed 4 double-spaced pages with 12-point font and 1” margins on all
four sides (Formatting: 0.5%). Tables and exhibits, which are not subject to the page limit,
should be placed in an appendix. Submit your report on Canvas by 2 p.m., October 25. You can
submit it multiple times by the due. One member can submit the report for the whole group.
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