Marketing I

Lecture 4
Winter Semester 2023/2024
Course Lecturers: Dr. Sara El-Deeb
Dr. Hagar Adib
Chapter 7:
Customer-Driven Marketing
Strategy: Segmentation,
Targeting and Positioning

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Agenda
Define the customer- Understand the Discuss how companies
driven strategy Targeting strategies communicate their position

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2 4

Explain the Understand the

Segmentation process Positioning strategies

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Les Exclusive stores  high net worth consumers

Semi-Exclusive stores  upper-middle income

consumers

Damas 22K stores  middle income consumers4

How much?

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Handmade in Colombia

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Celebrities!

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Customer-driven Marketing Strategy

Companies recognize that they can’t appeal to all customers in the marketplace.
The companies themselves vary in their abilities to serve different segments of
the market.

Instead, a company must identify the parts of the market that it can serve best
and most profitably.

Companies focus on the buyers who have the greatest interest in the values they
create.

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Customer-driven Marketing Strategy

Two questions must be answered:

1. What customers will we serve? “Select customers to serve”

2. How can we best serve these customers? “Decide on Value Proposition”

By trying to serve all customers, marketers may not serve any customers well!

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Segmentation, Targeting and Positioning
STP Process

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Segmentation, Targeting and Positioning
STP Process

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Segmentation, Targeting and Positioning
Segmentation and Targeting

Market segmentation is the process that companies use to divide large

heterogeneous markets into small markets that can be reached more efficiently
and effectively with products and services that match their unique needs.

Market targeting (targeting) is the process of evaluating each market segment’s

attractiveness and selecting one or more segments to enter.

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Segmentation, Targeting and Positioning
Differentiation and Positioning

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 consumers.

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Segmentation, Targeting and Positioning

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Market Segmentation
Segmenting Consumer Markets

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Market Segmentation
Segmenting Consumer Markets

Geographic segmentation divides the market into different geographical

units such as nations, regions, provinces, parishes, cities, or even
neighborhoods.

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Market Segmentation
Example: Geographic Segmentation

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Market Segmentation
Example: Geographic Segmentation

Africa

India

Australia

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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, generation, and nationality.

Demographic factors are the most popular bases for segmenting

customer groups.

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Market Segmentation
Demographic 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).

Income segmentation divides the market into affluent or low-income

consumers.

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Market Segmentation
Example: Demographic Segmentation- Age

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Market Segmentation
Example: Demographic Segmentation- Age

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Market Segmentation
Example: Demographic Segmentation- life cycle

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Market Segmentation
Example: Demographic Segmentation- Gender

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Market Segmentation
Example: Demographic Segmentation- Gender

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Market Segmentation
Example: Demographic Segmentation- Gender

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Market Segmentation
Example: Demographic Segmentation- Income

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Market Segmentation
Segmenting Consumer Markets

Psychographic segmentation divides buyers into different groups based on

social class, lifestyle, or personality characteristics.

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Market Segmentation
Example: Psychographic Segmentation

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Market Segmentation
Segmenting Consumer Markets

Behavioral segmentation divides buyers into groups based on their

knowledge, attitudes, uses, or responses to a product.

- Occasions: according to occasions when buyers get the idea to buy or make their
purchase.
- Benefits sought: according to the benefits consumers seek from the products.
- User status: segmenting market into non-user, potential users, regular users, first
time users
- Usage rate: light users, medium users and heavy product users
- Loyalty status: loyal consumers and unloyal consumers.

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Market Segmentation
Example: Behavioral Segmentation- Occasions

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Market Segmentation
Example: Behavioral Segmentation- Occasions

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Market Segmentation
Example: Behavioral Segmentation- Occasions

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Market Segmentation
Example: Behavioral Segmentation- Occasions

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Market Segmentation
Example: Behavioral Segmentation- Occasions

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Market Segmentation
Example: Behavioral Segmentation- Benefits Sought

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Market Segmentation
Example: Behavioral Segmentation- Benefits Sought

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Market Segmentation
Example: Behavioral Segmentation- Usage Rate

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Market Segmentation
Multiple Segmentation Bases

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

groups.

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Market Segmentation
Segmenting International Markets

Inter-market segmentation divides consumers into groups with similar

needs and buying behaviors even though they are located in different
countries.

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Market Segmentation
Segmenting International Markets

Inter-market segmentation divides consumers into groups with similar

needs and buying behaviors even though they are located in different
countries.

