Marketing Strategy Chapter 7

Chapter 7: Customer Value-Driven Marketing Strategy

• Customer value-driven marketing focuses on understanding customer needs and creating value
• The process of customer-driven marketing begins with selecting customers, segmenting the total market into smaller segments, targeting specific segments, and creating value for targeted customers.
• Differentiation creates value by differentiating the product offering
• Positioning involves placing the market offering in the minds of target customers, creating a competitive advantage.
• Market segmentation divides a market into segments with distinct needs, characteristics, or behaviors.

Learning Objectives

• 7-1: Defining the steps in customer-driven marketing strategy (segmentation, targeting, differentiation, positioning).
• 7-2: Listing and discussing major bases for segmenting consumer and business markets.
• 7-3: Explaining how companies identify attractive market segments and choose a market-targeting strategy.
• 7-4: Discussing how companies differentiate and position their products to maximize competitive advantage.

Market Segmentation

• Dividing a market into smaller segments with distinct needs, characteristics, or behaviors.
• Types of segmentation:
  • Segmenting consumer markets: Geographic, demographic, psychographic, behavioral.
    • Geographic: Nations, regions, states, cities, neighborhoods.
    • Demographic: Age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation.
    • Psychographic: Social class, lifestyle, personality characteristics.
    • Behavioral: Consumer knowledge, attitudes, uses of a product, or responses to a product; Occasions, benefits sought, user status, usage rate, loyalty status.
  • Segmenting business markets: Additional variables like customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.
  • Segmenting international markets: Geographic location, economic factors, political and legal factors, cultural factors.
  • Intermarket (cross-market) segmentation: Forming consumer segments with similar needs/buying behaviors across countries.

Requirements for Effective Segmentation

• Measurable: Segment size and purchasing power can be measured.
• Accessible: Segments can be effectively reached and served.
• Substantial: Segments are large or profitable enough to serve.
• Differentiable: Segments are conceptually distinguishable and respond differently to marketing efforts.
• Actionable: Effective programs can be designed for attracting and serving the chosen segments.

Market Targeting

• Evaluating Market Segments: Considering segment size & growth, segment structural attractiveness, and company objectives and resources.
• Selecting Target Market Segments: Defining target markets as groups who share common needs/characteristics served by the company. Different targeting strategies include:
  • Undifferentiated (mass) marketing: Targets whole market with one offer.
  • Differentiated marketing: Targets several segments with separate offers.
  • Concentrated (niche) marketing: Targets one or a few smaller segments.
  • Micromarketing: Tailoring products and marketing programs to suit the tastes of specific individuals and locations (local or individual marketing).

Differentiation and Positioning

• Product position: How consumers define a product based on attributes.

• Choosing a Differentiation and Positioning Strategy: This involves identifying, selecting, and communicating the chosen position to consumers. Strategies include:

  • Competitive advantages: Offering better value than competitors (lower prices/more benefits).
  • Competitive advantages types: Product, services, channels, people, image.
  • Positioning strategy elements: Important, distinctive, superior, communicable, preemptive, affordable, profitable.

• Value proposition: The full mix of benefits upon which a brand is positioned.

• Positioning statement: Summarizes company/brand positioning: To (target segment and need) our (brand) is (concept) that (point of difference).

Explore Chapter 7 on Customer Value-Driven Marketing Strategy. This quiz covers key concepts like market segmentation, targeting, differentiation, and positioning, which are essential for creating effective marketing strategies that cater to customer needs. Test your understanding of how to create value for targeted customers.