Business & Finance - Marketing MRKT Assignment 2

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Principles of Marketing Seventeenth Edition

Chapter 7

Customer Value-Driven Marketing Strategy: Creating Value for Target Customers

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.

Learning Objective 1

Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

Customer-Driven Marketing Strategy

Learning Objective 2

List and discuss the major bases for segmenting consumer and business markets.

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.

Market Segmentation • Segmenting consumer markets • Segmenting business markets • Segmenting international markets • Requirements for effective segmentation

Market Segmentation

Segmenting Consumer Markets

Geographi c

segmentati on

Demograp hic

segmentati on

Psychograp hic

segmentatio n

Behavioral segmentati

Market Segmentation Segmenting Consumer Markets

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

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.

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.

Market Segmentation

Segmenting Consumer Markets Psychographic segmentation divides a market into different segments based on social class, lifestyle, or personality characteristics.

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.

Market Segmentation Segmenting Consumer Markets

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

Market Segmentation

Segmenting Consumer Markets 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.

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

Market Segmentation Segmenting International Markets

Geographic location

Economic factors

Political and legal factors

Cultural factors

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.

Market Segmentation Requirements for Effective Segmentation

Measurable Accessible Substantial

Differentiable Actionable

Learning Objective 3

Explain how companies identify attractive market segments and choose a market-targeting strategy.

Market Targeting Evaluating Market Segments

• Segment size and growth • Segment structural attractiveness • Company objectives and resources

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.

Market Targeting Figure 7.2 Market-Targeting Strategies.

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

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

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

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

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

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

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

Learning Objective 4

Discuss how companies differentiate and position their products for maximum competitive advantage.

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

Differentiation and Positioning

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

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

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.

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

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy A competitive advantage should be:

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy

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

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)

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.”

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.