Customer-Driven Marketing Strategy & Integrated

Marketing Mix
Introduction
Introduction
 Companies cannot appeal to ALL buyers or at least, not
ALL buyers in the same way.
 Buyers are numerous, too widely scattered & too varied in
their needs & buying practices.
 Companies are moving from “mass marketing” towards
“target marketing”.
 Scattering marketing efforts (“shotgun” approach),
focusing on (“rifle” approach).
Market Segmentation
 Steps in Market Segmentation, Targeting & Positioning

Select Customers to Serve Decide on a value proposition

Differentiation
Segmentation Create Value for Differentiate the market offering
Divide the total market into Targeted Customers to create superior customer value
smaller segments D

Targeting Positioning
Position the market offering
Select the segment or
in the minds of target
segments to enter customers
Market Segmentation
 Market Segmentation
 Dividing a market into smaller groups with distinct needs,
characteristics, or behaviors who might require separate products
or marketing mixes.
 Market Targeting
 The process of evaluating each market segment’s attractiveness
and selecting one or more segments to enter.
 Positioning
 Arranging for a product to occupy a clear, distinctive, and
desirable place relative to competing products in the minds of
target consumers.
 Differentiation
 Actually differentiating the firm’s market offering to create
superior customer values.
Market Segmentation
 Segmenting Consumer Markets
 Marketers have to try different segmentation variables, alone
and in combination to view the market structure.
 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation
 Behavioral Segmentation
Market Segmentation
 Geographic Segmentation
 Nations
 Regions
 States
 Countries
 Cities
 For
four geographic regions in Japan, Coca-Cola
developed four ready-to-drink canned coffees.
 Market Segmentation
 Geographic Segmentation (continued)

Geographic
World region/country N. America, W. Europe, Middle East, China, India
Country Region Mountain, west north central, west south central, east north
central
City or metro size Under 5000; 5,000-20,000; 50,000-100,000; etc.
Density Urban, suburban, rural
Climate Northern, southern
Market Segmentation
 Demographic Segmentation
 Dividing a market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation,
education, religion, race, generation & nationality.
 P&G for kids and adults offers different shapes of
toothpastes and toothbrushes.
 Nintendo offers “Brain Training” for older baby boomers.
 Nike for men & now for women.
 Credit cards for different income groups.
 Marketers must be careful to guard against “stereotypes” i.e.
all 70-years old do not require wheelchairs.
 Market Segmentation
 Demographic Segmentation (continued)
Demographics
Age Under 6; 6-11; 12-19; 20-34; 35-49; 50-64; 64+
Gender Male, female
Family Size 1-2; 3-4; 5+; nuclear families, extended families
Family Life-Cycle Young-single; under 18; young-married with no kids; young-
married with kids; older-married with no kids; older-married with
no kids; older-single
Income (annual) Under $1000; $1000-$2000; $2000-$3000; $ 10,000-20,000; $
20,000-$30,000
Occupation Professional & technical; managers, officials & proprietors; clerical;
sales; craftspeople; supervisors; farmers; retired; students;
homemakers; unemployed
 Market Segmentation
 Demographic Segmentation (continued)
Demographics
Religion Muslims, Catholic, Protestants, Jewish, Hindu, Buddhists, Jains
Race Asian, Hispanic, Black, White
Generation Baby boomers, Generation X, Generation Y
Nationality Afghan, North American, South American, British, French, German,
Italian, Japanese
Education Grade school or less; some high school; high school graduate; some
college; college graduate; etc.
Market Segmentation
 Psychographic Segmentation
 Social Class distribution, Life-Style & Personality
 The American Express offers “My Life. My Card” to a
specific life-style people.
 Honda scooters targets older consumers with the slogan;
 “You’ve been trying to get there all your life.”
 Honda is appealing to the rebellious, independent kid in all
of us.
Market Segmentation
 Psychographic Segmentation (continued)
Psychographics
Social Class Lower-lowers, upper-lowers, working class, middle class,
upper-middles, lower-uppers, upper-upper
Lifestyle Achievers, strivers, survivors, innovators, makers, etc.
Personality Compulsive, gregarious, authoritarian, ambitious
Market Segmentation
 Behavioral Segmentation
 Dividing a market into groups based on consumer knowledge of,
attitude towards, use of or response to a product.
 for Occasions;
 Altoids offers a special “Love Tin” for valentine.
 Peeps creates different shaped sugar and fluffy marshmallow treats
for Easter, Halloween & Christmas.
 For Benefits;
 Champion athletics offers “Fit & Polish” consumers for function &
style seekers; “Serious Sports” consumers seek performance &
function as they exercise heavily & live in active wear; “Value
Seeking Moms” seek durability & value.
 Burger King’s heavy users between “18 & 34”.
 Apple Mac’s “Macolytes”.
 Different segments seek different mix of benefits.
 Market Segmentation
 Behavioral Segmentation (continued)
Behavioral
Occasions Regular occasion; special occasion
Benefits Quality, service, economy, convenience, speed
User Status Nonuser, ex-user, potential user, first-time user, regular user
User Rates Light user, medium user, heavy user
Loyalty Status None, medium, strong, absolute
Readiness Stage Unaware, aware, informed, interested, desirous
Attitude towards Enthusiastic, positive, indifferent, negative, hostile
product
Market Segmentation
 Using Multiple Segmentation Bases
 Multiple segmentation bases is an effort to identify smaller,
better-defined target groups.
 Thus, a bank may not ONLY identify a group of wealthy
retired adults BUT ALSO within that group, distinguish
several segments based on their current income, assets,
savings and risk preferences, housing and life-style.
 One good example of multivariable segmentation is
“Geodemographic” segmentation.
 In the US, many business-information-service firms
(Claritas, Express, Acxiom & MapInfo) help marketing
planners link US Census & consumer transition data with
consumer life-style patterns to better segment.
Market Segmentation
 Home Work (page 249; 12th Ed)
 Using Multiple Segmentation Bases
 Assignment (download & present)
 PRIZM NE (New Evolution) system by Claritas.
Market Segmentation

