1. business and industrial
2. advertising and marketing
3. marketing

Customer-Driven Marketing
Strategy
Creating Value for
Target Customers
Chapter 6
Rest Stop: Previewing the Concepts
1.
2.
3.
4.
Define the major steps in designing a customerdriven marketing strategy: market segmentation,
targeting, differentiation, and positioning.
List and discuss the major bases for segmenting
consumer and business markets.
Explain how firms identify attractive market
segments and choose a market-targeting strategy.
Discuss how companies differentiate and position
their products for maximum competitive
advantage.
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6-2
First Stop
Best Buy – Serving the “Right” Customers
At Issue
•
•
History: Increased competition
from Wal-Mart and online
retailers forced Best Buy to
reexamine segmentation
strategy and positioning
strategies.
Customer Centricity: Adoption of
this strategy forced Best Buy’s
task force to ID profitable
“Angel” and costly “Demon”
customers. Angels accounted for
20% of customers generating
bulk of profits. Demons were
extreme bargain hunters.
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Implementation
• Ditching Demons: Deleted demons
from marketing lists, reduced
promotions that tended to attract
them, instituted 15% restocking
fee.
• Embracing Angels: Stocked more
items, developed better service of
interest to them. Established
Reward Zone loyalty program.
Remodeled stores to reflect core
customer segments, trained clerks
to ID and cater to Angels’ shopping
preferences. Overall sales have
doubled; early customer centric
stores outsold traditional.
6-3
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 segments 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. Variables are often
combined to better define segments.
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Market Segmentation
• Geographic:
– Nations
– Region of country
– States
– Counties
– Cities
– Neighborhoods
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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 as needs, wants, and usage often vary by
demographics.
– 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.
– Avoid stereotypes in promotions based on age.
– Promote positive messages when marketing to
mature consumers.
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Market Segmentation
• Gender:
– Neglected gender segments can offer new
opportunities (Harley Davidson & women).
• Income:
– Identifies and targets the affluent for luxury
goods.
– People with low annual incomes can be a lucrative
market.
– Troubled economy makes marketing to all income
groups a challenge.
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Market Segmentation
• Psychographic
segmentation:
• Behavioral
segmentation:
– Dividing a market
into different
groups based on
social class,
lifestyle, or
personality
characteristics.
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– Dividing buyers into
groups based on
consumer
knowledge,
attitudes, uses, or
responses to a
product.
6 - 10
Market Segmentation
• Behavioral segmentation:
– Occasion segmentation:
• Special promotions and labels for holidays.
• Special products for special occasions.
– Benefits sought:
• Different segments desire different benefits from
products.
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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.
• Divide into groups by degree of loyalty.
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Market Segmentation
• Best to use multiple segmentation bases in
order to identify smaller, better-defined target
groups.
– Start with 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 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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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:
– Identifying a set of differentiating 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
• Competitive advantage:
– An advantage over competitors gained by offering
greater customer value, either through lower
prices or by providing more benefits that justify
higher prices.
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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.
– Finding points of differentiation requires that
marketers examine the entire customer
experience.
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Differentiation and Positioning
• 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.
– Unique selling proposition is often preferred.
– Promoting multiple differences is possible.
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Differentiation and Positioning
• Worthwhile 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 deliver 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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Rest Stop: Reviewing the Concepts
1.
2.
3.
4.
Define the major steps in designing a customerdriven marketing strategy: market segmentation,
targeting, differentiation, and positioning.
List and discuss the major bases for segmenting
consumer and business markets.
Explain how firms identify attractive market
segments and choose a market-targeting strategy.
Discuss how companies differentiate and position
their products for maximum competitive
advantage.
Copyright 2011, Pearson
Education Inc. Publishing as
Prentice-Hall
6 - 33
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system, or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior written permission of the
publisher. Printed in the United States of America.
Copyright © 2011 Pearson Education, Inc.
Publishing as Prentice Hall
Copyright 2011, Pearson
Education Inc. Publishing as
Prentice-Hall
6 - 34