Global Edition

Chapter Seven
Customer-Driven Marketing
Strategy:
Creating Value for Target Customers

Copyright ©2014 by Pearson Education

 Customer-Driven Marketing Strategy:
Creating Value for Target Customers

Topic Outline
• Market Segmentation
• Market Targeting
• Differentiation and Positioning

Copyright ©2014 by Pearson Education

 Mid-term exam

• Chapter 1, 2, 3, 5
• 120 minutes
• Offline, open book
• 3 essay questions
 Market Segmentation

Copyright ©2014 by Pearson Education

 Market Segmentation

Market segmentation
Dividing a market into smaller segments
with distinct needs, characteristics, or
behavior that might require separate
marketing strategies or mixes.
Ex: adult consumers, elderly consumers,
teenagers etc.

Copyright ©2014 by Pearson Education

 Market Segmentation

• Segmenting consumer markets

• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting Consumer Markets

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting Consumer Markets

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting Consumer Markets

• Geographic segmentation divides the

market into different geographical units
such as nations, regions, states, counties, or
cities
• Ex:
– Vietnam market, Lao market, Australia market
etc.
– HCMC market, Can Tho market etc.
Copyright ©2014 by Pearson Education
 Market Segmentation
Segmenting Consumer Markets

Demographic segmentation
divides the market into
groups based on variables
such as age, gender, family
size, family life cycle, income,
occupation, education,
religion, race, generation,
and nationality

Copyright ©2014 by Pearson Education

 Market Segmentation

Age and life-cycle stage segmentation is the

process of offering different products or
using different marketing approaches for
different age and life-cycle groups
Gender segmentation divides the market
based on sex (male or female)

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting Consumer Markets
Income segmentation divides
the market into affluent,
middle-income or low-
income consumers

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting Consumer Markets
Psychographic segmentation divides buyers into
different groups based on social class, lifestyle, or
personality traits

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting Consumer Markets
Behavioral segmentation divides buyers into groups
based on their knowledge, attitudes, uses, or
responses to a product
• Occasions
• Benefits sought
• User status
(nonuser, ex-users,
potential, first time, regular users)
• Usage rate
(light, medium, and heavy product users
• Loyalty status

Copyright ©2014 by Pearson Education

 Market Segmentation
Using Multiple Segmentation Bases

Multiple segmentation is used to identify smaller,

better-defined target groups
PRIZM NE classifies every American household
into 66 unique segments organized into 14
different social groups.

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting International markets

Geographic Economic
location factors

Political- Cultural
legal factors factors

Copyright ©2014 by Pearson Education

 Market Segmentation
Segmenting International Markets
Intermarket
segmentation
divides consumers
into groups with
similar needs and
buying behaviors
even though they
are located in
different countries

Copyright ©2014 by Pearson Education

 Market Segmentation
Requirements for Effective Segmentation
To be useful, market segments must be:
Measurable Accessible

Substantial Differentiable

Actionable

Copyright ©2014 by Pearson Education

 Market Targeting
Selecting Target Market Segments
Target market consists of a set of buyers who
share common needs or characteristics that
the company decides to serve

Copyright ©2014 by Pearson Education

 Market Targeting
Evaluating Market Segments
• Segment size and growth
.
• Segment structural attractiveness
• Company objectives and resources

Copyright ©2014 by Pearson Education

 Market Targeting
Target Marketing Strategies
1 to N 1 to n 1 to 1

This figure covers a broad range of targeting strategies, from

mass marketing (no targeting) to individual marketing
(customizing products and programs to individual customers).

Copyright ©2014 by Pearson Education

Other version of Target Marketing Strategies
 Market Targeting
Target Marketing Strategies

Undifferentiated marketing targets the whole

market with one offer
– Mass marketing
– Focuses on common needs rather than what’s
different

Copyright ©2014 by Pearson Education

 Market Targeting
Differentiated marketing
Differentiated
marketing targets
several different
market segments
and designs
separate offers for
each
P&G (Bold, Cheer,
Dash, Dreft,
Gain, and Tide)
Copyright ©2014 by Pearson Education
 Market Targeting
Differentiated marketing
• Pro.
Goal is to achieve higher sales and stronger position
• Con.
More expensive than undifferentiated marketing

Company must weigh increased sales

against increased costs

Copyright ©2014 by Pearson Education

 Market Targeting
Target Market Strategies
• Concentrated marketing
targets a small share of a
large market
• Limited company resources
• Knowledge of the market
• More effective and efficient

Copyright ©2014 by Pearson Education

 Marketing Targeting
Target Market Strategies

Micromarketing is the practice of tailoring

products and marketing programs to suit
the tastes of specific individuals and
locations
• Local marketing
• Individual marketing

Copyright ©2014 by Pearson Education

 Market Targeting
Target Market Strategies

Local marketing involves tailoring brands and

promotion to the needs and wants of local
customer groups
• Cities
• Neighborhoods
• Stores

Copyright ©2014 by Pearson Education

 Market Targeting
Target Market Strategies
Individual marketing involves
tailoring products and marketing
programs to the needs and
preferences of individual
customers
• Also known as:
– One-to-one marketing
– Mass customization

Copyright ©2014 by Pearson Education

 Market Targeting
Choosing a Target Market

Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies

Copyright ©2014 by Pearson Education

 Market Targeting
Socially Responsible Target Marketing
• Benefits customers with
specific needs
• Concern for vulnerable
segments
– Children
• Alcohol
• Cigarettes
• Internet abuses

Copyright ©2014 by Pearson Education

 Differentiation and Positioning

Product position is the way

the product is defined by
consumers on important
attributes—the place the
product occupies in
consumers’ minds
relative to competing
products
Perceptions
– Impressions
– Feelings

Copyright ©2014 by Pearson Education

 Example
Product position is the way the product is defined by consumers
on important attributes.
Positioning: Sonos does more than just sell speakers; it
unleashes “All the music on earth, in every room of your house,
wirelessly.”

Copyright © 2012 Pearson Education, Inc.

7- 33
Publishing as Prentice Hall
 Differentiation and Positioning

• To compete in a competitive environment, marketers must

strategically plan their positions to give their products or
services the greatest advantage to win.
• The goal is to find the position you can own in the mind of
your customers. Your position must have enough potential
customers to make it profitable.
• Using positioning map

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Positioning maps show consumer perceptions of their brands
versus competing products on important buying dimensions
1. Draw a horizontal line, the X-axis. Then draw a vertical line, the Y-
axis. You now have a box divided into quadrants.
2. Think of two attributes very important, desired or meaningful to your
customers. Label them to X, Y axis.
3. Next, place a circle to represent each of your competitors on the
graph where you think they are best represented in the minds of their
(and your) customers.
4. To give even more meaning to the graph, match the relative size of
the circle to the brand’s market share.
5. Finally, put your own brand/company/product where you think it best
fits on the graph, including the size of the circle to represent your
market share relative to the competition.
Copyright ©2014 by Pearson Education
 “Positioning map” can reveal your competitive advantages

Copyright ©2014 by Pearson Education

Differentiation and Positioning
 Differentiation and Positioning

Positioning : Uniqlo has positioned itself as a modern Japanese company and

aims to inspire people to dress casually.
The brand has a “made for all” positioning strategy and is a brand that sells
apparels that are essential, simple and helps wearers find their individualistic
styles
 Differentiation and Positioning
Positioning Map & Positioning Gap
• The resulting positioning map allows you to visualize your
brand versus competitors based on a two-attribute matrix.
• Positioning gap. Is there a space or gap with little or no
competition in the quadrant? If so, you might have found your
brand position.
• Is there a gap in the tasty but not-so-healthy quadrant with
few or no competitors?
• What about the not-so-tasty but very healthy quadrant? Is it
available? Does it have enough of a market to be profitable?

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Positioning Map & Positioning Gap
• If you weren’t able to find a desirable positioning gap or
niche, consider replacing one or both of the attributes with a
different attribute your customers and prospects also care
about.
• Depending on your product or service, there are many
attributes to consider:
– ease of use, financing options, availability of service, speed, frequent
upgrades, color, fuel economy, beauty and style, reliability, strength,
environmentally friendly and other unique features and benefits (Your
customers or prospects will tell you what they value)

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Choosing a Differentiation and Positioning
Strategy
• Identifying a set of possible competitive
advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen
position to the market

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Identifying Possible Value Differences and
Competitive Advantages

Competitive advantage is an advantage over

competitors gained by offering consumers
greater value, either through lower prices
or by providing more benefits that justify
higher prices

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Choosing a Differentiation and Positioning
Strategy
• Identifying a set of possible competitive
advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen
position to the market

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Identifying Possible Value Differences and
Competitive Advantages

Competitive advantage is an advantage over

competitors gained by offering consumers
greater value, either through lower prices
or by providing more benefits that justify
higher prices

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Choosing a Differentiation and Services differentiation:
Positioning Strategy Quicken Loans’ Rocket
Identifying a set of possible Mortgage doesn’t just offer
competitive advantages to mortgage loans; its online-
differentiate along the lines of: only interface lets users get a
• Product loan decision in only minutes.
• Services
• Channels
• People
• Image

Copyright © 2012 Pearson Education, Inc.

7- 45
Publishing as Prentice Hall
 Differentiation and Positioning
Choosing the Right Competitive Advantage
Difference to promote should be:

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Value proposition is the full mix of benefits upon which a brand
is positioned.
Figure 7.4 Possible Value Propositions

Copyright © 2012 Pearson Education, Inc.

7- 47
Publishing as Prentice Hall
 Differentiation and Positioning
Developing a Positioning Statement
• To (target segment and need) our (brand) is
(concept) that (point of difference)

Copyright ©2014 by Pearson Education

 Differentiation and Positioning
Developing a Positioning Statement

Copyright ©2014 by Pearson Education

 Communication and Delivering the
Chosen Position
Choosing the positioning is often easier than
implementing the position.

Copyright ©2014 by Pearson Education