Chapter 7- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter Seven Customer-Driven Marketing Strategy: Creating Value for Target Customers

Chapter 7- slide 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Types ofMarkets © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Consumer Markets -purchasers and household members who intend to consume or benefit from purchased products and do not buy products to make profits Business Markets -individuals or groups that purchase a specific kind of product for resale, direct use in producing other products or use in general daily operations

Chapter 7- slide 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Types ofMarkets – Consumer market– Business market Consumer Market and Business Market Ads The producer of Altoids aims advertisements at consumer markets. The Intel ad is aimed at business markets. © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer-Driven Marketing Strategy: Creating Value for Target Customers Market Segmentation Market Targeting Differentiation and Positioning Topic Outline

Chapter 7- slide 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 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

Chapter 7- slide 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Target-MarketSelection Process Market segment – Individuals, groups, or organizations with one or more similar characteristics that cause them to have similar product needs Market segmentation – The process of dividing a total market into groups with relatively similar product needs to design a marketing mix that matches those needs © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation

Chapter 7- slide 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation Market Segmentation

Chapter 7- slide 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 9-9 No Market Segmentation

Chapter 7- slide 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 9-10 Segmented by Gender

Chapter 7- slide 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 9-11 Segmented by Age

Chapter 7- slide 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation Segmenting Consumer Markets

Chapter 7- slide 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter 7- slide 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities Segmenting Consumer Markets

Chapter 7- slide 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Examples of Geographic Variables Urban/Rural Areas Population Density City Size Terrain Climate Geographic Variables © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation 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 Segmenting Consumer Markets

Chapter 7- slide 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market 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)

Chapter 7- slide 18 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Income segmentation divides the market into affluent or low-income consumers Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits survey.shtml Segmenting Consumer Markets

Chapter 7- slide 19 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 9-19 Using Psychographic SegmentationUsing Psychographic Segmentation –Psychographic profiles produce rich descriptions of potential target markets

Chapter 7- slide 20 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 9-20 Psychographic SegmentationPsychographic Segmentation –Divides a population into groups that have similar psychological characteristics, values, and lifestyles –, including family, job, social, and consumer activities –The most common method for developing psychographic profiles of a population is to conduct a large-scale survey AIO statements VALS and VALS 2 “Values and Lifestyles”

Chapter 7- slide 21 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 9-21

Chapter 7- slide 22 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Values, Attitudes & Lifestyles (VALS) © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Classifies consumers based on psychological characteristics that are correlated with purchase behavior and key demographics The VALS Survey

Chapter 7- slide 23 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall lnnovlttOr L :::::::: 2011 C.na IQt Ltlmlng.All Rights Reserwd. Manot be scanned. copied or durtUQ.Mtd,or postedto 1 publidyaccessible website, in whole or In Plrt. · Purchases mountain bicycle C$1 oo..) Purchasesf club$ ($1001 Owns a fishing rod Coee hunting Ac:hiever SurviV<N"

Chapter 7- slide 24 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Psychographic Variables Personality characteristics Motives Lifestyles Lifestyle Segmentation In this advertisement, Garmin GPS targets people who enjoy an outdoors lifestyle © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 25 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Behavioristic Variables Benefits Sought Usage or Application Type Usage Rates Behavioristic Variables © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 26 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product Occasions Benefits sought User status Usage rate Loyalty status Segmenting Consumer Markets

Chapter 7- slide 27 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Multiple segmentation is used to identify smaller, better-defined target groups Using Multiple Segmentation Bases

Chapter 7- slide 28 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation To be useful, market segments must be: Requirements for Effective Segmentation MeasurableAccessible SubstantialDifferentiable Actionable

Chapter 7- slide 29 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve Selecting Target Market Segments

Chapter 7- slide 30 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Segment size and growth Segment structural attractiveness Company objectives and resources Evaluating Market Segments.

Chapter 7- slide 31 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Target Marketing Strategies

Chapter 7- slide 32 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Discussion Question © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. If a baseball team wants to purchase 12 cases of baseballs, with 24 balls in each case, is this an example of a consumer market or a business market?

