Chapter 5: Customer-Driven Marketing

Strategy

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 Learning Objectives

• Understand the reasons for segmentation, choosing

the target market and making a difference.

• Know and understand the advantages and

disadvantages of differentiation strategy.

• Apply knowledge of market strategy in positioning

map.

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 Content

Market concept

Segmentation

Targeting

Differentiation and Positioning

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Part 1: Market concept

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 Market Definition
• In marketing, the term “market” refers to the
group of consumers or organizations that is
interested in the product, has the resource to
purchase the product and is permitted by law
and other regulations to acquire the product.

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 Customer-Driven Marketing Strategy

• Define the major steps in designing a

customer-driven marketing strategy:
market segmentation, targeting,
differentiation, and positioning.

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 Part 2: Segmentation

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 Market segmentation

Market segmentation requires dividing a market into

smaller segments with distinct needs, characteristics,
or behaviors that might require separate marketing
strategies or mixes.

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 Market segmentation

Discuss:

Why the company do market segmentation?

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 Market Segmentation

• Segmenting consumer markets

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

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 Market Segmentation

• Segmenting Consumer Markets

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation

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 Market Segmentation

Segmenting Consumer Markets

Geographic segmentation divides the

market into different geographical units such
as nations, regions, states, counties, cities,
or even neighborhoods.

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 Market Segmentation

Segmenting Consumer Markets

Demographic segmentation divides the

market into segments based on variables
such as age, life-cycle stage, gender,
income, occupation, education, religion,
ethnicity, and generation.

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 Market Segmentation

• Segmenting Consumer Markets

Age and life-cycle stage segmentation

divides a market into different age and life-
cycle groups.

Gender segmentation divides a market into

different segments based on gender.

Income segmentation divides a market into

different income segments.
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 Market Segmentation

Segmenting Consumer Markets

Psychographic
segmentation
divides a market
into different
segments based
on social class,
lifestyle, or
personality
characteristics.
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 Market Segmentation

Segmenting Consumer Markets

Behavioral segmentation divides a

market into segments based on consumer
knowledge, attitudes, uses of a product, or
responses to a product.

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 Market Segmentation

Segmenting Consumer Markets

Behavioral
Segmentation
• Occasions
• Benefits sought
• User status
• Usage rate
• Loyalty status

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 Market Segmentation

Segmenting Consumer Markets

• Using Multiple Segmentation Bases

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

Experian’s Mosaic USA system classifies

U.S. households into one of 71 lifestyle
segments and 19 levels of affluence.

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 Market Segmentation

• Segmenting Business Markets

Consumer and business marketers use many of

the same variables to segment their markets.

Additional variables include:

• Customer operating characteristics
• Purchasing approaches
• Situational factors
• Personal characteristics
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 Market Segmentation

• Segmenting International Markets

Geographic Economic
location factors

Political and Cultural

legal factors factors

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 Market Segmentation

• Requirements for Effective Segmentation

Measurable Accessible Substantial

Differentiable Actionable

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 Market Segmentation

Segmenting International Markets

Intermarket segmentation involves forming

segments of consumers who have similar
needs and buying behaviors even though
they are located in different countries.

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Part 3: Market Targeting

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 Market Targeting
• Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness

• Company objectives and

resources
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 Market Targeting
• Selecting Target Market Segments

A target market is a set of buyers who

share common needs or characteristics
that the company decides to serve.

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 Market Targeting
• Selecting Target Market Segments

FIGURE | 7.2
Market-Targeting Strategies

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 Market Targeting
Selecting Target Market Segments

Undifferentiated marketing targets the

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

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 Market Targeting
Selecting Target Market Segments

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

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 Market Targeting
Selecting Target Market Segments

Concentrated marketing
targets a large of a
smaller market.
• Limited company
resources
• Knowledge of the market
• More effective and
efficient

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 Market Targeting
Selecting Target Market 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 Market Segments

Local marketing involves tailoring brands and

promotion to the needs and wants of local
customer segments.
– Cities
– Neighborhoods
– Stores

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 Market Targeting
Selecting Target Market Segments

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
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 Market Targeting
Selecting Target Market Segments

Choosing a targeting strategy depends on

– Company resources
– Product variability
– Product life-cycle stage
– Market variability
– Competitor’s marketing strategies

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 Market Targeting
Selecting Target Market Segments

• Socially Responsible Target Marketing

• Benefits customers
with specific needs

• Concern for
vulnerable segments

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Part 4: Differentiation and Positioning

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 Differentiation and Positioning

Product
position is the
way the product
is defined by
consumers on
important
attributes.
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 Differentiation and Positioning
Positioning Maps

Positioning maps
show consumer
perceptions of
marketer’s brands
versus competing
products on
important buying
dimensions.

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 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
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 Differentiation 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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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive

advantages to differentiate along the lines of:

Product
Services
Channels
People
Image

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 Differentiation and Positioning

Choosing a Differentiation and Positioning Strategy

• Choosing the Right Competitive Advantage
A difference to promote should be:

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

• Selecting an Overall Positioning Strategy

Value proposition
is the full mix of
benefits upon which
a brand is
positioned.

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Positioning statement summarizes company or

brand positioning using this form: To (target
segment and need) our (brand) is (concept) that
(point of difference)

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Positioning Statement Example for Evernote:

“To busy multitaskers who need help remembering

things, Evernote is a digital content management
application that makes it easy to capture and
remember moments and ideas from your everyday
life using your computer, phone, tablet, and the Web.”

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 Differentiation and Positioning
Communicating and Delivering the Chosen Position

Choosing the positioning is often easier than

implementing the position.

Establishing a position or changing one usually

takes a long time.

Maintaining the position requires consistent

performance and communication.

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 Key terms

• Market Segmentation

• Market targeting

• Market positioning

• Differentiation Strategy

• Positioning map

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 Key terms

• Mass marketing

• Differentiated Marketing

• Micro marketing

• Niche marketing

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 Q&A

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