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Chapter Seven
Customer-Driven Marketing
Strategy:
Creating Value for Target Customers
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 1
• A company must identify the parts of the
market it can serve best and most
profitably . It must design customer driven
marketing strategies that build the right
relationships
Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 2
Customer-Driven Marketing Strategy:
Creating Value for Target Customers
Topic Outline
• Market Segmentation
• Market Targeting
• Differentiation and Positioning
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 3
Market Segmentation
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
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 4
Market Segmentation
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 5
Market Segmentation
•
•
•
•
Segmenting consumer markets
Segmenting business markets
Segmenting international markets
Requirements for effective segmentation
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 6
Market Segmentation
Segmenting Consumer Markets
Geographic
segmentation
Demographic
segmentation
Psychographic
segmentation
Behavioral
segmentation
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 7
Market Segmentation
Segmenting Consumer Markets
• I- Geographic segmentation divides the
market into different geographical units
such as nations, regions, states, counties,
or cities
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 8
Market Segmentation
Segmenting Consumer Markets
II-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
Most popular, often used before
other markets being segmented
on other basis.
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 9
Market Segmentation
A-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
B-Gender segmentation divides the market
based on sex (male or female)
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 10
Market Segmentation
Segmenting Consumer Markets
C-Income segmentation divides
the market into affluent or lowincome consumers
III-Psychographic segmentation
divides buyers into different
groups based on social class,
lifestyle, or personality traits
Marketers use personality
variables to segment markets.
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 11
Market Segmentation
Segmenting Consumer Markets
IV-Behavioral segmentation
divides buyers into groups
based on their knowledge,
attitudes, uses, or responses to
a product
• Occasions
• Benefits sought
• User status( non-users, exusers,potential, 1st time or regular
users)
• Usage rate ( light, medium & heavy
users )
• Loyalty status
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 12
Market Segmentation
Using Multiple Segmentation Bases
Multiple segmentation is used to identify smaller,
better-defined target groups
Geodemographic segmentation is an example of
multivariable segmentation that divides groups
into consumer lifestyle patterns
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 13
Market Segmentation
Using Multiple Segmentation Bases
• These groups segment people and
locations into marketable groups of
like-minded consumers that exhibit
unique characteristics and buying
behavior based on a host of
demographic factors
• Such segments provide a powerful tool
for marketers of all kinds. It can help
companies identify and better
understand key customer segments,
target them more efficiently and tailor
market offerings and messages to
their specific needs.
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 14
Which of the following is not a way to segment
consumer markets?
1.
2.
3.
4.
Geographic
Psychographic
Demographic
Derived demand
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 15
Which of the following is not a way to segment
consumer markets?
1.
2.
3.
4.
Geographic
Psychographic
Demographic
Derived demand
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 16
Dividing a market based on consumer attitude,
use, or response to a product is called
________ segmentation.
1.
2.
3.
4.
occasion
psychographic
behavioral
market
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 17
Dividing a market based on consumer attitude,
use, or response to a product is called
________ segmentation.
1.
2.
3.
4.
occasion
psychographic
behavioral
market
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 18
A marketer selling different offerings in different
communities would be using ________
segmentation.
1.
2.
3.
4.
geographic
psychographic
demographic
behavioral
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 19
A marketer selling different offerings in different
communities would be using ________
segmentation.
1.
2.
3.
4.
geographic
psychographic
demographic
behavioral
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 20
Marketers selling luxury cars often use income as
a segmenting variable. Income is one
component of ________ segmentation.
1.
2.
3.
4.
geographic
psychographic
demographic
behavioral
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 21
Marketers selling luxury cars often use income as
a segmenting variable. Income is one
component of ________ segmentation.
1.
2.
3.
4.
geographic
psychographic
demographic
behavioral
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 22
Many marketers believe that ________ variables
are the best starting point for building market
segments.
1.
2.
3.
4.
geographic
psychographic
demographic
behavioral
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 23
Many marketers believe that ________ variables
are the best starting point for building market
segments.
1.
2.
3.
