Chapter 6

Customer-Driven
Marketing Strategy:
Chapter 1

Creating Value for

Target Customers
 Rest Stop: Previewing the Concepts

§ Define the major steps in designing a customer-

driven marketing strategy: market segmentation,
targeting, differentiation, and positioning.
§ List and discuss the major bases for segmenting
consumer and business markets.
§ Explain how companies identify attractive market
segments and choose a market-targeting strategy.
§ Discuss how companies differentiate and position
their products for maximum competitive
advantage in the marketplace.

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 Case Study
Dunkin’ Donuts vs. Starbucks - Segmentation
 Dunkin’ Donuts
§ Background: Shifted focus from donuts to
coffee in mid 90s; coffee accounts for
64% of sales.
§ Customers: Blue- and white-collar workers
from of all race, age, and income groups.
Want to be part of a crowd.
§ Positioning: Low-brow, “everyman” appeal;
simple fare for working class.
§ Starbucks? Dunkin’ Donuts customers
disliked Starbucks’ atmosphere, the way
laptops used tabletops, the couch
seating, coffee lingo, and high prices.
§ Future plans: Move upscale while keeping
existing customers, expanding menu into
pizza and smoothies.
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 Starbucks
§ Background: 5,400 coffee
shops with 10,000 more
planned by 2020.
§ Customers: Higher income
professionals. Desire to
standout as individuals.
§ Positioning: High-brow “third
place” outside of home
and office, featuring art,
eclectic music, wireless
Internet, and couches.
§ Dunkin’ Donuts?
Starbucks customers
“couldn’t bear that they
weren’t special anymore.”
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 Designing a Customer-Driven
Marketing Strategy
§ Designing a true customer-driven
marketing strategy involves:
►Segmentation
►Targeting
►Differentiation
►Positioning

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 Market Segmentation
§ Segmentation:
► Dividing a market into smaller groups with distinct
needs, characteristics, or behaviors that might
require separate marketing strategies or mixes.
§ Key variables:
► Geographic
► Demographic
► Psychographic
► Behavioral

§ No single way to segment is best. Often combine

more than one variable to better define
segments.
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 Market Segmentation
§ Geographic:
►World region or country
►Region of country
►City or metro size
►Density
►Climate
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 Market Segmentation
§ Demographic:
►Age, gender, family size, family life cycle,
income, occupation, education, race,
religion, generation, nationality.
►The most popular bases for segmenting
customer groups.
►Easier to measure than most other types
of variables.

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 Market Segmentation
§ Age and life-cycle stage addresses the
fact that consumer needs and wants
change with age:
►P&G has different toothpastes for
different age groups.
§ Avoid stereotypes in promotions.
§ Promote positive messages.
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 Market Segmentation
§ Gender:
► Neglected gender segments can offer new
opportunities (e.g., Nivea for men).
§ Income:
► Identifies and targets the affluent for luxury
goods.
► People with low annual incomes can be a
lucrative market.
► Some manufacturers have different grades of
products for different markets.
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 Market Segmentation

§ Psychographic  Behavioral
segmentation: segmentation:
►Dividing a  Dividing buyers
market into into groups
different based on
groups consumer
based on knowledge,
social class, attitudes, uses,
lifestyle, or or responses to
personality a product.
characterist
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 Market Segmentation
§ Behavioral segmentation:
► Occasion segmentation:
• Special promotions and labels for holidays.
► (E.g., Hershey Kisses)
• Special products for special occasions.
► (E.g., Kodak disposable cameras)
► Benefits sought:
• Different segments desire different benefits
from products.
► (E.g.,P&G’s multiple brands of laundry
detergents to satisfy different needs in the
product category).
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 Market Segmentation
§ Behavioral segmentation:
►User status:
• Nonusers, ex-users, potential users,
first-time users, regular users
►Usage rate:
• Light, medium, heavy
►Loyalty status:
• Brands, stores, companies
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 Market Segmentation
§ Best to use multiple segmentation bases
in order to identify smaller, better-
defined target groups.
►Startwith a single base and then expand
to other bases.
►Multivariable segmentation systems such
as PRIZM NE are becoming more
common.

