Principles of Marketing

Seventeenth Edition

Customer Value-Driven Marketing Strategy:

Creating Value for Target Customers

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Learning Objectives
7-1 Define the major steps in designing a customer-driven marketing
strategy: market segmentation, targeting, differentiation, and
positioning.
7-2 List and discuss the major bases for segmenting consumer and
business markets.
7-3 Explain how companies identify attractive market segments and choose
a market-targeting strategy.
7-4 Discuss how companies differentiate and position their products for
maximum competitive advantage.

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Customer-Driven Marketing Strategy

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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
Segmenting Consumer Markets

Geographi Demograp
c hic
segmentati segmentati
on on

Psychograp
Behavioral
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segmentati
segmentatio
on
n

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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
Requirements for Effective Segmentation

Measurable Accessible Substantial

Differentiabl
Actionable
e

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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
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 Markets
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 Markets
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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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 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
A competitive advantage should be:

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

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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
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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