Customer-Driven Marketing Strategy: Creating Value for Target Customers

Designing a Customer-Driven Marketing Strategy

Designing a true customer-driven marketing strategy involves:

Segmentation Targeting Differentiation Positioning

Market Segmentation

Segmentation:

Dividing a market into smaller groups with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.

Key variables:

Geographic Demographic Psychographic Behavioral

No single way to segment is best. Often combine more than one variable to better define segments.

Market Segmentation

Geographic:

World region or country Region of country City or metro size Density Climate

Market Segmentation

Demographic:

Age, gender, family size, family life cycle, income, occupation, education, race, religion, generation, nationality. The most popular bases for segmenting customer groups. Easier to measure than most other types of variables.

Market Segmentation

Age and life-cycle stage addresses the fact that consumer needs and wants change with age:

P&G has different toothpastes for different age groups.

Avoid stereotypes in promotions. Promote positive messages.

Market Segmentation

Gender:

Neglected gender segments can offer new opportunities (e.g., Nivea for men).

Income:

Identifies and targets the affluent for luxury goods. People with low annual incomes can be a lucrative market. Some manufacturers have different grades of products for different markets.

Market Segmentation

Psychographic segmentation:

Behavioral segmentation:

Dividing a market into different groups based on social class, lifestyle, or personality characteristics.

Dividing buyers into groups based on consumer knowledge, attitudes, uses, or responses to a product.

Market Segmentation

Behavioral segmentation:

Occasion segmentation:
Special promotions and labels for holidays.
(E.g., Eid Shopping)

Special products for special occasions.

(E.g., Kodak disposable cameras)

Benefits sought:
Different segments desire different benefits from products.
(E.g., P&Gs multiple brands of laundry detergents to satisfy different needs in the product category).

Market Segmentation

Behavioral segmentation:

User status:

Nonusers, ex-users, potential users, first-time users, regular users Light, medium, heavy

Usage rate:

Loyalty status:

Brands, stores, companies

Market Segmentation

Best to use multiple segmentation bases in order to identify smaller, better-defined target groups.

Start with a single base and then expand to other bases.

Segmenting Business Markets

Consumer and business markets use many of the same variables for segmentation. Business marketers can also use:

Operating characteristics Purchasing approaches Situational factors Personal characteristics

Segmenting International Markets

Factors used:

Geographic location Economic factors Political and legal factors Cultural factors Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.

Intermarket segmentation:

Requirements for Effective Segmentation

To be useful, market segments must be:

Measurable (size, purchasing power and profiles of

the segment can be measured)

Accessible (The segment can be effectively reached

& served)

Substantial (The market segments are larger or

profitable enough to serve)

Differentiable (The segments respond differently to

marketing mix programs)

Actionable (Effective programs can be designed for

attracting & serving the segments)

Evaluating Market Segments

Segment size and growth:

Analyze current segment sales, growth rates, and expected profitability. Consider competition, existence of substitute products, and the power of buyers and suppliers. Examine company skills and resources needed to succeed in that segment. Offer superior value and gain advantages over competitors.

Segment structural attractiveness:

Company objectives and resources:

Market Targeting

Market targeting involves:

Evaluating marketing segments.

Segment size, segment structural attractiveness, and company objectives and resources are considered.

Selecting target market segments.

Alternatives range from undifferentiated marketing to micromarketing.

Selecting Target Market Segments

Targeting strategies include:

Undifferentiated (mass) marketing:

Ignores segmentation opportunities

Differentiated (segmented) marketing:

Targets several segments and designs separate offers for each

Targets one or a couple small segments

Concentrated (niche) marketing:

Micromarketing (local or individual marketing)

Micromarketing

Tailoring products and marketing programs to suit the tastes of specific individuals and locations.

Local marketing: Tailoring brands and promotions to the needs and wants of local customer groupscities, neighborhoods, specific stores. Individual marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.

Differentiation and Positioning

A products position is:

The way the product is defined by consumers on important attributesthe place the product occupies in consumers minds relative to competing products. Perceptual positioning maps can help define a brands position relative to competitors.

Differentiation and Positioning

Choosing a differentiation and positioning strategy involves:

Identifying a set of possible value differences and competitive advantages on which to build a position. Choosing the right competitive advantages. Selecting an overall positioning strategy.

Differentiation and Positioning

Identifying possible value differences and competitive advantages:

Key to winning target customers is to understand their needs better than competitors do and to deliver more value. Extent to which a company can position itself as providing superior value.

Competitive advantage:

Achieved via differentiation.

Differentiation and Positioning

Differentiation

Actually differentiating the marketing offering to create superior customer value. Product differentiation Services differentiation Channels differentiation People differentiation Image differentiation

Types of differentiation:

Differentiation and Positioning

Choosing the right competitive advantage requires selecting how many and which differences to promote. Differences that could be promoted are:

Important Distinctive Superior Communicable Preemptive Affordable Profitable

Differentiation and Positioning

Overall or full positioning of the brand is called the brands value proposition. Potential value propositions include:

More for more: More benefits for higher price. More for same: More benefits for the same price. More for less: More benefits for a lower price. Same for less: Same benefits for a lower price. Less for much less: Fewer benefits for much lower price.

Differentiation and Positioning

Developing a positioning statement:

Format: To (target segment and need) our (brand) is (a concept) that (point of difference). Example: To busy mobile professionals who need to always be in the loop, BlackBerry is a wireless connectivity solution that gives you an easier, more reliable way to stay connected to data, people, and resources while on the go.

Communicating and Delivering the Chosen Position

Company must take strong steps to deliver and communicate the desired position to target consumers.

The marketing mix efforts must support the positioning strategy.

Firm must also monitor and adapt the position over time to match changes in consumer needs and competitors strategies.