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Customer-Driven Marketing Strategy: Creating Value for Target Customers

Topic Outline

Market Segmentation

Market Targeting
Differentiation and Positioning

Market Segmentation
-is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs

Market Segmentation

Market Segmentation
Segmenting Consumer Markets

Geographic segmentation

Demographic segmentation

Psychographic segmentation

Behavioral segmentation

MAJOR SEGMENTATION VARIABLES FOR CONSUMER MARKETS

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

MAJOR SEGMENTATION VARIABLES FOR CONSUMER MARKETS


Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality

DEMOGRAPHIC SEGMENTATION
Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups.
Gender segmentation divides the market based on sex (male or female)

Demographic Segmentation
Income segmentation divides the market into affluent or low-income consumers

MAJOR SEGMENTATION VARIABLES FOR CONSUMER MARKETS


Psychographic segmentation

- divides buyers into different groups based on social class, lifestyle, or personality traits

MAJOR SEGMENTATION VARIABLES FOR CONSUMER MARKETS

BEHAVIORAL SEGMENTATION

Behavioral Segmentation

- divides buyers into groups based on their knowledge,

attitudes, uses, or responses to a product.

-divides a population based on their behavior, the way

the population respond to, use or know of a product.

Forms of Behavioral Segmentation:


OCCASIONS.

Buyers can be grouped according to occasions when they get the idea to buy, actually make their purchase , or use the purchase item.

Occasion Segmentation -dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or used the purchased item.

Forms of Behavioral Segmentation:


BENEFIT

SOUGHT. A powerful form of segmentation is to group buyers according to the different benefits that they seek from the product.

Benefit Segmentation -the process of grouping customers into market segments according to the benefits they seek from the product. -Summers et al. (2009, p. 142)

Forms of Behavioral Segmentation:


USER STATUS
Markets can be segmented into nonusers, ex-users, potential users, first time users, and regular users of a product. Marketers want to reinforce and retain regular users,

attract targeted nonusers, and reinvigorate relationships


with ex-users.

Forms of Behavioral Segmentation:


USAGE RATE

Markets can also be segmented into light,


medium and heavy product users.

Forms of Behavioral Segmentation:


LOYALTY STATUS

A market can also be segmented by consumer loyalty.

Loyal consumers - those who buy one brand all or most of the time - are valuable customers.

Buyers can be divided into four groups according to their brand-loyalty status:
Hard-core loyals - consumers who buy one

brand all the time.

Split loyals consumers who are loyal to two

or three brands.

Buyers can be divided into four groups according to their brand-loyalty status:

Shifting loyals consumers who shift from

favoring one brand to another.


Switchers consumers who show no loyalty

to any brand.

Forms of Behavioral Segmentation:


BUYER-READINESS STAGE
A market consists of people in different buyer-readiness stages of readiness to buy a product. Some people are unaware of the product; some are aware; some are informed; some are interested; some want the product; and some intend to buy.

Buyer readiness stages range from being unaware that the

product or service exists to actual purchase. The six buyer readiness stages are:
Issues

Stage

Awareness

Is the consumer aware that the product exists? Do they know about your company and your brand?

Knowledge

What does the consumer need to know about the product? Do they know what benefits the product provides? Do they know what attributes/features the product has? Do they know how much the product costs and where to buy it?

Liking

Does the consumer like the product? What is their attitude towards the product? Do they feel that it would provide useful benefits?

Preference

Does the consumer prefer your brand? Do they believe that your brand provides the right mix of attributes to deliver desired benefits?

Conviction

Is the consumer convinced that they should buy your brand? Are they convinced that your brand would meet their needs and is value for money? Have they moved from purchase intention to actually purchasing the product?

Purchase

Forms of Behavioral Segmentation:


ATTITUDE TOWARDS PRODUCT

Attitude is a learned tendency to respond

consistently towards a given object.


People in a market can be enthusiastic, positive,

indifferent, negative or hostile about a product.

The Strategic Directions Group found the following types of people:

1. Upbeat enjoyers feel that the best years are now

and in the future.

2. Insecures feel that they havent been successful

in life and the best years are over.

The Strategic Directions Group found the following types of people:

3. Threatened actives worry about crime but have

a more positive outlook on life.

4. Financial positives are more open to change and

more concerned about looking good.

SEGMENTING BUSINESS MARKETS

Segmenting a business market means dividing the market into different homogenous groups of

companies. Such organizations are considered as one segment and are catered according to their needs.

