7.

Consumer-drive marketing strategy: creating value for target

customers
1. Customer-driven marketing strategy
Target marketing = ID market segments, selecting one or more of
them, and developing products and marketing programs tailored to
them
2. Market segmentation
= Dividing a market into smaller segments
with distinct needs, characteristics or
behaviour that might require separate
marketing strategies or mixes.

1) which customer will we serve? And

2) how will we serve them
based on value proposition (=how it will create value for its target
customers)
Differentiation = differentiating a firms market offering to create
superior customer value
positioning: occupy a clear, distinctive and desirable place relative
to competing products in the minds of target consumers
The goal is to create more value for the customer we serve than
competitors do
- Segmenting consumer markets
B2C
- Segmenting business markets
B2B
- Segmenting international markets
- Requirements for effective segmentation.
Segmenting consumer markets

A) Geographic segmentation
divides the market into different
geographical units such as nations,
regions, states, counties or cities.
Ex different countries, climats (IKEA
different kind of products in North and
South, inside or outside the city (ex Proxy
Delhaize, Delhaize, pick and go .. ex in the
city a lot of salads, food..)
Ex mozzarella from Italy, in slogan connection with country our
visual on the packaging (ex Flag) has a huge effect on buying
behaviour
B) 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.
Age and life-cycle stage segmentation
=the process of offering different products or using different
marketing approaches for different age and life-cycle groups.
Barbie, Lego, tooth paste
Gender segmentation
divides the market based on sex (male or female)
EX Flair, gilette
Income segmentation
divides the market into affluent, middle-income or low-income
consumers.
Ex cars
C) Psychographic segmentation
divides buyers into different groups based on social class,
lifestyle or personality traits.
Ex luxury brands needs to be lifestyle brands : ex Armani
hotel
so the concept of luxury brand has changed
jath, apple, rolex,
Demographic, psychographic and geographic are independent of
the brand
D) Behavioural segmentation
Dependent of the product
divides buyers into groups based on their knowledge,
attitudes, uses or responses to a product.
Occasions
Ex father day, after eight chocolats,

 Benefits sought
= balance between function and style
start your day good with nutella, for dry hair
User status
Ex beer
Usage rate
Ex shampoo, facial cremes, personal care, apple account to
trigger user rate of consumers and in which combination, how
often..
Loyalty status
loyal to brands, companies or stores
Multiple segmentation bases
= merge geographic, demographic, lifestyle and behavioral
ex if you have this income you have this car and this income
-

Segmenting business markets

Operation characteristics, purchasing approaches, situational factors
and personal characteristics
Ex: American express offering corporate card program, asset
management, retirement planning and financial education service
- Segmenting international markets
Geographic location
Ex climat, nations, transportation
Economic factors
Ex income
Political-legal factors
Ex tax system
Cultural factors
Ex language
Using intermarket segmentation (=cross-market segmentation)
=forming segments of consumers who have similar needs and
buying behavior even though they are located in different countries
-

Requirements for effective segmentation

To be useful, market segments must be:
Measurable
= size, purchasing power and profiles of the segments can be
measured
Accessible
=effectively reached and served
Substantial
=large or profitable enough

Differentiable
=conceptually distinguishable and respond differently
Actionable
=effective programs can be designed for attracting and
serving them
3. Market targeting
- Selecting target market segments
Target market consists of a set of buyers who share
common needs or characteristics that the company
decides to serve
- Evaluating market segments
Segment size and growth
Segment structural attractiveness
Look at long term attractiveness
Competitors
Substitute products
Power buyer
Power supplier
Company objectives and resources.
Enter segments only in which it can create superior customer value
and gain advantages over its competitors
- Target marketing strategies

Target market
= set of buyers sharing common needs or characteristics that the
company decides to serve (different levels)
A. Undifferentiated marketing targets the whole market with one
offer
o Mass marketing
o Focuses on common needs rather than whats different
B. Differentiated marketing targets several different market
segments and designs separate offers for each.
o Goal is to achieve higher sales and stronger position.
o More expensive than undifferentiated marketing.
o But increased costs!
C. Concentrated marketing targets a small share of a large market

o Greater knowledge of customer needs, and requires special

reputation
Ex Whole Food market (organic, natural)
o Low cost of setting up Internet cost make it easier to serve
niches
o Higher than normal risk
o Limited company resources
o More effective and efficient.
D. Micromarketing
= the practice of tailoring products and marketing programs to
suit the tastes of specific individuals and locations.
o Local marketing
= tailoring brands and promotions to the needs and wants
of local customer groups (cities, neigbourhoods,stores..)
Advances in communication technology
ex starbucks: send people ads tailored to their location
= place casting to position localized messages direct with
consumers
o Individual marketing
= tailoring products and marketing programmes to the
needs and preferences of individual customers
one-to-one marketing, customized marketing,
markets-of-one marketing
New technologies: more detailed databases, robotic
production and flexible manufacturing, interactive
communication media
Mass customization
= interact one-to-one with masses of customers to design
products and services tailored to individual needs
ex: Nike shoes with personal text
or : personalize promotional messages
E. Local marketing
involves tailoring brands and promotion to the needs and
wants of local customer groups.
o Cities
o Neighborhoods
o Stores
F. Individual marketing
involves tailoring products and marketing programs to the
needs and preferences
of individual customers.

Also known as:

o One-to-one marketing
o Mass customisation
o Markets-of-one marketing
Choosing a target market
depends on
o Company resources
o Product variability
o Product life-cycle stage
o Market variability
o Competitors marketing strategies
o Differentiation and positioning
Social responsible target marketing
o Targeting of vulnerable or disadvantaged consumers with
controversial or potentially harmfull products
ex cigarette, beer, fast food
o Marketing of adult products to children
ex Victoria secret bras at age of 12

Differentiation and positioning

-

Product position
=the way the product is defined by consumers on important
attributesthe place the product occupies in consumers minds
relative to competing products.
o Perceptions
o Impressions
o Feelings
A. Choosing a differentiation and positioning strategy
Identifying a set of possible competitive advantages to build a
position.
Choosing the right competitive advantages.
Selecting an overall positioning strategy.
Communicating and delivering the chosen position to the
market.
- Identifying possible value differences and competitive advantages
Competitive advantage
= an advantage over competitors gained by offering
consumers greater value, either through lower prices or by
providing more benefits that justify higher prices.
Identifying a set of possible competitive advantages to build a
position by providing
superior value from

o Product differentiation
= physical : features, performance, style, design
o Service differentiation
= speedy, convenience, careful delivery
o Channel differentiation
=channel coverage, expertise and performance
o People differentiation
o Image differentiation
= convey a products distinctive benefits and positioning
The chosen symbols, characters and other image elements must be
communicated through advertising that conveys the companys or
brands personality
-

Choosing the right competitive advantage

Difference to promote should be:
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
- Selecting an overall positioning strategy
Value proposition
= the full mix of benefits upon which a brand is positioned.
- Developing a positioning statement
To (target segment and need) our (brand) is (concept) that
(point of difference).
First: show products membership in certain category, then show
difference
Choosing the positioning is often easier than implementing the
position

o More for more: most upscale product/service for higher price

risk during economic downturnes
o More for the same: comparable quality at lower price
o The same for less: ex poundship: same brands at deep
discounts based on superior purchasing power and lower costs
o Less for much less: meeting customers lower performance or
quality requirements at a much lower price
o More for less: only possible in short run
Communicating and delivering the chosen position
- through marketing mix: product, price, place and promotion
- a products position should evolve gradually as it adapts to the
ever)changing marketing environment