Customer-Driven Marketing Strategy:
Creating Value for Target Customers
Customer-Driven Marketing Strategy: Creating Value for Target Customers
• Market Segmentation
• Market Targeting
• Differentiation and Positioning
Topic Outline
Market Segmentation
Market Segmentation
Market segmentation
Dividing a market into smaller segments
with distinct needs, characteristics, or
behavior that might require separate
marketing strategies or mixes.
Market Segmentation
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
Copyright ©2014 by Pearson Education
Market Segmentation
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
Segmenting Consumer Markets
Market Segmentation
• Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities
Segmenting Consumer Markets
Market Segmentation
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
Segmenting Consumer Markets
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)
Market Segmentation
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
Segmenting Consumer Markets
Market Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product
• Occasions • Benefits sought • User status • Usage rate • Loyalty status
Segmenting Consumer Markets
Market Segmentation
Multiple segmentation is used to identify smaller, better-defined target groups
Using Multiple Segmentation Bases
PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups.
Market Segmentation
Geographic location
Economic factors
Political-legal factors
Cultural factors
Segmenting International markets
Market Segmentation
Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries
Segmenting International Markets
Market Segmentation
To be useful, market segments must be:
Requirements for Effective Segmentation
Measurable Accessible
Substantial Differentiable
Actionable
Market Targeting
Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve
Selecting Target Market Segments
Market Targeting
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
Evaluating Market Segments .
Market Targeting
Undifferentiated marketing targets the whole market with one offer
– Mass marketing
– Focuses on common needs rather than what’s different
Target Marketing Strategies
Market Targeting
Differentiated marketing targets several different market segments and designs separate offers for each
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing
Target Marketing Strategies
Market Targeting
• Concentrated marketing targets a small share of a large market
• Limited company resources
• Knowledge of the market
• More effective and efficient
Target Market Strategies
Marketing Targeting
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
• Local marketing
• Individual marketing
Target Market Strategies
Market Targeting
Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups
• Cities
• Neighborhoods
• Stores
Target Market Strategies
Market Targeting
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
Target Market Strategies
Market Targeting
Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
Choosing a Target Market
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
Differentiation and Positioning
Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions
Differentiation and Positioning
• 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
Choosing a Differentiation and Positioning Strategy
Differentiation and Positioning
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
Identifying Possible Value Differences and Competitive Advantages
Differentiation and Positioning
Identifying a set of possible competitive advantages to build a position by providing superior value from:
Choosing a Differentiation and Positioning Strategy
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
Differentiation and Positioning
Difference to promote should be:
Choosing the Right Competitive Advantage
Important Distinctive Superior
Communicable Preemptive Affordable
Profitable
Differentiation and Positioning
Value proposition is the full mix of benefits upon which a brand is positioned
Selecting an Overall Positioning Strategy
Differentiation and Positioning
• To (target segment and need) our (brand) is (concept) that (point of difference)
Developing a Positioning Statement
Differentiation and Positioning
Communication and Delivering the Chosen Position
Choosing the positioning is often easier than implementing the position.
Positioning and Targeting for Entrepreneurial Offerings: The Key Strategic Questions for any Venture
• “What am I selling to whom and why should they buy?”
• Positioning: “What should be the perceived value of my offering compared to the competition?”
• Targeting: “Which is (are) my target segment(s)?”
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Market Driven Strategy
• Distinctive Competence
•Sustainable Competitive Advantage
How should I be positioned?
To which target market(s)?
•Pricing
•Screening ideas
•Product/Service development
•Naming the company and products
•Distribution
•Sales force
•Logos and stationary
•Promotion
•Public relations
•Advertising
•Raising capital
•Recruiting
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Where Does Sustainable Advantage Come From for Entrepreneurs?
Sustainable Competitive Advantage (S.C.A.) from an Entrepreneurial Marketer’s Point of View
Customer’s point of view Sustainable differential perceived values vs. competition comes from
distinctive competence – if and only if the customer perceives it! Possible Sources of S.C.A.
– Technology, patents – Design, perceived high quality, image, customer habits – Exceptional customer service, Ease of doing business with you, Reliability,
“Coolness” – Reputation, trust, & ??? – (Price usually isn’t sustainable.)
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Some Effective Value Propositions which Lever Distinctive Competence
• Dell for about 10 years
• Victoria’s Secret
• Pom Wonderful
• Orvis
• Southwest Airlines
• David’s Bridal
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• Priceline.com
• Apple • Starbucks • Diapers.com/Soap.com/Beautybar.c
om/WAG.com/Yoyo.com
• Hindustan Lever • Toyota –Lexus • Milo.com • Scancafe.com
Positioning Issues • Why should a member of the target segment buy
my product or service vs. the competition’s? • What are the unique differentiating characteristics
of my product or service( the incremental value vs. the competitors) as perceived by members of the target segment(s)?
• Typically, humans cannot make decisions balancing more than two to four differentiating attributes at a time.
• Features vs. benefits
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The Wharton School: An Entrepreneurial Positioning Example
• Global
• Cross-functional
• Leadership
• Technology
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The Wharton School
University of Pennsylvania
• Globalization • Cross Functional Integration • Leveraging Technology • Leadership
The Best Positioning Becomes an Offering that is an Exemplar
• Creates new category or subcategory • Represents it to the mind of consumers • Is an advocate for the new category
– Asahi Super Dry Beer – Betty Crocker Gluten Free Cake Mixes – Salesforce.com – Geek Squad – ESPN – Zappos (Service)
• Is a thought leader & innovator – Tide Coldwater – Milo.com
• Invests enough to be the clear leader
42 Source: D. Aaker, 11/30/11 “Marketing News”
Positioning via Names
Is a name
enough?
It should be!
A good name communicates your positioning in a memorable way
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Positioning via Names
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Positioning via Names
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Positioning and Slogans If the name isn’t enough
• Zappos – “Powered by Service” • Forbes: “Capitalist Tool” • Synygy: the Incentive Compensation Company • Michelin: “Because So Much Is Riding on Your Tires” • Timken (Bearings): “Precision Thinking” • Seiko Kinetic Watches: “Someday All Watches Will Be
Made This Way” • “Since 1735 there has never been a quartz Blancpain
Watch. And there never will be.” • Diapers.com “We are number one in number two!” “We Deliver Everything but the Baby” • Like a good neighbor, State Farm is there • Whatever it is…you can get it on Ebay • “We try harder” - Avis
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Slogan Ground Rules*
1. Slogan can be your positioning or a mini vision statement 2. Be consistent 3. Avoid clichés – “Genuine” Chevy, Miller, Underwear “Ultimate” Staples, Raincoats. . . 4. Take a stand – “Blancpain” 5. Use numbers, but have them backed up 6. Beware of a boomerang effect -- Nike: “Just Do It” Foreign Labor Practices Ford: “Quality is Job One” 7. Be brief Honda: “Simplify” Hertz: “Exactly” 8. Make it your own
FedEx: “When it Positively, Absolutely has to….” * Adapted from R. W. Keidel, Wall Street Journal, June 16, 1997
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Case Study: Tandem’s East (Lodish et al, 2001)
An Entrepreneurial Positioning Example: Wharton Business school (Lodish et al., 20010
Positioning and Slogans (Lodish et al., 2001)