Principles of Marketing (19th Edition) Chapter 7 PDF

Principles of Marketing Nineteenth Edition, Global Edition Chapter 7 Customer Value– Driven Marketing Strategy: Creating Valu...

Principles of Marketing Nineteenth Edition, Global Edition Chapter 7 Customer Value– Driven Marketing Strategy: Creating Value for Target Customers Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Learning Objectives 1. Define the major steps in designing a customer- driven marketing strategy: market segmentation, targeting, differentiation, and positioning. 2. Discuss the major bases for segmenting consumer and business markets. 3. Explain how companies identify attractive market segments and choose a market- targeting strategy. 4. Discuss how companies differentiate and position their products for maximum competitive advantage. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  FACEBOOK (META): Targeting the Diverse Needs of Different Social Media Segments Thanks to successful segmentation and targeting, Facebook/Meta’s four huge social media platforms — Facebook, Instagram, WhatsApp, and Messenger—now constitute four or the world’s top five social media brands. rvlsoft/ Copyright © 2024 Pearson Education Ltd. All Shutterstock Rights Reserved.  Learning Objective 1 Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Customer Value–Driven Marketing Strategy Figure 7.1 Designing a Customer Value– Driven Marketing Strategy Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Learning Objective 2 Discuss the major bases for segmenting consumer and business markets. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Market segmentation requires dividing a market into smaller segments with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets 1) Geographic 2) Demographic segmentation segmentation 3) Psychographic 4) Behavioral segmentation segmentation Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets (1) Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets (2) Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. - Most popular bases Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets (3) Psychographic segmentation divides a market into different segments based on social class, lifestyle, or personality characteristics. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets (4) Behavioral segmentation divides a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets Behavioral Segmentation Occasions Benefits sought User status Usage rate Loyalty status Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Occasions – when are you going to consume the products? Benefits – what benefits you will receive if you consume the products? User status – Is this your first time purchase or frequently purchase the products? Usage rate – How many units of products for each purchase? Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Consumer Markets Segmentati on Examples Variable Geographic Nations, regions, states, counties, cities, neighborhoods, population density, climate Demographic Age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, generation Psychographic Social class, lifestyle, personality Behavioral Occasions, benefits, user status, usage rate, loyalty status Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting Business Markets Consumer and business marketers use many of the same variables to segment their markets. Additional variables include: Customer operating characteristics Purchasing approaches Situational factors Personal characteristics Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting International Markets Geograph Economic ic location factors  cross-border  GDP, GNP, Political Cultural factors and legal  culture, subculture, factors social class law & regulation Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Segmentation Segmenting International Markets Intermarket segmentation involves forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries. yan Photography Intermarket segmentation: Today’s technologies let fast-fashion retailer Zara target like-minded style conscious but value- seeking consumers anywhere in the world Copyright © 2024 Pearson Education Ltd. All they live. Rights Reserved.  Market Segmentation Requirements for Effective Segmentation Measurable Substantial Accessible - value, measure - can be - the market the size size is big reached enough Differentiable Actionabl - easy to e differentiate - practical the segments for implementati on Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Learning Objective 3 Explain how companies identify attractive market segments and choose a market-targeting strategy. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Evaluating Market Segments Segment size and growth - how big is the segment? Segment structural attractiveness - competition? Substitute products? Company objectives and resources - fit between company Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments A target market is a set of buyers who share common needs or characteristics that the company decides to serve. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Figure 7.2 Market-Targeting Strategies Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments Undifferentiated marketing is a market- coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Mass marketing Focuses on common needs rather than what’s different Globalization Targets the whole market with one offer Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments Differentiated marketing is a market- coverage strategy in which a firm targets several market segments and designs separate offers for each. Goal is to achieve higher sales and stronger position More expensive than undifferentiated marketing Multinational/multidomestic Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments Concentrated marketing is a market- coverage strategy in which a firm goes after a large share of one or a few segments or niches. Limited company resources Knowledge of the market More effective and efficient Niche market Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and local customer segments. It includes: Local marketing Individual marketing Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Local marketing involves tailoring brands and promotions to the needs and wants of local customer segments. Cities Neighborhoods Stores Local marketing: The Kroger app personalizes and optimizes the customer’s experience in a preferred local store. Its Google Maps pickup service shares a pick-up customer’s estimated time of arrival with the store so orders are ready for handover just when the customer arrives at the Koshiro K/Shutterstock store. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Individual marketing involves tailoring products and marketing programs to the needs and preferences of individual customers. Also known as: One-to-one marketing Mass customization Individual marketing: Based on images submitted by a customer using its smartphone app, FitMyFoot 3-D prints footwear that fits that customer and no one FitMyFoo t else. