Slide 1Designing a Customer-Driven Marketing StrategyStep 1: Market SegmentationMarket SegmentationMarket SegmentationMarket SegmentationMarket SegmentationMarket SegmentationMarket SegmentationMarket SegmentationMarket SegmentationSegmenting Business MarketsRequirements for Effective SegmentationStep 2: TargetingTargetingEvaluating Market SegmentsTargeting StrategiesTargeting StrategiesTarget Marketing StrategiesMicromarketingChoosing a Targeting StrategySocially Responsible TargetingPositioningDifferentiation and PositioningDifferentiation and PositioningDifferentiation and PositioningHere’s Why All Of This Is So Important!Chapter 6Customer Driven Marketing Strategy: Creating Value for Target CustomersDesigning a Customer-Driven Marketing StrategyAddresses the question: Who is our customer?Addresses the question: Who is our customer?Addresses the question: What do our customers think about when they think about us?Addresses the question: What do our customers think about when they think about us?Step 1: Market SegmentationDividing a market into smaller groups with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes.The basic idea here: Take a group of customers that are inherently heterogeneous, and divide it into smaller groups that are more homogeneousThe basic idea here: Take a group of customers that are inherently heterogeneous, and divide it into smaller groups that are more homogeneousMarket SegmentationKey segmentation variables: GeographicDemographic PsychographicBehavioralNo single way to segment is best. Often combine more than one variable to define segments.Market SegmentationGeographic:World regionor countryRegion of countryCity or metro sizeDensityClimateMarket SegmentationDemographic:Age, gender, family size, family life cycle, income, occupation, education, race, religion, generation, nationality.The most popular basis for segmenting consumer marketsEasier to measure than most other types of variablesMarket SegmentationGender:Segmenting on the basis of gender often requires different products variations for men and women.Neglected gender segments can offer new opportunitiesMarket Segmentation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:Dividing a market into different groups based on social class, lifestyle, or personality characteristics.Behavioral segmentation:Dividing buyers into groups based on consumer knowledge, attitudes, uses, or responses to a product.Behavioral segmentation:User Status: Nonusers, ex-users, potential users, first-time users, regular usersUsage Rate: Light, medium, heavyLoyalty Status: Brands, stores, companiesMarket SegmentationMarket SegmentationMarketers will frequently use more than one segmentation variable.Use multiple segmentation bases in order to identify smaller, better-defined target groups.Start with a single base and then expand to other bases.The goal: Create a homogeneous customer group that might be a good target for marketing activity.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 characteristicsRequirements for Effective SegmentationTo be useful, market segments must be:MeasurableAccessibleSubstantialDifferentiableActionableStep 2: TargetingSelecting the market segments that will become the chosen targets of opportunityThe basic idea here: From the segments that have been identified in Step 1, pick those segment(s) to whom you plan to market your products or services.The basic idea here: From the segments that have been identified in Step 1, pick those segment(s) to whom you plan to market your products or services.TargetingYou have to decide which segments are most attractive.This is done by evaluating market segments on the criteria of:Segment size and growthSegment structural attractivenessCompany objectives and resourcesEvaluating Market SegmentsSegment Size and Growth: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 competitors.Targeting StrategiesTargeting StrategiesUndifferentiated (mass) marketingIgnores segmentation opportunities Differentiated (segmented) marketingTargets several segments and designs separate offers for eachTarget Marketing StrategiesConcentrated (niche) marketingTargets one or a couple of 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 local customer groups—cities, neighborhoods, specific stores.Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.Choosing a Targeting StrategyFactors to consider:Company resourcesProduct variabilityProduct’s life-cycle stageMarket variabilityCompetitors’ marketing strategiesMarketing sometimes generates controversy and concern when targeting: Vulnerable, minority, or disadvantaged populationsChildren and teensSocially Responsible Targeting23PositioningA product’s 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.The basic idea here: What does a customer think about when he/she thinks about US?The basic idea here: What does a customer think about when he/she thinks about US?Choosing a differentiation and positioning strategy involves:Identifying a set of possible value differences and competitive advantages on which to build a position. Selecting an overall positioning strategy. Differentiation and