SEGMENTING INTERNATIONAL MARKETS


Companies can segment international markets using one or a combination of several variables. They can segment by geographical location. World markets can also be segmented on the basis of economic factors. Countries can be segmented by political and legal factors. Cultural factors can also be used, grouping markets according to common languages, religions, values and attitudes, customs, and behavioral patterns.

SEGMENTING INTERNATIONAL MARKETS

Intermarket Segmentation

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

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

MEASURABLE:

The size, purchasing power, and profiles

of the segments can be measured.

ACCESSIBLE:

The market segments can be effectively

reached and served.

SUBSTANTIAL:

The market segments are large or

profitable enough to serve.

REQUIREMENTS FOR EFFECTIVE SEGMENTATION

DIFFERENTIABLE:

The segments are conceptually

distinguishable and respond differently to different marketing mix elements and programs.

ACTIONABLE: Effective programs can be designed for

attracting and serving the segments.

Market Targeting
the process of evaluating each market segments

attractiveness and selecting one or more segments to enter. It requires carefully understanding consumer wants and needs, as well as having a good grasp on how a given product or service can meet those consumer desires.

Evaluating Market Segments


In evaluating different market segments, a firm must

look at three factors:


Segment size and growth Segment structural attractiveness. Major structural

factors that affect long-run segment attractiveness:


Competitors Substitute products Power of buyers Powerful suppliers

Company objectives and resources

Selecting Target Market Segments


Target Market

set of buyers who share common needs or characteristics that the company decides to serve Targeting
Can be carried out at several different levels.

Companies can target very broadly, very narrowly, or

somewhere in between.

Selecting Target Market Segments


Undifferentiated Marketing Defined as a market-coverage strategy in which a firm decides to ignore market segment differences and go after a whole market with one offer. Focuses on what is common needs of consumers rather than what is different. Treats all potential buyer as a homogeneous group.

Selecting Target Market Segments


Differentiated Marketing Strategy in which firma targets several market segments and design separate offers for each. Developing strong market positions within several market segments. Increases the cost of doing business:

Extra marketing research, forecasting, sales analysis, promotion planning, and channel development.

Selecting Target Market Segments


Concentrated Marketing The firm goes after a large share of one or a few segments or niches Strong market position:

It can market more effectively and more efficiently

Niches are smaller and may attract only one or a few

competitors. Highly profitable and at the same time, it involves higher-than-normal risks.

IV. Micromarketing
Local Marketing- tailoring brands & promotions to the needs & wants of local customer groupscities, neighborhoods, specific stores.

Individual Marketingtailoring products & marketing programs to the needs & preferences of individuals.

Factors in choosing a Targeting Strategy:


Company resources Degree of product variability Products life-cycle stage Market variability Competitors marketing strategy

Socially Responsible Target Marketing Focusing on the segments that they can satisfy best and most profitably.

PRODUCT POSITION
the way the product is defined by consumers on important attributes-the place the product occupies in consumers minds relative to competing products.

POSITIONING MAPS
PERCEPTUAL POSITIONONG MAPS
which show consumer perceptions of their brands versus competing products on important buying dimensions.

CHOOSING A DIFFERENTIATION AND POSITIONING STRATEGY


1. Identifying possible value differences and competitive advantages. 2. Choosing the right competitive advantages 3. Selecting an overall positioning strategy

Competitive advantage
an advantage over competitors gained by offering greater customer value, either through lower prices or providing more benefits that justify higher prices.

Points of differentiation
Product
Services

Channels
People Image

Product
brands can be differentiated on features, performance, or style and design.

Services
through speedy, convenient or careful delivery.

Channel

gain competitive advantage through the way they design their channels coverage, expertise and performance.

People

hiring and training other people than their competitors do.

Image

brand image should convey the products distinctive benefit sand positioning.

2.
How many differences to promote

Which differences to promote


Important

Distinctive
Superior Communicable

Preemptive
Affordable Profitable

Selecting an Overall Positioning Strategy


Full positioning of the brand is called the brands value

proposition. Potential value propositions include:


More for More More for the Same The Same for Less Less for Much Less

More for Less

Developing a Positioning Statement


Summing up the company and brand positioning is

called positioning statement. It takes the form: To (target segment and need) our (brand) is (concept) that (point of difference).

Communicating and Delivering the Chosen Position


Company must take strong steps to deliver and

communicate the desired position to target consumers. The marketing mix efforts must support the positioning strategy. Must monitor and adapt the position over time to match changes in consumer needs and competitors strategies.