CH7 customer driven marketing

Strategy: segmentation , targeting and positioning

Chapter learning outcomes
Topic outline
7-1 customer driven marketing strategy.
7-2 market segmentation
7-3 market targeting
7-4 differentiation and positioning

7-1 customer driven marketing strategy

 Market segmentation:
is the process that companies use to divide heterogeneous markets
into small markets that can be reached more efficiently and.
Effectively with product and services that match their unique needs.
 Market targeting ( targeting):
Is the process of evaluate each market segment's attractiveness and
selecting one or more segments to enter.
 Differentiation:
Involves actually differentiating the market offering to create
superior customer value.
 Positioning:
Consists of arranging for a market offering to occupy a clear,
distinctive, and desirable place relative to competing products in the
minds of target consumer.
 Designing a customer driven marketing strategy

Select customers to Decide on a value

Servie Proposition
Segmentation Differentiation
Divide the total Differentiate the
market into smallest Create market offering to
segments value Creat superior
Targeting for Customer value
Select the segment or targeted Positioning
custome
segments to enter Position the market
r
offering in the minds
of target customers

In concept marketing blots down to two questions which customers will be

serve? (2) how will we serve them? Of course the taught part is coming up with
good answer's to these simple. Seconding but difficult questions. The goal is to
create more value for customers we serve than competition do.

7.2 market segmentation

segmenting consumer markets.
Segmenting business markets.
Segmenting international markets.
Requirements for effective segmentation.

Segmenting consumer markets

Table 7.1 outlines the major variable that might be used in segmenting consumer
markets.
(1) geographic segmentation
calls for dividing the market into different geographical units such as nations,
regions, states countries, cities, or even neighborhoods.
(2) Demographic segmentation
Divides the market into groups based on variables such as, age, gender, family
size, family life side, income, occupation, education, religion, race. generation,
and nationality.
Demographic factors are the most popular bases for segmented, customer
groups.
1. age and life. Cyde stage: is offering different product or using different
marketing approaches for different age and life. Cycle groups.
2. gender segmentation: has long been used in dothing cosmetics, troiletries,
and magazines.
3. income segmentation: has long been used by the marketers of products
and services, and travel.

(3) Psychographic segmentation

Psychographic segmentation: divides buyers into different groups based on
social class, lifestyle or personality characteristics.
Marketers use personality variables to segment markets,

(4) Behavioral segmentation

Behavioral segmentation : divides buyers into groups based on their
knowledge,altitudes, uses, or response to a product.

Occasion segmentation :
Is grouping buyers according to the occasion when they get the idea to buy,
actually make their purchase, or used the purchased item.

Benefit segmentation:
Is grouping buyers according to the different benefits that they seek from the
product.

User status:
Is segmenting markets into nonusers, ex-users, potential users, first time users,
and regular users of a product.

Usage rate:
Is grouping markets into light, medium, and heavy product users.

Loyalty statues:
Is dividing buyers into groups to their degree of loyalty.
Note that:
Segmenting consumer markets is using multiple segmentation bases.

Segmenting business markets

 Geographic.
 loyalyty status.
 Demographic.
 Operating characteristics.
 Benefits sought.
 Purchasing approaches.
 User status.
 Situational factors.
 Usage rate.
 Personal characteristics.
consumer and business marketers use many of the same variables to segment the
markets.
Business marketers also use some additional variables such as (customer
operating characteristics, purchasing approaches, situational factors, and
personal characteristics).
Many marketers believe that buying behavior and benefits provide the best basis
for segmenting business markets.

Segmenting international markets

Companies can segment international markets using one or a combination of
several variables.
1) geographic factors: nations dose to one another will have many common
traits and behaviors.
2) Economic factors: companies may be grouped by population income levels
or by their overall level of economic development.
3) Political and legal factors: type and stability of government, receptivity to
foreign firms, monetary regulations, and the amount of bureaucracy.
4) Cultural factors: grouping markets according to common languages ,m
religions, values and attitudes, customs, and behavioral patterms.
 5) Inter. Market segmentation: is segmenting of consumers who have similar
needs and buying behavior even though they are located in different
countries.

Requirements for effective segmentation

To be useful, market segments must be:
1) measurable.
2) Accessible.
3) Substantial.
4) Differentiable.
5) Actionable.

1- measurable: the size purchasing power, and profiles of the segments can
be measured.
2- Accessible: the market segments can be effectively reached and served.
3- Substantial: the segments are large or profitable enough to serve.
4- Differentiable: the segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
5- Actionable: effective programs can be designed for attracting and serving
the segments.

7.3 market targeting

Target market: consists of a set of buyers who share common needs or
characteristic that the company decides to serve.
a) evaluating marketing segments:
in evaluating different market segments, a firm must at three factors.
1- segment size and growth.
2- Segment structural attractiveness.
3- Company objectives and resources.

The largest, fastest, growing segment are not always the most attractive ones for
every company.
The company also needs to examine major structural factors that affect long run
segment attractiveness.
A segment is less attractive if it already ns many strong and aggressive
competitors.
The existence of money actual or potential substitute products may limit prices
and the profits.
The relative power of buyers also affects segment attractiveness.

A segment may be less attractive if it contains powerful supplies who can control
prices.

Selecting target market segmentation

Target market: consists of a set of buyers who share common need or
characteristics the company divides to serve

Figure / 7.2 marketing targeting strategies

Micromarketing
Differentiated Differentiated Concentrated
(local or
(mass)  (segmented)  (niche) 
individual
marketing marketing marketing
marketing

1) undifferentiated marketing:
using n undifferentiated marketing or mass marketing strategy, a firm might
decide to ignore market segment difference and target the whole market with
one offer.

This mass marketing strategy on what is common in the needs of consumers

rather than on what is different.

2) differentiated marketing:
a firm decides to target several market segments and designs separate offers for
each.
Goal is to achieve higher sales and a stronger position.
More expensive than undifferentiated marketing.

3) concentrated marketing or ( niche marketing):

targets a large share of one or a few smaller segments or niches instead of going
after a small share of a large market.
It can market more effectively by fine – tuning its products prices, and programs
to the needs of carefully defined.
 limited company resources.
 Knowledge of the market.
 More effective and efficient.

4) micromarketing:
is the practice of tailoring products and marketing programs to suit the tastes of
specific individuals and locations.
 local marketing.
 Individual marketing.

5) local marketing:
involves tailoring brands and promotion to the needs and wants of local
customer groups.
 cities.
 Neighborhoods.
 Stores.

6) individual marketing:
involves tailoring products and marketing programs to the needs and
preferences of individual customers.
Also known as:
 one – to – one marketing.
 Customized marketing or mass customization.
 Markets – of – one marketing.

Choosing a targeting strategy

Depends on:
1. company resources.
2. product variability.
3. product life cycle stage.
 4. market variability.
5. competitor's marketing strategies.

Socially responsible target marketing

 concern for vulnerable segments ( children) with contrivers or potentrally
hurmful product.
 Cigaretles
 Internet abuses .

Problems arise when marketing adult products to kids, whether intentionally or

unintentionally.

7.4 differentiation and positioning

* value proposition: how a company will create differentiation value for targeted
segments and what positions it wants to occupy in those segments.
* a product's position: is the way the product is defined by consumers on
important attributes. The place the product occupies in consumer's minds
relative to competing products.
* perceptions
* impressions.
* feeling.
* positioning maps:
Perceptual positioning map show consumer perceptions of their brands versus
computing products on important buying dimensions.
( choosing a differentiation and positioning strategy)
 the differentiation and positioning task consists of three stpes
1. identifying a set of differentiating competitive advantages upon
which to build a position.
2. choosing the right competitive advantages.
3. selecting on overall positioning strategy.

1) identifying a set of possible competitive advantages to build a position by

providing superior value from:
a. product differentiation
b. service differentiation
 c. channel differentiation
d. people differentiation
e. image differentiation

competitive advantage:
is advantage over competitor gaind by offering consumers greater value, either
through lower prices or by providing more benefit that justify higher prices.
Choosing the right competitive advantage difference to promote should be:

Important Distinctive Superior Communicable

Preemptive Affordable Profitable

How many difference to promote?

- ad man rosser reeves believes a company should develop a unique selling
proposition (USP) for each brand and stick.

Which differences to promote

A difference is wroth establishing to the extent that it satisfies the following
criteria:
1- important : the difference delivers a highly valued benefit to target buyers.
2- distinctive: competitors do not offer the difference, or the company can offer
it in a more distinctive way.
3- superior: the difference is superior to other ways customers might obtain the
same benefit.
4- Communicable: the difference is communicable and visible to buyers.
5- preemptive : competitors cannot easily copy the difference.
6- affordable: buyers can afford to pay for the difference.
7- profitable: the company can introduce the difference profitably.

Selecting on overall positioning strategy:

The full positioning of a brand is called the brand's value proposition.

Developing a positioning statement

To ( target segment and need) our ( brand) is ( concept) that ( point of
difference)
Delivering the chosen position:
A company must take steps to deliver and communicate the desired position to
consumers.
Choosing the positing is often easier than implementing the position.