I. Chapter 6: Customer-Driven Marketing Strategy: Creating Value for Target CustomersII. Ch. 7: Products, Services, and Brands: Building Customer ValueIII. Ch. 8: New-Product Development and Life-Cycle StrategiesIV. Ch. 9: Pricing – Understanding and Capturing Customer ValueI. CHAPTER 6: CUSTOMER-DRIVEN MARKETING STRATEGY: CREATING VALUE FOR TARGET CUSTOMERS - Market Segmentationo Dividing a market into smaller groups with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Use multiple segmentation bases in order to identify smaller, better-defined target groups. Start with a single base and then expand to other bases.o Must be measurable, accessible, substantial, differentiable, actionableo Key segmentation variables: Geographic, Demographic, Psychographic, Behavioral (no single way is best, often combing more than one variable to define segments) Geographic: World region or country, Region of country, city or metro size, density, and climate. 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- Gender: product variations for men and women. Neglected segments can offer new opportunities- Income: targets the rich for luxury goods. People with low incomes can be profitable. Some products have different grader for different markets. Psychographic: dividing a market into different groups based on social class, lifestyle, or personality characteristics. Behavioral: Dividing buyers into groups based on consumer knowledge attitudes, uses, or responses to a product (Kroger card or Harrahs gold card, tracks purchases)- Occasion segmentation: Special promotions/labels for holidays/occasions- Benefit segmentation: often results in the creation of multiple market offering with distinct sets of benefits- User Status: nonusers, ex-users, potential users, first-time users, regular- Usage Rate: Light, Medium, heavy- Loyalty Status: Brands, stores, companieso Segmenting Business Markets: Consumer and business markets use many of the same variablesfor segmentation. Business markets can also use: Operating characteristics, purchasing approached, situational factors, personal characteristics.o Segmenting International Markets: Factors used: Geographic location, economic factors, political and legal factors, cultural factors Intermarket segmentation: forming segments of consumers w/ similar needs and buyingbehavior even though located in different countries. (Coca-Cola)- Targeting: o Evaluating market segments  Size: Analyze current segment sales, growth rates, and expected profitability Segment Structural Attractiveness: Consider competition, existence of substitute products, and the power of buyers and suppliers  Company Objectives and Resources: Examine company skills and resources needed to succeed in that segment. Offer superior value and gain advantages over competitorso Selecting target market segments – Ordered from Targeting broadly  narrowly (select strategy based off Company resources, product variability, life-cycle stage, market variability, and competitors’ marketing strategies) Undifferentiated (mass) marketing: Ignores segmentation opportunities. These productsrarely succeed for long in the American marketplace (Henry Ford) Differentiated (segmented) marketing: Targets several segments and designs separate offers for each. Coca-Cola, P&G (soaps and detergents) Concentrated (niche) marketing: Targets one or a couple small segments. Niches have very specialized interests 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 localcustomer groups (cities, neighborhoods, specific stores)- Individual Marketing: Tailoring products and marketing to needs and preferencesof individual customer (ex: Amazon) Socially Responsible Targeting- Marketing sometimes generates controversy and concern when you are targetingminority, disadvantages populations, children/teens or when profit is made at expense of segments’ vulnerabilities.- Differentiation and Positioningo Positioning – a Products position is the way a product is defined by consumers on important attributes – the place the product occupies in consumers’ minds relative to competing products.[Select how many (usually just 1) & which differences to promote]o Differentiation –differentiate the marketing creating best value (ex: multiple tide formula) Types: Product, services, channels, people, and image differentiation Difference to Promote: Important, distinctive, superior, affordable, profitableo Choosing differentiation and positioning involves:  Identify a set of possible value differences and competitive advantages on which to builda position: NEED TO KNOW WHATS IMPORTANT TO CUSTOMERS (+value)  Choose the right competitive advantages: Provide superior value w/ differentiation Select an overall positioning strategy.o Good Value Propositions: Walmart=less for less, Kohls=more for less, BMW=more for moreo Positioning Statement Format: “To (target segment and need) our (brand) is (a concept) that (point of difference).”o Communicating and delivering the chosen position: must deliver and communicate position to target market (marketing mix must support) & firm must monitor/adapt overtime to match changes in needs and competitors’ strategies (DiGiorno vs delivery)II. CH. 7: PRODUCTS, SERVICES, AND BRANDS: BUILDING CUSTOMER VALUE- Products: Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy and want or need.- Services: Any activity or benefit that one party an offer to another that is essentially intangible and does not result in ownership of anything - 4 Service Characteristicso Intangibility: Services cant be seen, tasted, felt, heard or smelled before purchaseo Variability: Quality of service depends on who provides them and when, where, & howo Inseparability: Services cannot be separated from providerso Perishability: Services cannot be stored for later scale or use- Major Service Marketing Tasks: o Managing service differentiation – develop differentiated offer, deliver, and imageo Managing service quality – set high service