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Armstrong9e 06
The key steps in developing a customer-driven marketing strategy are market segmentation, targeting, differentiation, and positioning. Companies segment markets using demographic, geographic, psychographic, and behavioral variables. They evaluate segments based on size, attractiveness, and fit with company objectives to select target segments. Companies then differentiate their offering by creating superior customer value and choose a positioning strategy to communicate their competitive advantages relative to others in the target customers' minds.
Armstrong9e 06
- 1. Chapter 1 Chapter6 Customer-Driven Marketing Strategy: Creating Value for Target Customers
- 2. Define the majorsteps in designing a customer-driver 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. Rest Stop: Previewing the Concepts
- 3. Dunkin’ Donuts Background:S hifted 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. Case Study 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.” Dunkin’ Donuts vs. Starbucks - Segmentation
- 4. Designing a Customer-DrivenMarketing Strategy Designing a true customer-driven marketing strategy involves: Segmentation Targeting Differentiation Positioning
- 5. 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.
- 6. Market Segmentation Geographic:World region or country Region of country City or metro size Density Climate
- 7. 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.
- 8. Market Segmentation Ageand 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.
- 9. 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.
- 10. Market Segmentation Psychographicsegmentation: Dividing a market into different groups based on social class, lifestyle, or personality characteristics. Behavioral segmentation: Dividing buyers into groups based on consumer knowledge, attitudes, uses, or responses to a product.
- 11. Market Segmentation Behavioralsegmentation: 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).
- 12. Behavioral segmentation: Userstatus: Nonusers, ex-users, potential users, first-time users, regular users Usage rate: Light, medium, heavy Loyalty status: Brands, stores, companies Market Segmentation
- 13. Market Segmentation Bestto 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.
- 14. Market Segmentation PRIZMNE: 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.
- 15. Segmenting Business MarketsConsumer and business markets use many of the same variables for segmentation. Business marketers can also use: Operating characteristics Purchasing approaches Situational factors Personal characteristics
- 16. Segmenting International MarketsFactors 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.
- 17. Requirements for EffectiveSegmentation To be useful, market segments must be: Measurable Accessible Substantial Differentiable Actionable
- 18. Evaluating Market SegmentsSegment 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.
- 19. Market Targeting Markettargeting 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.
- 20. Selecting Target MarketSegments 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)
- 21. Micromarketing Tailoring productsand 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.
- 22. Choosing a TargetingStrategy Factors to consider: Company resources Product variability Product’s life-cycle stage Market variability Competitors’ marketing strategies
- 23. Smart targeting helpsboth 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. Socially Responsible Targeting
- 24. Differentiation and PositioningA 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.
- 25. Choosing a differentiationand positioning strategy involves: Identifying a set of possible value differences and competitive advantages on which to build a position. Choosing the right competitive advantages. Selecting an overall positioning strategy. Differentiation and Positioning
- 26. Differentiation and PositioningIdentifying 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.
- 27. Differentiation and PositioningDifferentiation Actually differentiating the marketing offering to create superior customer value. Types of differentiation: Product differentiation Services differentiation Channels differentiation People differentiation Image differentiation
- 28. Differentiation and PositioningChoosing 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
- 29. Overall or fullpositioning 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. Differentiation and Positioning
- 30. Developing a positioningstatement: 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.” Differentiation and Positioning
- 31. Company must takestrong 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. Communicating and Delivering the Chosen Position
- 32. Define the majorsteps in designing a customer-driver 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. Rest Stop: Reviewing the Concepts
- 33. All rights reserved.No part of this publication may be reproduced, stored in a retrieval 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 © 2009 Pearson Education, Inc. Publishing as Prentice Hall