4.
geographic
psychographic
demographic
behavioral
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 24
Market Segmentation
Segmenting International markets
Geographic
location
Economic
factors
Politicallegal factors
Cultural
factors
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Chapter 7- slide 25
Market Segmentation
Segmenting Business Markets
• Consumer and business markets use many
of the same variables to segment their
markets.
• Business marketers can use additional
variables; customer operating
characteristics, purchasing approaches,
situational factors, and personal
characteristics.
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 26
Market Segmentation
Segmenting Business Markets
Intermarket segmentation divides
consumers into groups with similar needs
and buying behaviors even though they are
located in different countries
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Chapter 7- slide 27
Mercedes Benz targets the world’s well-to-do and
IKEA targets the aspiring global middle class.
These companies are involved with ________
segmentation.
1.
2.
3.
4.
positioning
differentiation
intermarket
lifecycle
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 28
Mercedes Benz targets the world’s well-to-do and
IKEA targets the aspiring global middle class.
These companies are involved with ________
segmentation.
1.
2.
3.
4.
positioning
differentiation
intermarket
lifecycle
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 29
Market Segmentation
Requirements for Effective Segmentation
• To be useful, market segments must be:
Measurable
Accessible
Substantial
Differentiable
Actionable
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 30
In order to be useful, market segments need to be
which of the following?
1.
2.
3.
4.
Differentiable
Accessible
Substantial
All of the above
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 31
In order to be useful, market segments need to be
which of the following?
1.
2.
3.
4.
Differentiable
Accessible
Substantial
All of the above
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 32
Market Targeting
Selecting Target Market Segments
• Target market consists of a set of buyers
who share common needs or
characteristics that the company decides to
serve
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Chapter 7- slide 33
Market Targeting
Evaluating Market Segments
Factors affecting attractiveness of market segments:
• Segment size and growth
right size and growth is a relative matter.
• Segment structural attractiveness
Competitors, substitute products,power of
buyers,powerful suppliers
• Company objectives and resources
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 34
Which of the following structural factors is not
related to a segment’s attractiveness?
1. The presence of strong competitors in the
segment.
2. The existence of potential substitute products.
3. The lack of raw materials.
4. A number of powerful suppliers.
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 35
Which of the following structural factors is not
related to a segment’s attractiveness?
1. The presence of strong competitors in the
segment.
2. The existence of potential substitute products.
3. The lack of raw materials.
4. A number of powerful suppliers.
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 36
Market Targeting
Target Marketing Strategies
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 37
Market Targeting
Target Marketing Strategies
Undifferentiated marketing targets the
whole market with one offer
– Mass marketing
– Focuses on common needs rather than what’s
different
– Difficulties arise and mass marketers have
trouble competing with more focused firms.
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Chapter 7- slide 38
Market Targeting
Target Marketing Strategies
Differentiated marketing targets several
different market segments and designs
separate offers for each
• Goal is to achieve higher sales and stronger
position within each market segment.
• More expensive than undifferentiated
marketing
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 39
When using a(n) ________ marketing (massmarketing) strategy, a firm decides to ignore
market segment differences and target the
whole market with one offer.
1.
2.
3.
4.
differentiated
undifferentiated
positioning
segmentation
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 40
When using a(n) _____ marketing (massmarketing) strategy, a firm decides to ignore
market segment differences and target the
whole market with one offer.
1.
2.
3.
4.
differentiated
undifferentiated
positioning
segmentation
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 41
Market Targeting
Target Market Strategies
• Concentrated marketing
targets a small share of a
large market
• Limited company resources
• Knowledge of the market
• More effective and efficient
• Highly profitable but
involves higher than normal
risks.
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 42
Marketing Targeting
Target Market Strategies
Micromarketing is the practice of tailoring
products and marketing programs to suit
the tastes of specific individuals and
locations
Individual in every customer.
• Local marketing
• Individual marketing
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 43
Market Targeting
Target Market Strategies
Local marketing involves tailoring brands and
promotion to the needs and wants of local
customer groups
• Cities
• Neighborhoods
• Stores
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Chapter 7- slide 44
Market Targeting
Target Market Strategies
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
– Markets-of-one marketing
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Chapter 7- slide 45
This type of micromarketing is also known as oneto-one marketing or mass customization.
