Chapter 7 Notes

Dene the major steps of designing a customer driven marketing strategy: market segmentation, targeting, differentiation, and positioning Segmentation/Positioning Segment markets Identify bases for segmentation Develop segmentation proles Target segments Measure of segment attractiveness Select the target segment Differentiation Differentiating the market offering to create superior customer value Position for target segments Develop positioning for each segment Develop appropriate marketing mix List and discuss the major approaches for segmenting consumer and business markets Segmentation Variables Consumer Markets Geographic - area, population density, climate, etc. Demographic - age, sex, lifecycle, income, etc. Psychographic - lifestyle, personality, etc. Behavioural - benets sought, status, usage rate, loyalty, attitudes, etc. Business Markets Geographic Demographic Benets sought Customer operating characteristics Purchasing approaches Situational factors Personal characteristics International Markets Geography Economic factors

Politics and culture Inter market segments Segmenting Consumer Markets Geographic Segmentation Geographic Segmentation relates to dividing a market into different geographical units Variables include: World region or country Region of country Provinces/States City, metro size, or neighbourhoods Density or climate Demographic Segmentation Age, gender, family size, income, occupation, etc. are the most popular bases for segmenting customer groups. Age and lifecycle may not necessarily match. Gender-based segmentation may be important in targeting households for particular products. Demographic variables such as race, religion, and nationality may allow the identication of distinctive behaviour patterns for segmentation. Easier to measure than most other types of variables. Psychographic Segmentation Dividing a market into different groups based on: Shared attitudes Behaviours Lifestyles Personality Marketers would have better measures of its segments and their response to different marketing strategies based on the psychographic prole of the consumers. Would help to understand demographic variables better through this variable than in isolation. Behavioural Segmentation Dividing a market into groups based on consumer knowledge, attitude, use, or response to a product. Popular variables would include: Occasion Different times of the day - food Holidays - mother's day, father's day Special products for special occasions

Benets sought Different segments desire different benets from products Common benets could include value, quality, convenience, etc. User status Nonsers, ex-users Potential users First-time users Regular users Usage rate Light Medium Heavy Loyalty status Brands Stores Companies Multiple Bases for Market Segmentation Best to use multiple approaches in order to identify smaller, better-dened target groups. Start with a single base and then expand to other bases. Segmenting Business Markets Consumer and business markets use many of the same variables for segmentation. Business marketers can also use: Geographic Demographic Benets sought Customer operating characteristics Purchasing approaches Situational factors Personal characteristics Segmenting International Markets Due to differences in many operating variables in the international market, the variables used to segment at international level will need to be broad. Some of the broad variables would include: Geography Economic factors Politics and culture

Inter-market segments Requirements for Effective Segmentation Measurable - ability to measure numerically Accessible - ability to reach segment Substantial - ability to support the business Differentiable - ability to nd a unique position in the segment Actionable - ability to pursue and capture the segment Explain how companies identify attractive market segments and choose a target marketing strategy Market Targeting Segmentation allowed marketers to decide how to organize markets into groups of consumers with shared characteristics. Market targeting is to decide which markets to serve or to target. Before targeting the markets, each segment needs to be evaluated. Evaluating Market Segments Segment size and growth Analysis current segment sales, growth rates, and expected protability. Segment structural attractiveness Consider effects of: competitors, existence of substitute products, and the power of buyers/suppliers. Company objectives and resources Examine company skills and resources needed to succeed in that segment. Offer superior value/gain competitive advantage. Target Market Target market is a set of buyers sharing common needs or characteristics that the company decides to serve. In selecting a target market, several strategies could be adopted. Selecting Target Market Segments Mass marketing - no segments and single marketing mix A market-coverage strategy in which a rm decides to ignore market segment differences and go after the whole market with one offer. Focus is on common (not different) needs of consumers. Product and marketing program are geared to the largest number of buyers. Uses mass advertising and distribution. Differentiated marketing - large segments with specic marketing mixes

A market-coverage strategy in which a rm decides to target several market segments and designs separate offers for each. The goal is to have higher sales and a stronger position with each market segment. This approach increases the cosets of doing business. Niche marketing - small segments with specialized marketing mixes A market-coverage strategy in which a rm goes after a very narrowly-dened market segment. The focus is acquiring a large share of one or a few segments of niches. Niche marketers can market more effectively by ne-tuning its products, prices, and programs to the needs of carefully dened segments. Micromarketing - customized marketing to individuals. Could be in the form of local marketing or individual marketing The practice of tailoring products and marketing programs to the needs and wants of specic individuals and local customer groups. Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups - cities, neighbourhoods, specic stores. Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers. Mass Customization The process of customizing products on a mass market level. Dell is an example of mass customization, building every computer to order, as the customer orders it. Choosing a Targeting Strategy Companies need to consider the following factors when choosing a target-marketing strategy: Company resources Degree of product variability Product lifecycle stage Market viability Competitor's marketing strategies Discuss how companies position their products for maximum competitive advantage in the marketplace Successful Positioning Positioning - the way the product is dened by consumers on important attributes; the place the product occupies in consumer's minds relative to competing products

important attributes; the place the product occupies in consumer's minds relative to competing products Positioning maps - marketers often prepare perceptual positioning maps, which show consumer perceptions of their brands versus competing products on important buying dimensions Three positioning steps Identifying a set of possible competitive advantages Choosing the right competitive advantages Selecting an overall positioning strategy Designing a Positioning Strategy Consumers choose those products and services that give them the greatest value. Marketers refer to this as the value proposition which provides the full positioning of a brand - the full mix of benets on which it is positioned. Developing a Positioning Statement Is a statement that summarizes company or brand positioning It takes this form: Target segment and need Brand Concept Point-of-difference Communicating Positioning The positioning message is communicated through advertising and other promotional tools. However, the positioning message should also be communicated through all the other touch points (from packaging to retail outlets carrying the product) to present a common theme. Differentiation Differentiation of the market offering to create superior customer value Possible Value Differences and competitive advantages. Product differentiation Service differentiation Channel differentiation People differentiation Brand image differentiation Which Differences to Promote Not all brand differences are meaningful or worthwhile A difference is worth establishing to the extent that it satises the following criteria:

the following criteria: Important - of value to consumers Distinctive - obvious and clear Superior - better value than the competitors Communicable - explainable Pre-emptive - defendable and unique Affordable - delivers value for cost Protable - company can make money Possible Value Propositions