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments Choosing a targeting strategy depends on: Company resources - capability Product variability - choice of products Product life-cycle stage - newly launched or well-established Market variability - fluatuate Competitor’s marketing strategies - follow or counter-attack? Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Market Targeting Selecting Target Market Segments Socially responsible targeting: In this era of increased social responsibility, marketers must consider not just whether targeted consumers buy and like their products but also whether they use them wisely. Cagkan Sayin/Shutterstock Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Learning Objective 4 Discuss how companies differentiate and position their products for maximum competitive advantage. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning Product position is the way the product is defined by consumers on important attributes. Perception Impression Feelings Positioning: Spotify does more than just stream music. It gives you “Music for every mood.” rafapress/ Shutterstock Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Positioning maps show consumer perceptions of marketer’s brands versus competing products on important buying dimensions. Figure 7.3 Positioning Map: Large Luxury SUVs Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Figure 7.3 shows a positioning map for the U.S. large luxury S U V market.35 The position of each circle on the map indicates the brand’s perceived positioning on two dimensions: price and orientation (luxury versus performance). The size of each circle indicates the brand’s relative market share. Thus, relative to other luxury SUVs, customers view the market-leading Cadillac Escalade as a moderately priced, large, luxury S U V with a balance of luxury and performance. The Escalade is positioned on urban luxury, and in its case, “performance” probably means power and safety performance. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to build a position Choosing the right competitive advantages Selecting an overall positioning strategy Communicating and delivering the chosen position to the market Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning A difference is worth establishing to the extent that it satisfies the following criteria: Important Distinctive Superior Communicable Preemptive Affordable Profitable Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning 1)Important: The difference delivers a highly valued benefit to target buyers. 2)Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. 3)Superior: The difference is superior to other ways that customers might obtain the same benefit. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning 4)Communicable: The difference is communicable and visible to buyers. 5)Preemptive: Competitors cannot easily copy the difference. 6)Affordable: Buyers can afford to pay for the difference. 7)Profitable: The company can introduce the difference profitably. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning Which difference to promote? Positioning on multiple competitive advantages: Land Rover positions its new Defender as combining its legacy off- road performance with state-of-the-art electronics and luxury anzheni/ Shutterstock on-road comforts. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Value proposition is the full mix of benefits upon which a brand is positioned. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Figure 7.4 Possible Value Propositions Copyright © 2024 Pearson Education Ltd. All Rights Reserved. More for more: This positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. Although more for more can be profitable, this strategy can also be vulnerable. It often invites imitators who claim the same quality but at a lower price. More for the same: Companies can attack a competitor’s more for more positioning by introducing a brand offering comparable quality at a lower price. For example, Toyota introduced its Lexus line with a more for the same value proposition versus Mercedes and BMW. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. More for less: Of course, the winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions. The same for less: Offering the same for less can be a powerful value proposition—everyone likes a good deal. Less for much less: A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will gladly settle for less than optimal performance or give up some of the bells and whistles in exchange Rightsfor a lower price. Copyright © 2024 Pearson Education Ltd. All Reserved. All said, each brand must adopt a positioning strategy designed to serve the needs and wants of its target markets. More for more will draw one target market, less for much less will draw another, and so on. Thus, in any market, there is usually room for many different companies, each successfully occupying different positions. The important thing is that each company must develop its own winning positioning strategy, one that makes the company special to its target consumers. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Positioning statement is a statement that summarizes company or brand positioning using this form: For (target customers), who (unsolved customer needs), our product is (product description), that provides (key benefits). Unlike (key competing brands), our product (point of difference) Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Example (pg. 239): For (value-, health-, and convenience- seeking buyers), who (want to make good choices when it comes to their health, society, and environment), our product is (an online food and household goods store), that provides (an assortment of healthy, sustainable, everyday essentials at a fair price). Unlike (other retailers such as Amazon, Target, and Walmart), our product (allows customers to shop with the confidence that every item they buy is a good choice for them and for society). Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Positioning statement: Public Goods is positioned as an online food and household goods retailer that makes healthy, sustainable, everyday essentials accessible at a fair price. Courtesy of Public Goods Copyright © 2024 Pearson Education Ltd. All Rights Reserved.  Differentiation and Positioning Communicating and Delivering the Chosen Position Choosing the positioning is often easier than implementing the position. Establishing a position or changing one usually takes a long time. Maintaining the position requires consistent performance and communication. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.