Chapter 7- slide 33 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Step 1: Identify the Appropriate Targeting Strategy © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Homogeneous market customers having similar needs for a product Undifferentiated targeting strategy a single marketing mix directed at the entire market

Chapter 7- slide 34 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Step 1: Identify the Appropriate Heterogeneous market individuals or organizations with diverse needs for products in the same class Concentrated targeting strategy targeting a single market segment using one marketing mix © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 35 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Step 1: Identify the Appropriate Targeting Strategy Heterogeneous market Differentiated targeting strategy targeting two or more segments with a marketing mix for each © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 36 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Target-MarketSelection Process Differentiated Targeting Tostitos offers a variety of products and targets them at different market segments © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 7- slide 37 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Undifferentiated marketing targets the whole market with one offer –Mass marketing –Focuses on common needs rather than what’s different Target Marketing Strategies

Chapter 7- slide 38 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall © 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5: Target Markets: Segmentation and Evaluation Pride/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans

Chapter 7- slide 39 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting 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 Target Marketing Strategies

Chapter 7- slide 40 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Concentrated marketing targets a small share of a large market Limited company resources Knowledge of the market More effective and efficient Target Market Strategies

Chapter 7- slide 41 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketing Targeting Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations ( Local marketing Individual marketing Target Market Strategies

Chapter 7- slide 42 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups Cities Neighborhoods Stores Target Market Strategies

Chapter 7- slide 43 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting 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 Target Market Strategies

Chapter 7- slide 44 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Mass customization is the process through which firms interact one-to-one with masses of customers to design products and services tailor-made to meet individual needs.

Chapter 7- slide 45 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Depends on: Company resources Product variability Product life-cycle stage Market variability Competitor’s marketing strategies Choosing a Target Market

Chapter 7- slide 46 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 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

Chapter 7- slide 47 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

Chapter 7- slide 48 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning 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 Choosing a Differentiation and Positioning Strategy

Chapter 7- slide 49 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning 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 Identifying Possible Value Differences and Competitive Advantage

Chapter 7- slide 50 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Identifying a set of possible competitive advantages to build a position by providing superior value from: Choosing a Differentiation and Positioning Strategy Product differentiationService differentiationChannel differentiationPeople differentiationImage differentiation

Chapter 7- slide 51 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Difference to promote should be: Choosing the Right Competitive Advantage ImportantDistinctiveSuperior CommunicablePreemptiveAffordable Profitable

Chapter 7- slide 52 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Value proposition is the full mix of benefits upon which a brand is positioned Selecting an Overall Positioning Strategy

Chapter 7- slide 53 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning To (target segment and need) our (brand) is (concept) that (point of difference) “To busy, mobile professionals who need to always be in the loop, Blackberry is a wireless connectivity solution that gives you an easier, more reliable way to stay connected to data, people, and resources while on the go.” Developing a Positioning Statement Web link

Chapter 7- slide 54 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Communication and Delivering the Chosen Position Choosing the positioning is often easier than implementing the position.

Chapter 7- slide 55 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Dog’s RoleSegmentBrandPrice/100 gr. Dog as a family memberPremiumChum8.7 pence Dog as a companionModeratePal and Bounce6.4 & 7.9 pence Dog as an animalEconomyChappie6.3 pence Reference: A. Ryans An Example of the Power of Segmentation and Target Marketing: Pedigree Petfoods in UK Dog as a substitute child?Super Premium

Chapter 7- slide 56 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Segmentation and the UK Dog Food Market: Pedigree’s Super Premium Strategy Target Market? Intense relationships, own smaller dogs, older and urban females Benefits? Very best product that can be bought, reassurance, confidence, leads to an enhanced relationship Name? Mr. Dog (later Caesar) Product? Very high quality ingredients, wide variety of flavors, special packaging Price? 17.7 to 30.7 pence per 100 grams Advertising? Dog bringing newspaper, slippers, etc. Results: Fours years later, it had a 10% share of the total dog food market. The total super premium segment of the market was about 15% -- about 10% coming from dog food brands and about 5% coming from fresh foods. In addition, Pedigree's premium brand retained its market share.

Chapter 7- slide 57 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall