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Chapter Seven

Customer-Driven Marke2ng
Strategy:
Crea2ng Value for Target Customers
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Customer-Driven Marketing Strategy:


Creating Value for Target Customers
Topic Outline

Market Segmenta-on
Market Targe-ng
Dieren-a-on and Posi-oning

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Market Segmentation

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Market segmenta2on
Dividing a market into smaller segments
with dis-nct needs, characteris-cs, or
behavior that might require separate
marke-ng strategies or mixes.

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Market Segmentation
Segmen-ng consumer markets
Segmen-ng business markets
Segmen-ng interna-onal markets
Requirements for eec-ve segmenta-on

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Segmen2ng Consumer Markets

Geographic
segmentation

Demographic
segmentation

Psychographic
segmentation

Behavioral
segmentation

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Segmen2ng Consumer Markets

Geographic segmenta2on divides the


market into dierent geographical units
such as na-ons, regions, states, coun-es, or
ci-es

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Segmen2ng Consumer Markets
Demographic segmenta2on
divides the market into
groups based on variables
such as age, gender, family
size, family life cycle, income,
occupa-on, educa-on,
religion, race, genera-on,
and na-onality
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Market Segmentation
Age and life-cycle stage segmenta2on is the
process of oering dierent products or
using dierent marke-ng approaches for
dierent age and life-cycle groups
Gender segmenta2on divides the market
based on sex (male or female)

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Segmen2ng Consumer Markets

Income segmenta2on divides
the market into auent,
middle-income or low-
income consumers
Psychographic segmenta2on
divides buyers into dierent
groups based on social class,
lifestyle, or personality traits

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Segmen2ng Consumer Markets

Behavioral segmenta2on divides buyers into


groups based on their knowledge,
aJtudes, uses, or responses to a product
Occasions- Buyers can be grouped according to occasions
when they get the idea to buy, actually make their purchase, or
use the purchased item.

Benets sought- nding the major benets people look


for in a product class, the kinds of people who look , and the
major brands that deliver each benet

User status- segmented into nonusers, ex-users, poten-al


users, rst--me users, and regular users of a product

Usage rate- Markets can also be segmented into light,


medium, and heavy product users

Loyalty status- Consumers can be loyal to brands (Tide),


stores (Target), and companies (Apple)
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Market Segmentation
Using Mul2ple Segmenta2on Bases

Mul2ple segmenta2on is used to iden-fy smaller,
beSer-dened target groups

PRIZM NE classies every American household


into 66 unique segments organized into 14
dierent social groups.

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Segmen2ng Interna2onal markets
Geographic
location

Economic
factors

Politicallegal factors

Cultural
factors

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Market Segmentation
Segmen2ng Interna2onal Markets

Intermarket segmenta2on divides


consumers into groups with similar needs
and buying behaviors even though they are
located in dierent countries

Copyright 2014 by Pearson Education, Inc. All rights reserved

Market Segmentation
Requirements for Eec2ve Segmenta2on

To be useful, market segments
must be:
Measurable

Accessible

Substantial

Differentiable

Actionable

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Requirements for Effective


Segmentation

Measurable: The size, purchasing power, and proles of the segments


can be measured.
Accessible: The market segments can be eec>vely reached and
served.
Substan>al: The market segments are large or protable enough to
serve.
Dieren>able: The segments are conceptually dis>nguishable and
respond dierently to dierent marke-ng mix elements and programs.
If men and women respond similarly to marke-ng eorts for soY
drinks, they do not cons-tute separate segments.
Ac>onable: Eec>ve programs can be designed for aDrac>ng and
serving the segments.

Market Targeting
Selec2ng Target Market Segments
Target market consists of a set of buyers who
or characteris-cs that
share common needs

the company decides to serve

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Market Targeting
Evalua2ng Market Segments

Segment size and growth-

.
Segment structural aSrac-veness

a segment is less aSrac-ve if it already contains
many strong and aggressive compe>tors
or if it is easy for new entrants to come into the segment. The existence of many actual or

poten-al subs>tute products may limit prices and the prots that can be earned in a

segment. The rela-ve power of buyers also aects segment aSrac-veness. Buyers with
strong bargaining power rela-ve to sellers will try to force prices down, demand more
services, and set compe-tors against one anotherall at the expense of seller
protability. Finally, a segment may be less aSrac-ve if it contains powerful suppliers who
can control prices or reduce the quality or quan-ty of ordered goods and services.