Examples:
World’s Teens

Global Elite
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Market Segmentation
Segmenting International Markets

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Market Segmentation
Segmenting International Markets

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

Measurable Size, profiles of segments can be measured

Accessible Segments must be effectively reached and served

Substantial Segments must be large or profitable enough to serve

Differentiable Worthy to separate segments

Actionable Possible to develop separate marketing programs

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Market Segmentation
Requirements for Effective Segmentation

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Market Targeting
Evaluating Market Segments

Segment size and growth – large, fast growing segment vs. small and less
attractive

Segment structural attractiveness – aggressive competitors, substitute

products, power of buyer, powerful suppliers

Company objectives and resources – skills and resources

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Market Targeting
Target Market

Market targeting (targeting) is the process of evaluating each market

segment’s attractiveness and selecting one or more segments to enter.

Target market consists of a set of buyers who share common needs or

characteristics that the company decides to serve.

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Market Targeting
Market Targeting Strategies

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Market Targeting
Selecting Target Marketing Segments

Undifferentiated marketing targets the whole market with one offer

₋One product for the whole population
₋ Mass marketing
₋ Focuses on common needs rather than what’s different

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Market Targeting
Selecting Target Marketing Segments

Do you think undifferentiated marketing is a good strategy?

Which product categories can work with undifferentiated marketing?

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Market Targeting
Selecting Target Marketing Segments

Differentiated marketing targets several different market segments and designs

separate offers for each.
₋Different products to different segments
₋ Goal is to achieve higher sales and a stronger position
₋ More expensive than undifferentiated marketing

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Market Targeting
Example: Differentiatied Marketing

30 EGP 5 EGP

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Market Targeting
Example: Differentiated Marketing

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Market Targeting
Selecting Target Marketing Segments

Concentrated (niche) marketing targets a large share of one or a few smaller

segments or niches.
₋ Limited company resources
₋ Knowledge of the market
₋ More effective and efficient

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Market Targeting
Selecting Target Marketing Segments

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Market Targeting
Example:Concentrated Marketing

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Market Targeting
Selecting Target Marketing Segments

Micromarketing is the practice of tailoring products and marketing programs to

suit the tastes of specific individuals and locations.

• Local marketing
• Individual marketing

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Market Targeting
Selecting Target Marketing Segments

Local marketing involves tailoring brands and promotion to the needs and wants of
local customer groups
₋ Cities
₋ Neighborhoods
₋ Stores

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Market Targeting
Example: Local Marketing

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Market Targeting
Selecting Target Marketing Segments

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

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Market Targeting
Example: Individual Marketing

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Market Targeting
Example: Individual Marketing

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Differentatition and Positioning
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.

Positioning maps show consumer perceptions of a company’s brands versus

competing products on important buying dimensions.

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Differentatition and Positioning
Positioning Maps

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Differentatition and Positioning
Positioning Maps

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Differentatition and Positioning
Choosing a Differentiation and Positioning Strategy

1. Identifying a set of possible competitive advantages to build a position

2.Choosing the right competitive advantages
3.Selecting an overall positioning strategy

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Differentatition and Positioning
Choosing a Differentiation and Positioning Strategy

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.

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Differentatition and Positioning
Possible Value Differences and Competitive Advantages

Identifying a set of possible competitive advantages to build a position by providing

superior value from:

Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation

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Differentatition and Positioning
Choosing the right Competitive Advantages
Criteria for which differentiation to promote:

Important The difference delivers a highly valued benefit to target buyers

Distinctive Competitors do not offer the difference, or the company can offer it in a more
distinctive way.
Superior The differences is superior to other ways that customers might obtain the
same benefit.
Communicable The differences is communicable and visible to buyers.

Preemptive Competitors cannot easily copy the difference.

Affordable Buyers can afford to pay for the difference.

Profitable The company can introduce the difference profitably.

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Differentiation and Positioning
Selecting an overall Positioning Strategy

Ch 7 - Copyright © 2011 Pearson Education

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Value Propositions

1. More Benefits for More Price

Value Propositions

2. More Benefits For Less Price

Value Propositions

3. Same Benefits For Less Price

Value Propositions

4. Less Benefits for Less Price

Differentatition and Positioning
Develop a Positioning Statement

To (target segment and need) our (brand) is (concept) that (point of difference).

Example: Sante’ Cookie

To (youth of age groups between 25-35 who wants to take good care of their
health) (Sante’ Cookie) is (a healthy snack) that (gives you the best tasting yet
guilt free pleasure so you can stay in control of your weight and health)

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Differentatition and Positioning
Delivering the chosen value Proposition

A company must take steps to deliver and communicate the desired position to
target consumers.

Choosing the positioning is often easier than implementing the position.

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Thanks!
Any questions?

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