Chapter 4

Customer
Customer- Driven Marketing
Strategy: Creating value for the
customers
Customer-driven Marketing Strategy

Market
Differentiation
segmentation

Create value
for targeted
customer

Market
Positioning
Targeting
 Market Segmentation

Dividing a market into smaller segments of

buyers with distinct needs, characteristics, or
behaviors that might require separate marketing
strategies or mixes.
Market targeting

Market targeting is the process of evaluating each market segment’s

attractiveness and selecting one or more segments to enter.
Differentiation

Differentiation is actually differentiating the firm’s market offering to

create superior customer value.
Positioning

Positioning is arranging for a product to occupy a clear,

distinctive, and desirable place relative to competing
products in the minds of target consumers.
Major Segmentation Variables

Geographic Demographic

Create value
for targeted
customer

Psychographic Behavioral
Geographic Segmentation

World Region or Country

City or Metro Size

States, Divisions
 Demographic Segmentation

Dividing the market into groups based on variables

such as:
 Age
 Gender
 Family size
 Life cycle stage
 Income
 Occupation
 Education
 Religion
 Nationality
Step 1. Psychographic Segmentation

Divides Buyers Into Different Groups Based on:

Social Class Lifestyle Personality

 Behavioral Segmentation

Dividing the market into

groups based on variables
such as:
Occasions
Benefits
User status
Usage rate
Loyalty status
Requirements for Effective Segmentation

Measurable
Measurable • Size, purchasing power, profiles
of segments can be measured.
Accessible
Accessible
• Segments can be effectively
reached and served.
Substantial
Substantial
• Segments are large or
profitable enough to serve.
Differential
Differential • Segments must respond
differently to different
marketing mix elements &
programs.
• Effective programs can be
Actionable
Actionable
designed to attract and serve
the segments.
Market Targeting

Evaluating Market Segments

 Segment size and growth

 Segment structural attractiveness
 Company objectives and resources
Market Targeting (Evaluating Market Segment)

Segment size and growth

 Smaller versus larger segments

 Growth potential
Market Targeting (Evaluating Market Segment)

Segment structural attractiveness

Substitute Power of Power of

Competition
products buyers Suppliers

15
Market Targeting (Evaluating Market Segment)

Company objectives and resources

Consistent with
Competitive Availability of
company
advantage resources
objectives

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Market Targeting

Selecting Target Market Segments

 Undifferentiated marketing

 Differentiated marketing

 Concentrated marketing

 Micromarketing

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18
Company
Company
Market
Market Marketing
Marketing
Mix
Mix
Undifferentiated Marketing
Same product to all consumers
(no segmentation, i.e Coca-Cola)
Step 2. Market Targeting
Market Targeting

Target Marketing Strategies

Undifferentiated marketing targets the whole market with one offer

 Mass marketing
 Focuses on common needs rather than what’s different

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20
Company
Company
Segment
Segment33 Marketing
MarketingMix
Mix33
Company
Company
Segment
Segment22 Marketing
MarketingMix
Mix22
Segment Company
Company
Segment11 Marketing
MarketingMix
Mix11
Differentiated Marketing
Different products to one or more segments
(some segmentation)
Step 2. Market Targeting
Market Targeting

Selecting Target Market Segments

Differentiated marketing targets several different market segments and designs
separate offers for each

 Goal is to achieve higher sales and stronger position

 More expensive than undifferentiated marketing

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22
Segment
Segment33
Company
Company
Segment
Segment22 Marketing
Marketing
Mix
Mix
Segment
Segment11
Concentrated Marketing
Different products to subgroups within segments
(more segmentation)
Step 2. Market Targeting
Market Targeting

Selecting Target Market Segments

Concentrated marketing targets a small share of a large market

 Limited company resources

 Knowledge of the market

 More effective and efficient

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Market Targeting

(complete segmentation)
Products to suit the tastes of individuals and locations
Micromarketing