Company objec-ves and resources


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Market Targeting
Target Marke2ng Strategies

Undieren2ated marke-ng targets the whole


market with one oer
Mass marke-ng
Focuses on common needs rather than what s
dierent

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Market Targeting
Target Marke2ng Strategies

Dieren2ated marke2ng targets several


dierent market segments and designs
separate oers for each
Goal is to achieve higher sales and stronger
posi-on
More expensive than undieren-ated
marke-ng
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Market Targeting

Target Market Strategies


Concentrated marke-ng
targets a small share of a
large market
Limited company resources
Knowledge of the market
More eec-ve and ecient

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Marketing Targeting
Target Market Strategies

Micromarke2ng is the prac-ce of tailoring products


and marke-ng programs to suit the tastes of
specic individuals and loca-ons. Includes:
Local marke-ng
Individual marke-ng

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Market Targeting
Target Market Strategies

Local marke2ng involves tailoring brands and


promo-on to the needs and wants of local
customer groups
Ci-es
Neighborhoods
Stores

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Market Targeting
Target Market Strategies
Individual marke2ng involves

tailoring products and marke-ng
programs to the needs and
preferences of individual
customers
Also known as:
One-to-one marke-ng
Mass customiza-on

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Market Targeting
Depends on: Choosing a Target Market

Company resources - When the rm s resources are limited,
concentrated marke-ng makes the most sense

Product variability- Undieren-ated marke-ng is more suited


for uniform products, such as grapefruit or steel

Product life-cycle stage- When a rm introduces a new


product, it may be prac-cal to launch one version only

Market variability- If most buyers have the same tastes, buy


the same amounts, and react the same way to marke-ng eorts,
undieren-ated marke-ng is appropriate

Compe-tor s marke-ng strategies


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Market Targeting
Socially Responsible Target Marke2ng

Benets customers with


specic needs
Concern for vulnerable
segments
Children
Alcohol
CigareSes
Internet abuses
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Differentiation and Positioning


Product posi2on is the way
the product is dened by
consumers on important
aSributesthe place the
product occupies in
consumers minds
rela-ve to compe-ng
products
Percep-ons
Impressions
Feelings
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Differentiation and Positioning


Posi-oning maps
show consumer
percep-ons of
their brands
versus compe-ng
products on
important buying
dimensions. The
size of each circle
indicates the
brand s rela-ve
market share
Copyright 2014 by Pearson Education, Inc. All rights reserved

Differentiation and Positioning


Choosing a Dieren2a2on and Posi2oning
Strategy

Iden-fying a set of possible compe--ve

advantages to build a posi-on

Choosing the right compe--ve advantages


Selec-ng an overall posi-oning strategy
Communica-ng and delivering the chosen
posi-on to the market
Copyright 2014 by Pearson Education, Inc. All rights reserved

Differentiation and Positioning


Iden2fying Possible Value Dierences and
Compe22ve Advantages

Compe22ve advantage is an advantage over


compe-tors gained by oering consumers
greater value, either through lower prices
or by providing more benets that jus-fy
higher prices

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Differentiation and Positioning


Choosing a Dieren2a2on and Posi2oning
Strategy

Iden-fying a set of possible


compe--ve advantages to build
a posi-on by providing superior
value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
Copyright 2014 by Pearson Education, Inc. All rights reserved

Choosing the Right Competitive Advantage


product dieren>a>on, brands can be dieren-ated on features,
performance, or style and design. Thus, Bose posi-ons its speakers
on their striking design and sound characteris-cs.
a rm can also dieren-ate the services that accompany the product.
Some companies gain services dieren>a>on through speedy,
convenient, or careful delivery.
channel dieren>a>on gain compe--ve advantage through the way
they design their channel s coverage, exper-se, and performance.
Amazon.com and GEICO, for example, set themselves apart with
their smooth-func-oning direct channels.
people dieren>a>onhiring and training beSer people than their
compe-tors do. People dieren-a-on requires that a company
select its customer-contact people carefully and train them well.
image dieren>a>on. A company or brand image should convey a
product s dis-nc-ve benets and posi-oning.

Differentiation and Positioning


Choosing the Right Compe22ve Advantage

Dierence to promote
should be:
Important

Distinctive

Superior

Communicable

Preemptive

Affordable

Profitable

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Differentiation and Positioning


Selec2ng an Overall Posi2oning Strategy

Value proposi2on
is the full mix of
benets upon
which a brand is
posi-oned

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Differentiation and Positioning


Developing a Posi2oning Statement
our (brand) is (concept) that
To (target segment and need)
(point of dierence)
Evernote: To busy mul-taskers who need help remembering
things, Evernote is digital content management applica-on
that makes it easy to capture and remember moments and
ideas from your everyday life using your computer, phone,
tablet, and the Web.
Placing a brand in a specic category suggests similari-es
that it might share with other products in the category. But
the case for the brand s superiority is made on its points of
dierence.
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Communication and Delivering the


Chosen Position
Choosing the posi-oning is oYen easier than
implemen-ng the posi-on.

Copyright 2014 by Pearson Education, Inc. All rights reserved

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