1.
2.
3.
4.
Local marketing
Tailored marketing
Niche marketing
Individual marketing
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Chapter 7- slide 46
This type of micromarketing is also known as oneto-one marketing or mass customization.
1.
2.
3.
4.
Local marketing
Tailored marketing
Niche marketing
Individual marketing
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 47
Market Targeting
Choosing a Target Market
Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
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Chapter 7- slide 48
Market Targeting
Socially Responsible Target Marketing
• Benefits customers with
specific needs
• Concern for vulnerable
segments
• Children
– Alcohol
– Cigarettes
– Internet abuses
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Chapter 7- slide 49
If a beer manufacturer were to place a
commercial on a TV show that was
predominantly viewed by children, it could be
considered using ________.
1.
2.
3.
4.
socially irresponsible targeting
socially responsible targeting
adult targeting
niche targeting
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 50
If a beer manufacturer were to place a
commercial on a TV show that was
predominantly viewed by children, it could be
considered using ________ .
1.
2.
3.
4.
socially irresponsible targeting
socially responsible targeting
adult targeting
niche targeting
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 51
Differentiation and Positioning
Product position is the way
the product is defined by
consumers on important
attributes—the place
the product occupies in
consumers’ minds
relative to competing
products
–
–
–
Perceptions
Impressions
Feelings
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 52
Differentiation and Positioning
Marketers must plan
positions that will
give their products
the greatest
advantage in
selected target
markets and design
marketing mixes to
create these planned
positions.
Positioning maps
show consumer
perceptions of their
brands versus
competing products
on important buying
dimensions
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 53
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
• Developing a positioning statement
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Chapter 7- slide 54
A product’s ________ is the way the product is
defined by consumers on important attributes
relative to the competition.
1.
2.
3.
4.
image
equity
position
value
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Chapter 7- slide 55
A product’s ________ is the way the product is
defined by consumers on important attributes
relative to the competition.
1.
2.
3.
4.
image
equity
position
value
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 56
Differentiation and Positioning
Identifying Possible Value Differences and
Competitive Advantage
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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Chapter 7- slide 57
Differentiation and Positioning
Choosing a Differentiation and Positioning
Strategy
Identifying a set of possible competitive
advantages to build a position by
providing superior value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
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Chapter 7- slide 58
A firm that practices ________ differentiation
gains competitive advantage by the way it
designs its channel coverage.
1.
2.
3.
4.
services
product
people
channel
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Chapter 7- slide 59
A firm that practices ________ differentiation
gains competitive advantage by the way it
designs its channel coverage.
1.
2.
3.
4.
services
product
people
channel
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Chapter 7- slide 60
Differentiation and Positioning
Choosing the Right Competitive Advantage
Difference to promote should be:
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
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Chapter 7- slide 61
Differentiation and Positioning
Selecting an Overall Positioning Strategy
Value proposition
is the full mix of
benefits upon
which a brand is
positioned
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Chapter 7- slide 62
Differentiation and Positioning
Developing a Positioning Statement
• To (target segment and need) our (brand) is
(concept) that (point of difference)
Web link
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Chapter 7- slide 63
Communication and Delivering the
Chosen Position
Choosing the
positioning is
often easier than
implementing the
position.
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Chapter 7- slide 64
What is the first step in target marketing?
1.
2.
3.
4.
Market positioning
Market segmentation
Target marketing
None of the above
Copyright © 2010 Pearson Education, Inc.
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Chapter 7- slide 65
What is the first step in target marketing?
1.
2.
3.
4.
Market positioning
Market segmentation
Target marketing
None of the above
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 66
Which of the following steps of target marketing
takes into account competitors’ offerings to
the market?
1.
2.
3.
4.
Market positioning
Market segmentation
Market targeting
All of the above
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 67
Which of the following steps of target marketing
takes into account competitors’ offerings to
the market?
1.
2.
3.
4.
Market positioning
Market segmentation
Market targeting
All of the above
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 68
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retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 7- slide 69