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 Market Segmentation
§ PRIZM NE:
►Multivariable segmentation systems
developed by Claritas, Inc.
►Potential Rating Index for Zip Markets
(PRIZM NE).
►Based on U.S. census data.
►Classifies U.S. households and organizes
them into 66 clusters or segments
within
14 different social groups.
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 Segmenting Business Markets

§ Consumer and business markets use

many of the same variables for
segmentation.
§ Business marketers can also use:
►Operating characteristics
►Purchasing approaches
►Situational factors
►Personal characteristics

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Segmenting International Markets

§ Factors used:
► Geographic location
► Economic factors
► Political and legal factors
► Cultural factors

§ Intermarket segmentation:
► Forming segments of consumers who have
similar needs and buying behavior even
though they are located in different countries.

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 Requirements for Effective
Segmentation
§ To be useful, market segments must
be:
►Measurable
►Accessible
►Substantial
►Differentiable
►Actionable

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 Evaluating Market Segments

§ Segment size and growth:

► Analyze current segment sales, growth rates,
and expected profitability.
§ Segment structural attractiveness:
► Consider competition, existence of substitute
products, and the power of buyers and
suppliers.
§ Company objectives and resources:
► Examine company skills and resources needed
to succeed in that segment.
► Offer superior value and gain advantages
over competitors.
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 Market Targeting
§ Market targeting involves:
►Evaluating marketing segments.
• Segment size, segment structural
attractiveness, and company
objectives
and resources are considered.
►Selecting target market segments.
• Alternatives range from
undifferentiated marketing to
micromarketing.
►Being socially responsible.
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Selecting Target Market Segments

§ Targeting strategies include:

► Undifferentiated (mass) marketing:
• Ignores segmentation opportunities
► Differentiated (segmented) marketing:
• Targets several segments and designs
separate offers for each
► Concentrated (niche) marketing:
• Targets one or a couple small segments
► Micromarketing (local or individual marketing)

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 Micromarketing
§ Tailoring products and marketing
programs to suit the tastes of specific
individuals and locations.
► Local marketing: Tailoring brands and
promotions to the needs and wants of local
customer groups—cities, neighborhoods,
specific stores.
► Individual marketing: Tailoring products and
marketing programs to the needs and
preferences of individual customers.

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Choosing a Targeting Strategy
§ Factors to consider:
►Company resources
►Product variability
►Product’s life-cycle stage
►Market variability
►Competitors’ marketing strategies

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 Socially Responsible Targeting

§ Smart targeting helps both companies and

consumers.
§ Marketing sometimes generates
controversy and concern when
targeting:
► Vulnerable,minority or disadvantaged
populations
► Children and teens

§ Controversy arises when an attempt is

made to profit at the expense of
segments.
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 Differentiation and Positioning

§ A product’s 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.
►Perceptual positioning maps can help
define a brand’s position relative to
competitors.
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 Differentiation and Positioning

§ Choosing a differentiation and

positioning strategy involves:
►Identifyinga set of possible value
differences and competitive advantages
on which to build a position.
►Choosing the right competitive
advantages.
►Selecting an overall positioning strategy.

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 Differentiation and Positioning

§ Identifying possible value differences

and competitive advantages:
►Key to winning target customers is to
understand their needs better than
competitors do and to deliver more
value.
§ Competitive advantage:
►Extent to which a company can position
itself as providing superior value.
• Achieved via differentiation.
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 Differentiation and Positioning

§ Differentiation
► Actually differentiating the marketing offering
to create superior customer value.
§ Types of differentiation:
► Product differentiation
► Services differentiation
► Channels differentiation
► People differentiation
► Image differentiation

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 Differentiation and Positioning

§ Choosing the right competitive advantage requires

selecting how many and which differences to
promote.
§ Differences that could be promoted are:
► Important
► Distinctive
► Superior
► Communicable
► Preemptive
► Affordable
► Profitable

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 Differentiation and Positioning

§ Overall or full positioning of the brand is

called the brand’s value proposition.
§ Potential value propositions include:
► More for more: More benefits for higher price.
► More for same: More benefits for the same
price.
► More for less: More benefits for a lower price.
► Same for less: Same benefits for a lower price.
► Less for much less: Fewer benefits for much
lower price.
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 Differentiation and Positioning

§ Developing a positioning statement:

►Format: “To (target segment and need)
our (brand) is (a concept) that (point of
difference).”
►Example: “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.”
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Communicating and Delivering the
Chosen Position
§ Company must take strong steps to
deliver and communicate the desired
position to target consumers.
►The marketing mix efforts must support
the positioning strategy.
§ Firm must also monitor and adapt the
position over time to match changes
in consumer needs and competitors’
strategies.
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 

Thank you


 very much !!!



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Publishing as Prentice Hall
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