Local Marketing Individual Marketing

Tailoring brands/ promotions to Tailoring products and programs to
the needs of individual customers, i.e.
local customer groups, i.e Sears Dell

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 Market Targeting

Selecting Target Market Segments

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

 Cities

 Neighborhoods

 Stores

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Market Targeting

Selecting Target Market Segments

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

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Step 2. Market Targeting
Choosing a Market-Coverage Strategy

Company
CompanyResources
Resources

Product
ProductVariability
Variability

Product’s
Product’sStage
Stagein
inthe
theLife
LifeCycle
Cycle

Market
MarketVariability
Variability

Competitor’s
Competitor’sMarketing
MarketingStrategies
Strategies

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Socially Responsible Target Marketing

 Smart targeting helps companies and consumers alike.

 Target marketing sometimes generates controversy and concern.

 Disadvantaged and vulnerable can be targeted.

 Cigarette, beer, and fast-food marketers have received criticism in the past.
 Internet has come under attack because of the loose boundaries and lack
of control in marketing practices.
Discussion Connection
 At the last Discussion Connection, you segmented the U.S. footwear market.
 Now, pick two companies that serve this market and describe their
segmentation and targeting strategies.
 Can you come up with one that targets many different segments versus another
that focuses on only one or a few segments?
 How does each company you choose differentiate its marketing offer and
image?
 How has each done a good job of establishing this differentiation in the minds
of targeted 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

Perceptions
Impressions
Feelings
Step 3. Choosing a Positioning Strategy

Step 1. Identifying Possible

Competitive Advantages to
build a position.

Step 2. Selecting the Right

Competitive Advantage

Step 3. Communicating and

Delivering the Chosen
Position
Identifying Possible Competitive Advantages

 Key to winning and keeping customers is to understand their needs and

buying processes better than competitors do and deliver more value.

 Competitive advantage is an advantage over competitors gained by

offering consumers greater value, either through lower prices or by
providing more benefits, that justify competitive advantage,
Identifying Possible Competitive Advantages

Product Services
Differentiation Differentiation
i.e. Features, i.e. Delivery, Installation,
Performance, Style & Repair Services, Customer
Design, or Attributes Training Services

Image Personnel
Differentiation Differentiation
i.e. Symbols, i.e. Hiring, Training
Atmospheres, Events Better People Than
Competitors Do
Choosing the Right Competitive Advantages

How many differences to promote?

1: IBM, HRC, White Plus, Pepsodent Jeremy check.

2: Tibet oil, Keya Laundry

Which differences to promote?
Not all brand difference are meaningful or worthwhile, and each difference has
the potential to create company cost as well as customer benefit.
 Communicable
Communicable Preemptive
Preemptive
Unique selling position
Affordable
Affordable
Superior
Superior To Promote
Which Differences
For Determining
Criteria
Distinctive
Distinctive Profitable
Profitable
Important
Important
Choosing the Right Competitive Advantages
 Selecting an Overall Positioning Strategy (Fig.
7.4)
Price
These are wining More The same Less
value propositions
More More More
More for for for
More same Less
Benefits

The same
The Same for less

Less Less for

Much less
These are wining
value propositions
Developing a Proposition Statement

Proposition statement a statement that summarizes company or brand proposition

using this form: To (target segment and need) our (brand) is (concept) that (point of
difference
Communicating and Delivering the Chosen
Position

 Once position is chosen, company must take strong steps to deliver and
communicate the desired position to target consumers.
 All the company’s marketing mix must support the positioning strategy.
 Positioning strategy must be monitored and adapted over time to match
changes in consumer needs and competitor’s strategies.
Review of Concept Connections

 Define the three steps of target marketing: market segmentation,

market targeting, and market positioning.
 List and discuss the major levels of market segmentation and bases for
segmenting consumer and business markets.
 Explain how companies identify attractive market segments and choose
a market-coverage strategy.
 Discuss how companies can position their products for maximum
competitive advantage in the marketplace.