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Customer –Driven Marketing Strategy Creating value for Target Customer Chapter 7 1 Steps in market segmentation, targeting and positioning Market Segmentation Target Marketing Select the segment or segments to enter Market Differentiation Divide the total market into smaller segments Differentiate the market offering to create superior customer value Market Positioning Position the market offering in the minds of target customers Goal 1: Learn the four steps of target marketing Steps in Segmentation, Targeting, and Positioning 6. Develop Marketing Mix for Each Segment 5. Develop Positioning for Each Segment 4. Select Target Segment(s) 3. Develop Measures of Attractiveness 2. Develop Profiles of Segments 1. Identify Bases for Segmentation Market Positioning Market Targeting Market Segmentation Bases for Segmenting Consumer Markets C H A R A C T E R I S T I C S 1. Demographic 2. Geographic 3. Behavioristic 4. Psychographic Geographic Segmentation Variables World region or country Neighborhood City or metro size Density Climate Country region State City Goal 2: Understand the major bases for segmentation Demographic Segmentation Variables Age Occupation Gender Education Family size Religion Family life cycle Race Income Generation Nationality Goal 2: Understand the major bases for segmentation Behavioral Segmentation Variables Occasions User Rates Benefits Loyalty Status User Status Readiness Stage Attitude Toward the Product Goal 2: Understand the major bases for segmentation Requirements for Effective Segmentation To be useful market segments must be: Measurable: size, purchasing power, and profiles can be measured. Scattered customers- difficult to measure (left handed people) Accessible: effectively reached and served. Substantial: large or profitable enough to serve. Differentiable: conceptually distinguishable and respond differently to different marketing mix elements and programs. Actionable: Sufficient resources, marketing capabilities I.e effective marketing programs can be designed for attracting and serving the segments. Staff limitation Target Marketing: evaluate and select The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Size and Structural Growth Attractiveness Company Objectives and Resources Target Marketing: evaluate and select The process of evaluating each market segment’s attractiveness and selecting one or more segments to enter. Evaluating market segments Three factors: Segment size and growth: right size and growth. Segment structural attractiveness: strong competitors, substitute products, power of buyers, powerful suppliers Company objectives and resources: make sense for long run objectives and have required resources. Selecting target market segments Target marketing strategies: Target broadly (undifferentiated / mass marketing): ignore market segments, go after the whole market with one offer. Differentiated marketing: target several market segments and designs separate offers for each. Coca-cola, keep down cost GM (cars for every “purse, purpose, personality”); P&G – more total market share. Increase cost Concentrated (niche) marketing: large share of one or a few segments or niches, ignored by larger competitors. limited resources, gain operating economies through specialization. Zappos – only shoes and only online Selecting target market segments Target marketing strategies (continued): Micromarketing: tailor products and marketing programs to the needs and wants of specific individuals and local customer groups. Local Marketing: local customer groups – cities, neighborhoods, Retailers. Customize each store’s merchandise and promotions. Starbucks store locator service for mobile devices. Individual Marketing: individual customers. Dell computer. Choosing a Market-Coverage Strategy Competitors’ Strategies Market Variability Company Resources Factors Affecting Strategy Decisions Stage in Life Cycle Product Variability Target Marketing: evaluate and select Choosing a Target Marketing Strategy Depends on: Company resources: limited resources – concentrated marketing. Product variability: Uniform products, undifferentiated marketing. Steel. Variety products, differentiation or concentration. Automobiles. Product’s life-cycle stage: new product, one version, undifferentiated or concentrated marketing. Mature stage, Differentiated. Market variability: same tastes, buy same amounts, react same way to marketing offers, undifferentiated. Competitors’ marketing strategies: competitors use differentiated or concentrated, then undifferentiated is suicidal. Competitors use undifferentiated, then differentiated gain advantage. Positioning for Competitive Advantage Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. Bata – durable, Tide – powerful, Toyota – economy, Cadillac/Mercedes – luxury, Dettol soap – health and hygiene. Positioning for Competitive Advantage Choosing a positioning strategy The positioning task consist of three steps The positioning task consists of three steps: •Identifying possible competitive advantages: offer consumers greater value, either through lower prices or by providing more benefits that justify higher prices. Offer and deliver. •In what specific ways company can differentiate its offer? Market offer can be differentiated along the lines of product, services, channels, people, or image. Positioning for Competitive Advantage Choosing the right competitive advantages: How many differences to promote and which ones Which differences to promote: important, distinctive, superior, communicable, preemptive, affordable, profitable Must avoid three major positioning errors. Underpositioning, overpositioning, confused positioning Positioning for Competitive Advantage Choosing a positioning strategy Value propositions represent the full positioning of the brand Possible value propositions: More for More More for the Same More for Less The Same for Less Less for Much Less Goal 4: Realize how companies position their products