Customer-DrivenMarketing Strategy

Turan SULEYMANOVMSc in Business Administration

Linkoping University

Prepared to accompany the lecture at Azerbaijan University

Chapter 7

• Customer-Driven Marketing Strategy: Creating Value for Target Customers

Outline

•Customer-Driven Marketing Strategy•Market Segmentation •Market Targeting •Differentiation and Positioning

Market Segmentation

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

• Four important segmentation topics: segmenting consumer markets, segmenting business markets, segmenting international markets, and the requirements for effective segmentation.

Customer-Driven Marketing Strategy: Creating Value for Target Customers

Segmentation

• Geographic segmentation- Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods.

• Demographic segmentation-Dividing the market into segments based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality.

Segmentation

• Age and life-cycle segmentation Dividing a market into different age and life-cycle groups.

• Gender segmentation- Dividing a market into different segments based on gender.

• Income segmentation- Dividing a market into different income segments.

• Psychographic segmentation- Dividing a market into different segments based on social class, lifestyle, or personality characteristics.

Segmentation

• Behavioral segmentation- Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a product.

• Occasion segmentation- Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

• Benefit segmentation- Dividing the market into segments according to the different benefits that consumers seek from the product.

Using Multiple Segmentation Bases

Segmenting Business Markets

• Business buyers can be segmented geographically, demographically (industry, company size), or by benefits sought, user status, usage rate, and loyalty status. Yet, business marketers also use some additional variables, such as customer operatin characteristics, purchasing approaches, situational factors, and personal characteristics.

• It is believed that buying behavior and benefits provide the best basis for segmenting business markets.

Segmenting International Markets

• Economic factors , Political and legal factors • Intermarket segmentation (cross-market

segmentation) - Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.

Segmenting International Markets

Requirements for Effective Segmentation

• To be useful, market segments must be: • - measurable• - accessible• - Substantial • - Differentiable • - Actionable

Market Targeting

• Market segmentation reveals the firm’s market segment opportunities. The firm now has to evaluate the various segments and decide how many and which segments it can serve best.

• In evaluating different market segments, a firm must look at three factors: segment size and growth, segment structural attractiveness, and company objectives and resources.

Selecting Target Market Segments

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

• Target market- A set of buyers sharing common needs or characteristics that the company decides to serve.

Selecting Target Market Segments

• Market targeting can be carried out at several different levels. Companies can target very broadly (undifferentiated marketing), very narrowly (micromarketing), or somewhere in between (differentiated or concentrated marketing).

Market Targeting Strategies

Market Targeting Strategies

• Undifferentiated (mass) marketing - A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer.

• Differentiated (segmented) marketing -A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.

Differentiated (segmented) marketing

Concentrated (niche) marketing

• Concentrated (niche) marketing - A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches.

Concentrated (niche) marketing

Micromarketing

• Micromarketing - Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; It includes local marketing and individual marketing.

• Local marketing- Tailoring brands and promotions to the needs and wants of local customer segments—cities, neighborhoods, and even specific stores.

Local marketing-

Individual marketing

• Tailoring products and marketing programs to the needs and preferences of individual customers—also called one-toone marketing, customized marketing, and markets-of-one marketing.

Individual Marketing

Choosing a Targeting Strategy

• Companies need to consider many factors when choosing a market-targeting strategy: company’s resources, The product’s life-cycle stage, competitors’ marketing strategies and etc.

Differentiation and Positioning

• Beyond deciding which segments of the market it will target, the company must decide on a value proposition—how it will create differentiated value for targeted segments and what positions it wants to occupy in those segments.

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

• In planning their differentiation and positioning strategies, marketers often prepare perceptual positioning maps that show consumer perceptions of their brands versus competing products on important buying dimensions

Differentiation and Positioning Strategy

• The differentiation and positioning task consists of three steps: identifying a set of differentiating competitive advantages on which to build a position, choosing the right competitive advantages, and selecting an overall positioning strategy. The company must then effectively communicate and deliver the chosen position to the market

Identifying Possible Value Differences and Competitive Advantages

• Competitive advantage- An advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices.

• Companies can differentiate along the lines of product, services, channels, people, or image.

Choosing the Right Competitive Advantages

• Many marketers think that companies should aggressively promote only one benefit to the target market.

• Unique Selling Proposition • Buyers tend to remember number one better,

especially in this overcommunicated society. Thus, Walmart promotes its unbeatable low prices, and Burger King promotes personal choice—“have it your way.”

Selecting an Overall Positioning Strategy

Developing a Positioning Statement

• Positioning statement - A statement that summarizes company or brand positioning. It takes this form: To (target segment and need) our (brand) is (concept) that (point of difference).

Brand Statement

Thank you for your attention!