1. Customer –Driven Marketing Strategy Creating value for Target Customer
Chapter 7

2. Steps in market segmentation, targeting and positioning
Divide the total market into smaller segments
Target Marketing
Select the segment or segments to enter
Market Differentiation
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

3. Steps in Segmentation, Targeting, and Positioning
This CTR corresponds to Figure 9-1 on p. 297 and relates to the material on pp
Steps in Segmentation, Targeting, and Positioning
6. Develop Marketing
Mix for Each Segment
Market
Positioning
Steps in Segmentation, Targeting,
and Positioning
Market Segmentation. Market segmentation is the process of dividing a market into distinct groups of buyers who might require separate products or marketing mixes. All buyers have unique needs and wants. Still it is usually possible in consumer markets to identify relatively homogeneous portions or segments of the total market according to shared preferences, attitudes, or behaviors that distinguish them from the rest of the market. These segments may require different products and/or separate mixes.
Market Targeting. Market targeting is the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. Given effective market segmentation, the firm must choose which markets to serve and how to serve them.
Discussion Note: In targeting markets to serve the firm must consider its resources and objectives in setting strategy.
Market Positioning. Market positioning he process of formulating competitive positioning for a product and a detailed marketing mix. Marketers must plan how to present the product to the consumer.
Discussion Note: The product's position is defined by how consumers view it on important attributes.
5. Develop Positioning
for Each Segment
4. Select Target
Segment(s)
Market
Targeting
3. Develop Measures
of Attractiveness
2. Develop Profiles
of Segments
Market Segmentation
1. Identify Bases
for Segmentation

4. Bases for Segmenting Consumer Markets
Market Segmentation
This CTR relates to the material on pp
Bases for Segmenting Consumer Markets C H A R T E I S
1. Demographic
3. Behavioristic
Bases for Segmenting Markets
Geographic Segmentation. Geographic segmentation divides the market into different geographic units based upon physical proximity. While location determines how geographic segmentation is done, it is also true that many consumer products have attribute differences associated with regional tastes.
Demographic Segmentation. Dividing the market into groups based upon variables such as sex, age, family size, family life cycle, income, education, occupation, religious affiliation, or nationality are all demographic segmentations. Consumer needs often vary with demographic variables. Demographic information is also relatively easy to measure. Age and life-cycle stage, sex, and income are three major demographic bases for segmentation.
Psychographic Segmentation. Psychographic Segmentation divides the market into groups based on social class, life style, or personality characteristics. Psychographic segmentation cuts across demographic differences. Social class preferences reflect values and preferences that remain constant even as income increases. Life style describes helps group markets around ideas such as health, youthful, or environmentally conscious. Personalities may transcend other differences in markets and may be transferred to products themselves.
Behavioral (Response) Segmentation. Behavioral Segmentation divides markets into groups based on their knowledge, attitudes, uses, or responses to a product. Types of of behavioral segmentation are based upon occasions, benefits sought, user status, usage rates, loyalty, buyer readiness stage, and attitude.
4. Psychographic
2. Geographic

5. Geographic Segmentation Variables
World region or country
Country region
State
City
Neighborhood
City or metro size
Density
Climate
Goal 2: Understand the major bases for segmentation

6. Demographic Segmentation Variables
Age
Gender
Family size
Family life cycle
Income
Occupation
Education
Religion
Race
Generation
Nationality
Goal 2: Understand the major bases for segmentation

7. Behavioral Segmentation Variables
Occasions
Benefits
User Status
Attitude Toward the Product
User Rates
Loyalty Status
Readiness Stage
Goal 2: Understand the major bases for segmentation

8. 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

9. Target Marketing: evaluate and select
Evaluating Market Segments
This CTR relates to the material on p.312.
Target Marketing: evaluate and select
The process of evaluating each market segment’s attractiveness
and selecting one or more segments to enter.
Size and
Growth
Structural
Attractiveness
Company
Objectives and
Resources
Evaluating Market Segments
Segment Size and Growth. The company must collect and analyze data on current dollar sales, projected sales-growth, and expected profit margins for each market segment.
Segment Structural Attractiveness. Long run attractiveness includes an assessment of current and potential competitors, the threats of substitutes, and the power of buyers and suppliers.
Company Objectives and Resources. The company’s resources and core business strengths should also fit well with the market segment opportunities.

10. 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.

11. Selecting target market segments
Target marketing strategies:
Target broadly (undifferentiated / mass marketing): ignore market segments, go after the whole market with one offer.
Coca-cola, keep down cost
Differentiated marketing: target several market segments and designs separate offers for each.
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

12. 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.

13. Choosing a Market-Coverage Strategy
This CTR relates to the discussion on pp
Choosing a Market-Coverage Strategy
Factors
Affecting
Strategy
Decisions
Company
Resources
Competitors’
Strategies
Market
Variability
Product
Stage in
Life Cycle
Choosing a Market-Coverage Strategy
Factor to consider in choosing a market-coverage strategy include:
Company Resources. Sometimes the resources of a firm make a strategy decision fairly simple. For example, a small firm with limited resources is more likely to be successful implementing a concentrated strategy than a full coverage one.
Product Variability. The higher the degree of product variation or differentiation, the greater the likelihood that a differentiated or concentrated strategy will be necessary to meet consumer demands for choice.
Stage in Life Cycle. Introduction and early growth stages of the product life cycle are more likely to support single-version products. As the market matures, greater consumer numbers and a wider variety of tastes demand more differentiation.
Discussion Note: The cost of developing new products is often given as a reason for single-version rollouts. But it is important to remember that consumers don’t know how to use new products as well and so it makes sense to keep a product simple to help consumer learn about its benefits first and then let their experience with product use guide the introduction of additional features.
Market Variability. If taste differences in the market are small, then undifferentiated marketing is appropriate.
Competitor’s Marketing Strategies. Selecting a coverage strategy is not done in a vacuum. When the market is already served by competitor using a segmentation strategy, undifferentiated marketing is less likely to be successful. However, competitors using undifferentiated strategies may be vulnerable to a well-planned and executed differentiation strategy.

14. 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.

15. 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.

16. 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.

17. 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

18. 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