Chapter 7 Customer Driven Marketing Strategy Creating Value for Target Customers Customer Driven Marketing Strategy 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 evaluating each market segment s attractiveness and selecting one or more segments to enter Differentiation differentiating the market offering to create superior customer value Positioning arranging for a market offering to occupy a clear distinctive and desirable place relative to competing products in the minds of target consumers Market Segmentation Segmenting Consumer Markets Geographic segmentation dividing a market into different geographical units such as nations states regions counties cities or even neighborhoods Demographic segmentations dividing the market into segments based on variables such as age life cycle stage gender income occupation education religion ethnicity and generation Age and life cycle segmentation Gender segmentation Income segmentation Psychographic segmentation dividing a market into different segments based on social class lifestyle or personality characteristics Behavioral segmentation dividing a market into segments based on consumer knowledge attitudes uses or responses to a product Occasion segmentation segments according to the occasions when the buyers get the idea to buy actually make their purchase or use the purchased item Benefit segmentation segments according to the different benefits that the customer is looking to get from the item User Status non users ex users potential users first time users regular users User Rate light medium and heavy users of the product Loyalty status Using multiple segmentation bases It s better for marketers to use several different segmentation bases to narrow in on specific groups of people and know as much as they can about them Segmenting Business Markets Businesses can be segmented into the same variables as consumers geographic demographic industry or company size psychographic and behavioral They also have additional variables Operating characteristics Purchasing approaches Situational factors Personal characteristics Segmenting International Markets Geographic location Economic factors Political and legal factors Cultural factors Intermarket cross market segmentation forming segments of consumers who have similar need and buying behaviors even though they are located in different countries Requirements for successful segmentation Measurable size purchasing power profiles Accessible can they be effectively reached Differentiable distinguishable and react differently to marketing mixes Actionable programs can be created to carry out these plans Market Targeting Evaluation Market Segments Size and growth Structural attractiveness Company objectives and resources Also consider the long run segment attractiveness A segment is less attractive if it already contains many strong and aggressive competitors or if it is easy for new entrants to come into the segment The existence of many or potential substitute products may limit prices and profits that can be earned in a segment The relative power of buyers strong buying power in consumers can cause the price to decline Powerful Suppliers that can control price quality and quantity Selecting Target Market Segments Target Market set of buyers sharing common needs or characteristics that the company decides to serve Undifferentiated marketing mass marketing ignore market segments and go after the whole market with Differentiated marketing segmented marketing target several different segments and go after each with Concentrated marketing niche marketing go after a large share of one or a few segments or niches one offer a unique offer Micromarketing tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments includes local and individual marketing Local marketing tailoring brands and marketing to the needs and wants of local customer segments cities neighborhoods and even specific customers Individual marketing tailor to individuals Also called one to one marketing mass customization markets of one marketing Choosing a Marketing Strategy Need to consider Resources available to the company Degree of product variability Products life style stage Market variability Competitors marketing strategy Socially responsible target marketing aka don t market cigs to elementary schools Differentiation and Positioning Looking beyond segments a company needs to decide on a value proposition how will it create differentiated value Product Position the way consumers define a product s important attributes Positioning maps perceptual positioning maps show consumer perception of their brands vs competing products on important buying dimensions Example Choosing a Differentiation and Positioning Strategy Competitive advantage by having lower prices or providing more benefits that justify higher prices an advantage over competitors gained by offering greater customer value either Find points of differentiation by looking at Product features performance style Services speedy delivery convenient careful Channels the way they design their channel s coverage expertise and performance People hiring and training people better than their competitors Image developing a strong distinctive image McD s golden arches Choosing a competitive advantage How many differences to promote You can use a Unique Selling Proposition USP or choose multiple differences to promote Which differences should you promote Make sure they re Important Distinctive Communicable Preemptive Superior Affordable Profitable Selecting an Overall Positioning Strategy Value proposition the full positioning of a brand the full mix of benefits on which its positioned More for more higher price higher quality More for Same can use this to attack a more for more strategy in competitors comparable quality for lower cost Same for Less everyone likes a good deal Wal Mart category killers Same for much less Family Dollar More for less hard to maintain in the long run Developing a Positioning Statement Positioning Statement statement that summarizes a company s brand positioning using this form To target segment and need our brand is concept that point of difference Example To busy multitaskers who need help remembering things Evernote is an App that makes it easier to
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