Chapter#7

Customer-Driven Marketing Strategy:

Creating Value for Target Customers
 Topic Outline

Market Segmentation
Market Targeting
Differentiation and Positioning
 Two Basic Approaches

 Market Segmentation Approach
 The needs and preferences of the global market are viewed
as heterogeneous varying from one group to another.
 Total/Mass Market Approach
 The needs and preferences of the entire, global market are
regarded as relatively homogeneous.
Market Segmentation
 Major Steps in Target Marketing

 Segmentation
 Target Marketing
 Market Positioning
 Market Segmentation

Dividing a market into distinct groups with distinct needs,
characteristics, or behavior who might require separate
products or marketing mixes.
 Segmentation is breaking down heterogeneous mass market into
more homogeneous submarkets
 Consumers within segments should respond similarly to particular
marketing actions
 Consumer response should be different between segments
 Target Marketing

The process of evaluating each market segment’s
attractiveness and selecting one or more segments to
enter.
 Market Positioning

Arranging for a product to occupy a clear, distinctive,
and desirable place relative to competing products in
the mind of target consumers
Segmenting Consumer Markets

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation
 Geographical Segmentation


 Dividing a market into different geographical units
such as nation, province, regions, countries, cities or
neighborhoods
 Geographic Segmentation
Variables

 World Region or Country
 Region
 Province
 City
 Neighborhood
 City or Metro Size
 Density
 Climate
 Demographic Segmentation

Dividing the market into groups based on demographic
variables such as age, gender, etc.
Demographic Segmentation Variables


 Age  Occupation
 Gender  Education
 Family size  Religion
 Family life cycle  Race
 Income  Generation
 Nationality
 Psychographic Segmentation

Dividing a market into different groups based on social
class, personality etc.
 Psychographic Segmentation
Variables

 Social class
 Lifestyle
 Personality
 Behavioral Segmentation

Dividing a market into groups based on consumer knowledge, attitude etc .
 Behavioral Segmentation
Variables

 Occasions  Usage Rate
 Benefits  Loyalty Status
 User Status  Readiness Stage
 Attitude Toward the Product
 Market Segmentation
Requirements for Effective Segmentation
 To be useful, market segments must be:

Measurable Accessible
(size, purchasing power, (segments must be
profiles of segments can effectively reached and
be measured ) served)

Substantial Differentiable
(segments must be (segments must respond
differently to different
large or profitable marketing mix elements &
enough to serve) actions )

Actionable
(must be able to attract and
serve the segment)
Target Marketing


Steps in the Target Marketing Process

•Evaluating Market Segments

•Selecting Target Market Segments

 Evaluating Market Segments

Segment Size and Growth
Analyze sales, growth rates and expected profitability.

Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

 Company skills & resources relative to the segment (s).
 Look for Competitive Advantages.
Target Marketing Strategies


 Market Coverage Strategies

Company
Marketing Mix Market

A. Undifferentiated Marketing
 targets the whole market with one offer.
 mass marketing
 Focuses on common needs rather than what’s
different.
 Company
Marketing Mix 1 Segment 1

Company
Segment 2
Marketing Mix 2
Company
Marketing Mix 3 Segment 3

B. Differentiated Marketing
 targets several different market segments
and designs separate offers for each.
 Goal is to achieve higher sales and stronger
position.
 Segment 1
Company
Marketing Segment 2
Mix
Segment 3

C. Concentrated Marketing
 targets a small share of a large market
 Limited company resources
 Knowledge of the market
 More effective and efficient
 Company
Individual
Marketing
Customer
Mix

D. Custom Marketing Strategy or Micromarketing Strategy

 the practice of tailoring products and marketing programs to
suit the tastes of specific individuals and locations.
 Local marketing
 Individual marketing
Local marketing involves tailoring brands and promotion
to the needs and wants of local customer groups
 Cities
 Neighborhoods
 Stores
Individual marketing involves tailoring products and
marketing programs to the needs and preferences of
individual customers
Also known as:
 One-to-one marketing
 Mass customization
 Markets-of-one marketing
 Positioning for Competitive Advantage

Product’s Position - the place the product occupies in
consumers’ minds relative to competing products.

Marketers must:
Plan positions to give products the greatest advantage
Develop marketing mixes to create planned positions
Differentiation and Positioning
Choosing the Right Competitive Advantage

Difference to promote should be:

Important Distinctive Superior

(difference delivers a (competitors do not offer the (difference is superior to
difference or the company other ways that customers
highly valued benefit to can offer it in a more might obtain the same
target buyers) distinctive way) benefit)

Communicable Preemptive Affordable

(difference is communicable (competitors can not easily
and visible to buyers) (buyers can afford to pay
copy the difference) the difference)

Profitable
(the company can introduce
the difference profitably)
 Choosing and Implementing
a Positioning Strategy

Step 1. Identifying a set of possible competitive advantages:
Competitive Differentiation.

Step 2. Selecting the right competitive advantage.

Step 3. Effectively communicating and delivering the chosen

position to the market.
Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive

advantages to build a position by
providing superior value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
 Differentiation and Positioning
Selecting an Overall Positioning Strategy

Value proposition is the

full positioning of a
brand -the full mix of
benefits upon which a
brand is positioned
Communication and Delivering the
Chosen Position

Choosing the positioning is often easier than implementing

the position.
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