7- 1 copyright © 2012pearson education, inc. publishing as prentice hall i t ’s good and good for...

7- 1Copyright © 2012Pearson Education, Inc. Publishing as Prentice Hall

i t ’s good and good for you

Chapter Seven

Customer-Driven Marketing Strategy:

Creating Value for Target Customers

7- 2Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Customer-Driven Marketing Strategy: Creating Value for

Target Customers

This chapter looks into key customer-driven marketing strategy 4 steps:

1- dividing up markets into meaningful customer groups (segmentation),

2- choosing which customer groups to serve (targeting),

3- creating market offerings that best serve targeted customers (differentiation), and

4- positioning the offerings in the minds of consumers (positioning).


Customer-Driven Marketing Strategy:Creating Value for Target Customers

Customer-Driven Marketing Strategy major steps to create value for customers:• Market Segmentation• Market Targeting• Differentiation and Positioning

Topic Outline


Customer-Driven Marketing Strategy:Creating Value for Target Customers


Market Segmentation


Market segmentation Dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes.

Market Segmentation


Market Segmentation

Geographic segmentation

Demographic segmentation

Psychographic segmentation

Behavioral segmentation

Segmenting Consumer Markets


Market Segmentation

• Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities.


Example: Walmart services Hispanic places in U.S.A with relevant product assortment.


Market Segmentation

Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality



Market Segmentation

- Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups.

- Gender segmentation divides the market based on sex (male or female).

- Income segmentation divides the market into affluent, middle-income or low-income consumers.



Market Segmentation

Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits



Market Segmentation

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product

• Occasions• Benefits sought• User status • Usage rate• Loyalty status



Market Segmentation

• Occasions (Some holidays, such as Mother’s Day and Father’s Day, were originally promoted partly to increase the sale of candy,

flowers, cards, and other gifts).• Benefits sought (benefits people look for in the product)• User status (nonusers, ex-users, potential users, first-time

users, and regular users of a product)• Usage rate (light, medium, and heavy product users).• Loyalty status (Consumers can be loyal to brands (Tide),

stores (Target), and companies (Apple). Buyers can be divided into

groups according to their degree of loyalty).



Market Segmentation

Geographic location

Economic factors

Political-legal factors

Cultural factors

Segmenting International markets


Market Segmentation

- Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries

- Large companies, such as Coca-Cola or Sony, sell products in more than 200 countries.

Segmenting International Markets


Market Segmentation

To be useful, market segments must be:Requirements for Effective Segmentation

Measurable Accessible

Substantial Differentiable

Actionable


Market SegmentationRequirements for Effective Segmentation

1- Measurable: The size, purchasing power, and profiles of the segments can be measured.

2- Accessible: The market segments can be effectively reached and served.

3- Substantial: The market segments are large or profitable enough to serve.

4- Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. If men and women respond similarly to marketing efforts for soft drinks, they do not constitute separate segments.

5- Actionable: Effective programs can be designed for attracting and serving the segments.


Market Targeting

In evaluating different market segments, a firm must look at three factors:

• Segment size and growth: current segment sales, growth rates, and the expected profitability for various segments.

• Segment structural attractiveness: includes factors that affect long-run attractiveness. These factors might include strong and aggressive competitors, substitute products, and high power of buyers or powerful suppliers.

• Company objectives and resources: large markets may not be relevant to some companies.

Evaluating Market Segments


Market Targeting

Selecting Target Market Segments


Market Targeting

Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve

Selecting Target Market Segments

After evaluating different segments, the company must decide which and how many segments it will target.


Market Targeting

• Undifferentiated marketing targets the whole market with one offer– Mass marketing– Focuses on common needs rather than what’s

different– The company designs a product and a

marketing program that will appeal to the largest number of buyers.

– Example: Coca Cola

Target Marketing Strategies


Market Targeting

• Differentiated (Segmented) marketing targets several different market segments and designs separate offers for each

- Example: Toyota Corporation produces several different brands of cars—from Scion to Toyota to Lexus—each targeting its own segments of car buyers.

- Goal is to achieve higher sales and stronger position

- More expensive than undifferentiated marketing

Target Marketing Strategies


Market Targeting

• Concentrated (niche) marketing targets large share of one or a few segments or niches.

- Example: Whole Foods thrives by catering to affluent customers who Walmart can’t serve well

- Limited company resources- Greater knowledge of the market needs

- More effective and efficient (satisfying market need with low cost)

Target Market Strategies


Marketing Targeting

• Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

- Micromarketing includes:• Local marketing• Individual marketing



Market Targeting

• Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups

- Cities- Neighborhoods- Stores- example, Walmart customizes its merchandise store by store

to meet the needs of local shoppers.



