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Marketing creates utilityUtility creates valueForm utility: Finished forme.g. wheat to bread, thread to garmentPlace utility:e.g. to buy a car you dont need to go to plantTime utility:e.g. newspaper in morning, Possession utility: Transfer of ownership made conveniente.g. lease, easy payment, discounts

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallCost to companyPrice / cost to customerMaximum value/benefitsE.g. Pen, LCD, BurgerValue to customerProfit / value to companyCustomer valueValue Proposition: Mix of certain benefitsChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall2Customer ValueValue = Benefits (functional benefits + other)Cost (financial + time + energy etc.)

Customer defines the value and not the seller

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallA companys value proposition is the set of benefits or values it promises to deliver to customers to satisfy their needs (it differentiates one brand from another).e.g. BMW promises the ultimate driving machine Nokia Connecting People- anyone anywhereApple iPhone Touching is believing.Value PropositionChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter SevenCustomer-Driven Marketing Strategy:Creating Value for Target CustomersChapter 7- slide #Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall5Customer-Driven Marketing Strategy:Creating Value for Target Customers

Market SegmentationMarket TargetingDifferentiation and Positioning

Topic OutlineChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall6Market segmentation Dividing a market into smaller groups with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes.

Market SegmentationChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall7The process of evaluating each market segments attractiveness and selecting one or more segments to enter.Market Targeting

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallFinding differences between your brand and others that are in market.Differentiating the market offering to create superior customer value.DifferentiationChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallThe place the product occupies in consumers minds on important attributes relative to competing products.PositioningChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallMarket Segmentation

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall11Market SegmentationGeographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities

Segmenting Consumer Markets

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall12Market SegmentationDemographic 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

Segmenting Consumer MarketsChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall13Contd.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 (e.g. games)Gender segmentation divides the market based on sex (male or female)Income segmentation divides the market into affluent(wealthy) or low-income consumers

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14Market SegmentationPsychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall15Market SegmentationBehavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a productOccasions (Eid, Christmas, New year, etc.)Benefits sought (shoes- function and style)User status (ex-users, potential users, first time users, regular users)Usage rate (light, medium, heavy)Loyalty status (customer loyalty)

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Market SegmentationMultiple segmentation is used to identify smaller, better-defined target groups

Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns

Using Multiple Segmentation Bases

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall17Market SegmentationIntermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries.

Segmenting Business Markets

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall18Market SegmentationTo be useful, market segments must be:

Requirements for Effective Segmentation

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall19Market 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

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Market TargetingSegment size and growthSegment structural attractivenesse.g. existing competition, substitute productsCompany objectives and resourcesEvaluating Market Segments

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Market TargetingTarget Marketing Strategies

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall22Market TargetingUndifferentiated marketing targets the whole market with one offerMass marketingFocuses on common needs rather than whats differente.g. beverages,

Target Marketing Strategies

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall23Market TargetingDifferentiated marketing targets several different market segments and designs separate offers for eachGoal is to achieve higher sales and stronger positionMore expensive than undifferentiated marketinge.g. different Shampoos by Unilever, Different cars by Suzuki etc.

Target Marketing Strategies

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall24Market TargetingConcentrated marketing targets a small share of a large marketLimited company resourcesKnowledge of the marketMore effective and efficiente.g. Formal shoes in large sizes.Target Market Strategies

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall25Market TargetingMicromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locationsLocal marketingIndividual marketing

Target Market Strategies

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Market TargetingLocal marketing involves tailoring brands and promotion to the needs and wants of local customer groupsCitiesNeighborhoodsStores

Target Market Strategies

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall27Market TargetingIndividual marketing involves tailoring products and marketing programs to the needs and preferences of individual customersAlso known as:One-to-one marketingMass customizationMarkets-of-one marketinge.g. Wal-Mart customizes its merchandise store by store.

Target Market Strategies

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Market TargetingDepends on:Company resources (limited or ample).Product variability (standardized or differentiated).Product life-cycle stage (New product- Concentrated marketing).Market variability (tastes of consumers mass marketing or differentiated marketing)Competitors marketing strategies

Choosing a Target Market

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall29Market TargetingBenefits customers with specific needsConcern for vulnerable segmentsChildrenAlcoholCigarettesInternet abuses

Socially Responsible Target Marketing

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall30Differentiation and PositioningProduct position is the way the product is defined by consumers on important attributesthe place the product occupies in consumers minds relative to competing productsPerceptionsImpressionsFeelings

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall31 Differentiation and PositioningPositioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall32Pak Suzuki

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallDifferentiation and PositioningIdentifying a set of possible competitive advantages to build a positionChoosing the right competitive advantagesSelecting an overall positioning strategyDeveloping a positioning statement

Choosing a Differentiation and Positioning Strategy

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall35Differentiation and PositioningCompetitive 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

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall36Differentiation and PositioningIdentifying a set of possible competitive advantages to build a position by providing superior value from:

Choosing a Differentiation and Positioning StrategyChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall37Differentiation and PositioningDifference to promote should be:

Choosing the Right Competitive Advantage

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall38Differentiation and PositioningValue proposition is the full mix of benefits upon which a brand is positioned

Selecting an Overall Positioning Strategy

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall39More for More e.g. Starbucks, Mercedez More for same e.g. Toyotas Lexus (against Mercedez) Same for Less e.g. Metro Less for much less e.g. (Indigo Airlines, China products)More for less e.g. Tata Indica (more space + fuel economy) Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallTo (target segment and need) our (brand) is (concept) that (point of difference). Develop one for e.g. Haleeb Developing a Positioning Statement

Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallCommunication and Delivering the Chosen PositionChoosing the positioning is often easier than implementing the position.Chapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall42

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice HallChapter 7- slide #Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall