Chapter 5 Notes: Customer-Driven Marketing Strategy: Creating Value for Target Customers

Customer-Driven Marketing Strategy

• Customer-driven marketing strategy focuses on creating value for target customers.

• Key topics include market segmentation, market targeting, differentiation, and positioning.

Designing Customer Value-Driven Marketing Strategy

Market Segmentation

• Market segmentation involves dividing a market into smaller segments.

• These segments have distinct needs, characteristics, or behaviors.

• This may require separate marketing strategies or mixes.

Segmenting Consumer Markets

• Methods for segmenting consumer markets include:

  • Geographic segmentation

  • Demographic segmentation

  • Psychographic segmentation

  • Behavioral segmentation

Geographic Segmentation

• Divides the market into different geographical units.

• Examples: nations, regions, states, counties, or cities.

Demographic Segmentation

• Divides the market into groups based on variables.

• Variables include:

  • Age

  • Gender

  • Family size

  • Family life cycle

  • Income

  • Occupation

  • Education

  • Religion

  • Race

  • Generation

  • Nationality

Age and Life-Cycle Stage Segmentation

• Involves offering different products or using different marketing approaches.

• This is tailored for different age and life-cycle groups.

Gender Segmentation

• Divides the market based on sex (male or female).

Income Segmentation

• Divides the market into affluent, middle-income, or low-income consumers.

Psychographic Segmentation

• Divides buyers into different groups.

• Based on: social class, lifestyle, or personality traits.

Behavioral Segmentation

• Divides buyers into groups based on their:

  • Knowledge

  • Attitudes

  • Uses

  • Responses to a product

• Key variables include:

  • Occasions

  • Benefits sought

  • User status

  • Usage rate

  • Loyalty status

Using Multiple Segmentation Bases

• Multiple segmentation is used to identify smaller, better-defined target groups.

Segmenting International Markets

• Factors include:

  • Geographic location

  • Economic factors

  • Political-legal factors

  • Cultural factors

Intermarket Segmentation

• Divides consumers into groups with similar needs and buying behaviors.

• This is regardless of their country location.

Requirements for Effective Segmentation

• To be useful, market segments must be:

  • Measurable

  • Accessible

  • Substantial

  • Differentiable

  • Actionable

Market Targeting

• A target market consists of buyers who share common needs or characteristics.

• The company decides to serve these.

Evaluating Market Segments

• Considerations include:

  • Segment size and growth

  • Segment structural attractiveness

  • Company objectives and resources

Target Marketing Strategies

Undifferentiated Marketing

• Targets the whole market with one offer.

• Also known as mass marketing.

• Focuses on common needs rather than differences.

Differentiated Marketing

• Targets several different market segments.

• Designs separate offers for each segment.

• Goal is to achieve higher sales and a stronger position.

• More expensive than undifferentiated marketing.

Concentrated Marketing

• Targets a small share of a large market.

• Suitable for companies with limited resources.

• Requires knowledge of the market.

• Can be more effective and efficient.

Micromarketing

• Tailors products and marketing programs to suit specific individuals and locations.

• Includes:

  • Local marketing

  • Individual marketing

Local Marketing

• Tailors brands and promotion to the needs and wants of:

  • Cities

  • Neighborhoods

  • Stores

Individual Marketing

• Tailors products and marketing programs to individual customers.

• Also known as:

  • One-to-one marketing

  • Mass customization

  • Markets-of-one marketing

Choosing a Target Market

• Depends on:

  • Company resources

  • Product variability

  • Product life-cycle stage

  • Market variability

  • Competitor’s marketing strategies

Socially Responsible Target Marketing

• Benefits customers with specific needs.

• Considers vulnerable segments.

• Examples: Children, and addressing concerns related to:

  • Alcohol

  • Cigarettes

  • Internet abuses

Differentiation and Positioning

• Product position is how the product is defined by consumers on important attributes.

• It's the place the product occupies in consumers’ minds relative to competing products.

• Involves: perceptions, impressions, and feelings.

Positioning Maps

• Positioning maps show consumer perceptions of brands versus competing products.

• They are based on important buying dimensions.

Choosing a Differentiation and Positioning Strategy

• Involves:

  • Identifying possible competitive advantages.

  • Choosing the right competitive advantages.

  • Selecting an overall positioning strategy.

  • Communicating and delivering the chosen position to the market.

Competitive Advantage

• An advantage over competitors gained by offering greater value.

• Achieved through lower prices or more benefits that justify higher prices.

Identifying Possible Value Differences

• Achieved through:

  • Product differentiation

  • Service differentiation

  • Channel differentiation

  • People differentiation

  • Image differentiation

Choosing the Right Competitive Advantage

• The difference to promote should be:

  • Important

  • Distinctive

  • Superior

  • Communicable

  • Preemptive

  • Affordable

  • Profitable

Value Proposition

• The full mix of benefits upon which a brand is positioned.

Developing a Positioning Statement

• Follows the format: "To (target segment and need) our (brand) is (concept) that (point of difference)"

Communicating and Delivering the Chosen Position

• Choosing the positioning is often easier than implementing it.