Chapter 6Customer-Driven Marketing Strategy Creating Value for Target CustomersRest Stop: Previewing the Concepts• Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning• List and discuss the major bases for segmenting consumer and business markets• Explain how companies identify attractive market segments and choose a market-targeting strategy• Discuss how companies differentiate and position their products for maximum competitive advantageFigure 6.1 - Designing a Customer-Driven Marketing StrategyIn concept, marketing boils down to two questions: (1) Which customers will we serve? and (2) How will we serve them? Of course, the tough part is coming up with good answers to these simple-sounding yet difficult questions. The goal is to create more value for the customers we serve than competitors do.Segmenting Consumer Markets- Geographic Segmentation- Demographic Segmentation- Psychographic Segmentation- Behavioral SegmentationGeographic Segmentation• Dividing a market into different geographical units, such as nations, states, regions, counties, or cities• Companies are localizing their products, advertising, promotion, and sales efforts to fit the needs of individual regions One example of localization is Walmart, which operates virtually everywhere but has developed special formats tailored to specific types of geographic locations. In strongly Hispanic neighborhoods, Walmart operates Supermercado de Walmart stores, which feature signage, product assortments, and bilingual staff that are more relevant to local Hispanic customers. In markets where full-size superstores are impractical, Walmart has opened smaller Walmart Market supermarkets and even smaller Walmart Express and Walmarton Campus stores.Dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixesMarket segmentationThe process of evaluating each market segment’s attractiveness and selecting one or more segments to enterMarket targetingDifferentiating the market offering to create superior customer valueDifferentiationArranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumersPositioningDemographic Segmentation• Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generationAge and Life-Cycle Segmentation• Dividing a market into different age and life-cycle groups• Marketers must guard against using stereotypes• Disney Cruise Lines targets primarily families with children—most of its destinations and shipboard activities are designed with parents and their children in mind• Main Idea• Marketers must be careful to guard against stereotypes when using age and life-cycle segmentation. Although some 80-year-olds fit the doddering stereotypes, others ski and play tennis. Similarly, whereas some 40-year-old couples are sending their children off to college, others are just beginning new families. Thus, age is often a poor predictor of a person’s life cycle, health, work or family status, needs, and buying power. Gender Segmentation• Dividing a market into different segments based on gender• Blur of gender roles in the US• An underdeveloped gender segment can offer new opportunities in markets ranging from consumer electronics to motorcycles. Ask students to suggest other products or services traditionally targeted to a single gender that could be profitably targeted to all consumers.• Example• Harley-Davidson has traditionally targeted men between 35 and 55 years old, but women are now among its fastest-growing customer segments. Female buyers account for 12 percent of new Harley-Davidson purchasesIncome Segmentation• Dividing a market into different income segments• Some marketers target high-income segments• Retailers who target low- and middle-income groups are thrivingAge and life-cycle segmentationGender segmentationIncome segmentationPsychographic Segmentation• Dividing a market into different segments based on social class, lifestyle, or personality characteristics• The products people buy reflect their lifestyles• Marketers also use personality variables to segment markets. For example, different soft drinks target different personalities. Ask students to contrast the personality types targeted by different brands of similar products, such asApple and Microsoft, or Coke and Pepsi.Behavioral Segmentation• Dividing a market into segments based on consumer knowledge, attitudes, uses, or responses to a productOccasion Segmentation• Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item• M&M’s Brand Chocolate Candies runs special ads and packaging for holidays and events such as EasterBenefit Segmentation and User Status• Benefit segmentation: Dividing the market according to the different benefits that consumers seek from the product• User status – Segments include nonusers, ex-users, potential users, first-time users, and regular users• Usage Rate - Markets can also be segmented into light, medium, and heavy product usersLoyalty Status• Buyers can be divided into groups according to their degree of loyalty• “Mac Fanatics”—fanatically loyal Apple users are at the forefront of Apple’s empireOccasionsBenefits soughtUser statusUsage rateLoyalty statusUsing Multiple Segmentation Bases• The Nielsen PRIZM system • Based on demographic factors• Classifies U.S. households into 66 demographically and behaviorally distinct segmentsSegmenting 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 characteristicsSegmenting International Markets• Geographic location• Economic factors• Income levels or level of economic development• Political and legal factors• Type of government, receptivity to foreign firms, monetary regulations, and bureaucracy• Cultural factors• Languages, religions, values, customs• Different countries, even those that are close together, can vary greatly in their economic, cultural, and