chapter 6

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Chapter 6 Customer Value Driven Marketing Strategy

6.1 marketing strategy

6.2 market segmentation

Market Segmentation: dividing the market into smaller SEGMENTS OF BUYERS with DISTINCT NEEDS, characteristics, or behaviors that might REQUIRE SEPARATE MARKETING STRATEGIES or mixes.

Segmenting Consumer Markets: variable that might be used

Geographic segmentation: Dividing a market into different geographical units

hyperlocal social marketing: location-based targeting to consumers in local communities or neighborhoods using digital and social media.

Demographic segmentation: Dividing a market into segments based on variables

needs, wants and usage rates vary closely with demographics

easier to measure than most

age and life cycle segmentation: offering different products or using different marketing approaches for different age and life-cycle groups.

Gender segmentation: clothing, cosmetics, toys, magazines, men's personal care.

Income Segmentation: automobiles, clothing, cosmetics, financial services and travel use this

Psychographic Segmentation: divides buyers into different segments based on lifestyle or personality characteristics.

lifestyle, social class, personality.

behavioral segmentation: dives buyers into segments based on their knowledge, attitudes, uses or responses to a product. (can be the best starting point)

occasions segmentation: dividing the market into segments according to occasions when buyers get the idea to buy, actually make the purchase or use the purchased time.

benefits sought: grouping buyers according to the different BENEFITS that they seek from a product. ; requires finding major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit.

user status: markets can be segmented into NONUSERS, EX-USERS, POTENTIAL USERS, FIRST-TIME USERS, AND REGULAR USERS.

usage rate: markets can be segmented into LIGHT, MEDIUM, AND HEAVY PRODCUT USERS.

loyalty status: market segmented by consumer loyalty; brand, stores, companies

completely loyal: buy one brand all the time and cant wait to tell others about it

somewhat loyal: loyal to 2 or 3 brands of a given product or favor one brand while sometimes buying others

no loyalty: either want something different each time they buy or they buy whatever on sale

Using Multiple Segmentation Bases

often use multiple segmentation bases in an effort to identify smaller, better-defined target groups.

Segmentation bases help companies to:

Identify smaller, better-defined target groups

Identify and understand key customer segments

Reach customers more efficiently by tailoring market offerings and messages to customers’ specific needs

Segmenting International Markets

Variables:

geographic location: nations close to one another will have many common traits

economic factors: population income levels

political and legal factors: stability of government, monetary regulations, bureaucracy

cultural factors: common languages, regions, values, customs, behavioral patterns

Intermarket segmentation (cross-market segmentation): Grouping consumers with similar needs and buying behaviors irrespective of their location

marketers form segments of consumers who have similar needs and buying behaviors even though they are located in different countries

Requirements for Effective Segmentation

Market segments must be:

Measurable: size, purchasing power and profile of segments should be measured

substantial: large and profitable enough to serve

accessible: easily reached

differentiable: segments are conceptually distinguishable and respond differently to different marketing mix elements

actionable: designed for attracting and serving segments

6.3 market targeting

Evaluating Market Segments

Segments evaluated based on:

segment size and growth

segment structural attractiveness

company objectives and resources

Selecting Target Market Segments

target market: Set of buyers sharing common needs or characteristics that the company decides to serve

Undifferentiated marketing

Undifferentiated marketing (mass marketing): a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer

focuses on what is COMMON in the needs of consumers rather than on what is DIFFERENT

Differentiated Marketing

Differentiated marketing (segmented marking): a firm decides to target several market segments and designs separate offers for each

companies home for higher sales and a stronger position within each segment

increases the cost of doing business

better suited for uniform products (grapefruit or steel)

Concentrated Marketing

Concentrated Marketing (niche marketing): a firm goes after a large share of one or a few smaller segments/niches. (large share, small market)

market more effectively by: fine-tuning products, prices, and programs to needs of carefully defined segments

market more efficiently by: targeting its products or services, channels, and communications programs toward only consumers it can serve best

can be highly profitable; involves higher than normal risks

Micromarketing

Micromarketing: the practice of tailoring products and marketing programs to suit the tastes of specific individuals and local customer segments

local marketing: tailoring brands and promotions to needs and wants of local customers

Individual marketing: tailoring products and marketing programs to the needs and preferences of individual customers. ; one-to-one marketing, mass customization, and markets of one marketing.

Choosing a Targeting Strategy

which one is best depends on the company's resources, product variability, life-cycle stage, MARKET VARIABILITY, and COMPETITORS MARKETING STRATEGIES

Socially Responsible Target Marketing

Socially responsible target marketing should be done to serve both the interests of the company and the interests of those targeted.

Controversy and concern of target marketing

Vulnerable or disadvantaged consumers are targeted with controversial or potentially harmful products.

6.4 Differentiation and Positioning

product position: the way a product is defined by consumers on important attributes - the place the product occupies in consumers' minds relative to competing products.

Firms must decide which segments to target and on the value proposition.

marketers must PLAN positions to give their product the greatest advantage

Positioning Maps: show consumer perceptions of their brands versus those of competing products on important buying dimensions. ​​​

Choosing a Differentiation and Positioning Strategy

3 steps to differentiate and position:

Identify a set of differentiating competitive advantages on which to build a position

choosing the right competitive advantages

selecting an overall positioning strategy

Step 1: Identifying Possible Value Differences and Competitive Advantages

Competitive advantage: An advantage over competitors gained by offering greater customer value either by:

Having lower prices

Providing more benefits that justify higher prices

Through product differentiation, brands can be differentiated on features, performance, or style and design.

Firms can differentiate in terms of products, services, channels, people, or images.

Step 2: Choosing the right competitive advantages

Marketers must keep in mind:

​​​​​​​How many Differences to Promote

which differences to promote

Important, distinctive, superior, communicable, preemptive, affordable, profitable

Step 3: Selecting an Overall Positioning Strategy

value proposition: the full mix of benefits on which a brand is differentiated or positioned.

Developing a Statement

positing statement: summarizes company or brand position using this form: To (target segment and need) our (brand) is (concept) that (point of difference).

Communicating and Delivering the Chosen Position

All the company’s marketing mix efforts must support the positioning strategy.

Maintain the position obtained through consistent performance and communication.

The product’s position should be monitored and adapted over time