Customer-Driven Marketing Strategy (Chapter 6)

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 (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 mind of target consumers
4 major variables used in segmenting consumer markets
1) geographic
2) demographic
3) psychographic
4) behavioral
geographic segmentation
dividing a market into different geographical unites, such as nations, states, regions, countries, cities, or even neighborhoods
demographic segmentation
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
dividing a market into different age and life-cycle groups– but age is a poor predictor of needs/buying power
gender segmentation
dividing a market into different segments based on gender– used in clothes, cosmetics, toiletries, and magazines
income segmentation
dividing a marketing into different income segments– used in automobiles, clothing, cosmetics, financial services, and travel
psychographic segmentation
dividing the 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 of a product, or responses to a product
occasion 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
benefit segmentation
dividing the market into segments according to the different benefits that consumers seek form the product
user status
markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users of a product
usage rate
markets can also be segmented into light, medium, and heavy product users
loyalty status
a market can also be segmented by customer loyalty, buyers can be divided into groups according to their degree of loyalty: completely loyal, somewhat loyal, or show no loyalty
marketers often use multiple segmentation bases in an effort to
identify smaller, better-defined target groups
additional variables to segment the business market include
1) customer operating characteristics
2) purchasing approaches
3) situational factors
4) personal characteristics
international markets can be segmented by:
1) geographic location
2) economic factors
3) political and legal factors
4) cultural factors
intermarket segmentation (or cross-market segmentation)
forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries
requirements for effective segmentation
1) measurable
2) accessible
3) substantial
4) differentiable
5) actionable
factors that affect long-run segment attractiveness
1) competitors
2) new entrants
3) substitute products
4) power of buyers
5) powerful suppliers
target market
a set of buyers sharing common needs or characteristics that the company decides to serve
market-targeting strategies
1) undifferentiated (mass) marketing
2) differentiated (segmented) marketing
3) concentrated (niche) marketing
4) micromarketing (local or individual marketing)
–goes from targeting broadly –> targeting narrowly
designing a customer-driven marketing strategy
1) select customers to serve (segmentation + targeting)
2) decide on value proposition (differentiation + positioning)
= create value for targeted customers
4 parts of designing a customer-driven marketing strategy
1) segmentation
2) targeting
3) differentiation
4) positioning
undifferentiated (mass) marketing
a market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer (focuses on what is common in the needs of consumers rather than what is different)
differentiated (segmented) marketing
a market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each– hope for higher sales and a stronger position within each market segment)
concentrated (niche) marketing
a market-coverage strategy in which a firm goes after a large share of one or a few segments or niches– can market more efficiently and effectively
micromarketing
tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes:
1) local marketing
2) individual marketing
local marketing
tailoring brands and marketing to the needs and wants of local customer segments– cities, neighborhoods, and even specific stores
individual marketing
tailoring products and marketing programs to the needs and preferences of individual customers
choosing a targeting strategy depends on
1) company’s resources
2) the degree of product variability
3) product’s life-cycle stage
4) market variability
5) competitors’ marketing strategies
socially responsible target marketing issues include
targeting of vulnerable or disadvantaged consumers (like children) with controversial or potentially harmful products
value proposition
the full positioning of a brand- the full mix of benefits on which it is differentiated and positioned
= answers the customer’s question: “Why should I buy your brand?”
(how the company will create differentiated value for targeted segments and what positions it wants to occupy in those segments)
product position
the way a product is defined by consumers on important attributes– the place the product occupies in consumers’ minds relative to competing products
(= the complex set of perceptions, impressions, and feelings that consumers have for the product compared with competing products)
perceptual positioning maps
show consumer perceptions of their brands versus those of competing products on important buying dimensions
steps in choosing a differentiation and positioning strategy
1) identifying a set of differentiating competitive advantages on which to build a position
2) choosing the right competitive advantages
3) selecting an overall positioning strategy
competitive advantage
an advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices
possible value differences include
1) product differentiation
2) services differentiation
3) channel differentiation
4) people differentiation
5) image differentiation
product differentiation
brands can be differentiated on features, performance, or style and design
(ex = Subway is a healthy choice)
services differentiation
a firm can also differentiate the services that accompany the product
(ex = customer care or delivery)
channel differentiation
gain a competitive advantage through the way they design their channel’s coverage, expertise, and performance
(ex = Geico)
people differentiation
hiring and training better people than their competitors do
(ex = Disney World)
image differentiation
buyers may perceive a difference based on company or brand image– should convey a product’s distinctive benefits and positioning
(ex = Ritz Carlton)
choosing the right competitive advantages involves deciding
1) how many differences to promote
2) which differences to promote
unique selling proposition (USP)
companies should agressively promote only one benefit to the target market–each brand should pick an attribute and tout itself as “number one” on that attribute
A difference is worth establishing to the extent that it satisfies the following criteria
1) important
2) distinctive
3) superior
4) communicable
5) preemptive
6) affordable
7) profitable
possible value propositions
1) more for more
2) more for the same
3) more for less
4) the same for less
5) less for much less
more for more positioning
involves providing the most upscale product or service and charging a higher price to cover the higher costs
(also offers higher quality & prestige to the buyer)
ex = Mercedes
more for the same positioning
attack a competitor’s more-for-more positioning by introducing a brand offering comparable high quality at the same price
ex = Lexus vs. Mercedes
the same for less positioning
offer many of the same qualities but at a deep discount– imitative but lower-priced brands, based on a “Good deal”
ex = DSW
less for much less positioning
involves meeting consumers’ lower performance or quality requirements at a much lower price
products that offer less and therefore cost less–> consumers gladly settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price
ex = Motel 6
more for less positioning
offering the best products, best services, and the lowest price
-the winning value proposition
ex = Home Depot
positioning statement
a statement that summarizes company or brand positioning using this form:
To (target segment and need) our (brand) is (concept) that (point of difference)
once a company has chosen its position, it must take strong steps to
deliver and communicate the desired position to its target consumers