Market Targeting

• Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers

- Example: Dell, HP, and Apple create custom-configured computers.

- Also known as:One-to-one marketingMass customizationMarkets-of-one marketing



Choosing a target strategy depends on:• Company resources: When the firm’s resources are limited, concentrated marketing

makes the most sense.

• Product variability: Undifferentiated marketing is more suited for uniform products, such as grapefruit or steel. Products that can vary in design, such as cameras and cars, are more suited to differentiation or concentration.

• Product life-cycle stage: When a firm introduces a new product, it may be practical to launch one version only, and undifferentiated marketing or concentrated marketing may make the most sense. In the mature stage of the product life cycle (PLC), however, differentiated marketing often makes more sense.

• Market variability: If most buyers have the same tastes, buy the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate.

• Competitor’s marketing strategies: When competitors use differentiated or concentrated marketing, undifferentiated marketing can be suicidal. Conversely, when competitors use undifferentiated marketing, a firm can gain an advantage by using differentiated or concentrated marketing, focusing on the needs of buyers in specific segments.


Differentiation

and

Positioning

Products are made in factories, but brands happen in the minds of consumers.


Differentiation and Positioning

• Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products.

• It is the complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products.

• Example: Tide is positioned as a powerful, all-purpose family detergent; Ivory is positioned as the gentle detergent for fine washables and baby clothes, and Toyota positions its fuel efficient.



• Identifying a set of possible competitive advantages to build a position.

• Choosing the right competitive advantages.

• Selecting an overall positioning strategy (value proposition).

• Communicating and delivering the chosen position to the market.

Choosing a Differentiation and Positioning Strategy



Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

Identifying Possible Value Differences and Competitive Advantages



Identifying a set of possible competitive advantages to build a position by providing superior value from:

Choosing a Differentiation and Positioning Strategy

Product differentiation

Service differentiation

Channel differentiationPeople differentiation

Image differentiation


Differentiation and PositioningChoosing a Differentiation and Positioning Strategy

• Product differentiation, brands can be differentiated on features, performance, or style and design.

• Services differentiation through speedy, convenient, or careful delivery.

• Channel differentiation gain competitive advantage through the waythey design their channel’s coverage, expertise, and performance. Amazon.com and GEICO set themselves apart with their smooth-functioning direct channels.

• People differentiation—hiring and training better people than their competitors do. Disney World people are known to be friendly and upbeat.

• Image differentiation. A company or brand image should convey a product’s

distinctive benefits and positioning (such as quality).



Differences to promote should be:

Choosing the Right Competitive Advantage

Important Distinctive

Superior Communicable

Preemptive Affordable

Profitable



Differences to promote should be:

Choosing the Right Competitive Advantage

• Important: The difference delivers a highly valued benefit to targetBuyers (usable benefits).• Distinctive: Competitors do not offer the difference, or the companycan offer it in a more distinctive way.• Superior: The difference is superior to other ways that customersmight obtain the same benefit.• Communicable: The difference is communicable and visible tobuyers.• Preemptive: Competitors cannot easily copy the difference.• Affordable: Buyers can afford to pay for the difference.• Profitable: The company can introduce the difference profitably.



Value proposition is the full mix of benefits upon which a brand is positioned

Selecting an Overall Positioning Strategy (value proposition)

The five green cells represent winning value propositions—differentiation and positioning that gives the company competitive advantage.


Selecting an Overall Positioning Strategy (value proposition)• More-for-more positioning involves providing the most upscale product or

service and charging a higher price to cover the higher costs. Example: Four Seasons hotels, Rolex watches, Mercedes automobiles—each claims superior quality, craftsmanship, durability, performance, or style and charges a price to match.

• More for the Same. Companies can attack a competitor’s more-for-more positioning by introducing a brand offering comparable quality at a lower price. Example, Toyota introduced its Lexus line with a “more-for-the-same” value proposition versus Mercedes and BMW.

• The Same for Less. Offering “the same for less” can be a powerful value proposition— everyone likes a good deal. Example: Discount stores such as Walmart and DSW Shoes use this positioning. They don’t claim to offer different or better products, but give discounts based on superior purchasing power and lower-cost operations.

• Less for Much Less. A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will gladly settle for less than optimal performance for a lower price.

• More for Less. Of course, the winning value proposition would be to offer “more for less. Example: Depot had arguably the best product selection, the best service, and the lowest prices compared to local hardware stores and other home improvement chains.

7- 1 copyright © 2012pearson education, inc. publishing as prentice hall i t ’s good and good for...

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