Business Market Segmentation

Market Segmentation
 Business Markets Segmentation
 Consumer & business marketers use many of the same
variables to segment their markets.
 However, some additional variables are used too.
 Operating Characteristics
 Purchasing approaches
 Situational factors
 Personal characteristics
Market Segmentation
 Business Markets Segmentation (continued)
 Operating Characteristics
 Technology
 Customer Capabilities (customers needing many or few services)
 Purchasing Approaches
 Purchasing-function organization
 Companies with centralized or decentralized purchasing
 Nature of Existing Relationships
 Focus on DESIRABLE Companies OR on companies with whom we
have strong relationships
 Purchasing Criteria
 Companies seeking QUALITY, PRICE or SERVICE?
Market Segmentation
 Business Markets Segmentation (continued)
 Situational Factors
 Urgency
 Companies with QUICK & SUDDEN delivery or service?
 Specific Application
 Companies with CERTAIN applications of our products or ALL applications of
them
 Size or order
 Companies with SMALL or LARGE orders
 Personal Characteristics
 Buyer-Seller similarity
 Companies with PEOPLE and VALUES like OURS
 Attitudes towards RISK
 Risk-taking or risk-avoiding companies
 Loyalty
 Companies with FAIR, NO or HARD CORE loyalty to their suppliers (us)
Market Segmentation
 Business Markets Segmentation (continued)
 American Express offers two different cards to small and
large businesses.
 Many marketers believe that buying behavior and benefits
provide the best basis for segmenting business markets.
Market Segmentation
 Segmenting International Business
 Few companies become international
 Coca-Cola sells in 200 countries
 Even closer countries have different;
 Economic, cultural & political makeups.
 Geographically countries are segmented
 Western European Countries
 Middle Eastern Countries etc.
 Geographic segmentation assumes that geographically close
nations will have many commonalities.
 However, this is not always true. In S. America, many people
do not speak Spanish.
Market Segmentation
 Segmenting International Business (continued)
 Economic structure of a country shapes its population’s
product and service needs; hence, marketing opportunities.
 Political structure of a country too affects the stability of
government, receptivity to foreign firms, monetary
regulations & amount of bureaucracy.
 Such factors play a crucial role in a company’s choice of
which countries to enter & how.
 Cultural structure groups markets and their choices on the
basis on language, religions, values and attitudes, customs &
behavioral patterns.
Market Segmentation
 Segmenting International Business (continued)
 Segmenting international markets based on geo-political-
cultural factors assume that segments should consist of clusters
of countries.
 However, many marketers use a different approach;
“Intermarket Segmentation”
 It forms segments of consumers with similar needs and buying
behavior even though they are located in different countries.
 Mercedes-Benz targets the world’s well-to-do, regardless of their
country.
 IKEA targets the aspiring global middle class.
 MTV target 1.2 million teens around the world; hence, teens
almost look alike be it in China, Japan, US, Kabul, Karachi or
Singapore. They all swing to MTV beats sipping coke.
Market Segmentation
 Requirements of Effective Segmentation
 Not all ways of segmenting are effective.
 e.g. buyers of table salt could be divided into blond and
brunette customers. But hair color obviously does not affect
the purchase of salt.
 Furthermore, if all salt buyers;
 Bought the same amount of salt
 Believed that all salt is the same
 Wanted to pay the same price
 Then, segmenting the market wouldn’t benefit.
Market Segmentation
 Requirements of Effective Segmentation
 To be useful, segments must be
 Measurable:
 Size, purchasing power & profile
 But certain characteristics cannot be measured e.g. US Census Bureau
does not keep track of left-handed individuals. Hence, it’s difficult to
measure it.
 Accessible:
 for both placement & promotion, the target segment must be reachable.
 Substantial:
 Large or profitable enough.
 Within the segment, the preferences should be homogenous enough to
be profitable.
 A car manufacturer would not make much out of manufacturing cars for
people over 7 feet tall.
 Market Segmentation
 Requirements of Effective Segmentation (continued)
 To be useful, segments must be (continued)
 Differentiable:
 Segments must respond differently to different marketing mix programs
 If married & unmarried women respond similarly to a sale of
perfume, then they do not constitute separate segments.
 Actionable:
 The firm should have capabilities to serve.
 An Airline company identified SEVEN segments, its staff was too small
to develop separate marketing programs for each segment.