INTRODUCTION

TO MARKETING
Customer Value-Driven Marketing Strategy:
Creating Value for Target Customers
Topics to be covered:

 Marketing Strategy
 Market Segmentation
 Market Targeting
 Differentiation and Positioning
Marketing Strategy

 The following figure shows four major steps in designing a customer-

value driven marketing strategy:
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Market Segmentation
 Segmenting Consumer Markets: There is no single way to segment a
market. A marketer has to try different segmentation variables, alone
and in combination, to find the best ways to view the market
structures. The major variables that might be used in segmenting
consumer markets are as follows—
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 Geographic Segmentation: Dividing a market into different

geographical units such as nations, states, regions, countries, cities,
or neighborhoods.
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 Unilever launched shampoo brand, Clear, specifically for China.

Clear’s advertising campaign initially used a Taiwanese television
personality, Xu Xidi, and South Korean pop star, Rain.
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 Demographic Segmentation: Dividing the market into groups based on

variables such as age, gender, family size, family life-cycle, income,
occupation, education, religion, race, generation, and nationality. The
major variations of demographic segmentations are as follows—
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 Sheilas’ Wheels offers car insurance, home insurance and travel

insurance specifically for women.
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 Psychographic Segmentation: Dividing a market into different groups

based on social class, lifestyle, or personality characteristics.
Marketers must be aware about the fact that people in the same
demographic group can have very different psychographic makeup.
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 Lifestyle segmentation: Royal Dutch
Gazelle produces several types of
bikes for different kinds of
customers. Gazelle caters to a range
of lifestyle segments, from daily
users to the Dutch royal family.
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 Behavioral Segmentation: Dividing the market into groups based on

consumer knowledge, attitudes, uses, or responses to a product.
Many marketers believe that behavioral variables are the best starting
point for building market segments. The following behavioral variables
are frequently used in behavioral segmentation—
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 Airlines have developed frequent-flyer programs to encourage

passengers to use the same airline repeatedly to create loyal
customers. This technique, sometimes called frequency marketing,
focuses on usage rate.
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 Requirements for Effective Segmentation: To be useful, market

segment must be—
 Measurable: The size, purchasing power, and profiles of the
segments can be measured.
 Accessible: The market segments can be effectively reached and
served.
 Substantial: The market segments are large or profitable enough
to serve.
 Differentiable: The segments are conceptually distinguishable and
respond differently to different marketing mix elements and
programs.
 Actionable: Effective programs can be designed for attracting and
serving the segments.
Market Targeting

 Selecting Target Market Segments: After evaluating different

segments, the company must decide which and how many segments
it will target. A target market consists of a set of buyers who share
common needs or characteristics that the company decides to serve.
Market targeting can be carried out at several different levels as they
are shown in the figure given below:
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 Undifferentiated (mass) Marketing: A market coverage strategy in

which a firm decides to ignore market segment differences and go
after the whole market with one offer.

One of Henry Ford's famous quotes

about the Model T was, "Any customer
can have a car painted any color that
he wants, so long as it is black."
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 Differentiated (segmented) Marketing: A market coverage strategy in

which a firm decides to target several market segments and designs
separate offers for each.

Toyota practices differentiated marketing by offering different car models for different consumer segments.
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 Concentrated (Niche) Marketing: A market coverage strategy in which
a firm goes after a large share of one or a few segments or niche.

Divvies is targeting the people with acute food allergies.

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 Micromarketing: The practice of tailoring products and marketing

programs to the needs and wants of specific individuals and local
customer groups. Micromarketing generally includes the following
variations—
 Local Marketing: Tailoring brands and promotions to the needs
and wants of local customer groups—cities, neighborhoods, and
even specific stores.
 Individual Marketing: Tailoring products and marketing programs to
the needs and preferences of individual customers—also labeled
as one-to-one marketing, customized marketing, and markets-of-
one marketing.
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 Kinokuniya, the Japanese bookstore chain, practices local marketing. In Singapore,

Japanese bookstore Kinokuniya carries more comics at its Bugis Junction store
because of the higher youth traffic; but has more cultural books at its Ngee Ann
City store because of the more upmarket clientele.
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 Some vending machines in Japan  Vitamin producing company Care/of

employ facial recognition technology personalized the packages for the
to recommend drinks depending on a ranges of their products
customer’s age, gender, and other
characteristics.
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 Choosing a Targeting Strategy: Companies need to consider many

factors when choosing a market-targeting strategy. Such factors may
typically include—
 Company Resources
 Product Variability
 Product’s Life-Cycle Stage
 Market Variability
 Competitors’ Marketing strategy
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Differentiation and Positioning

 Beyond deciding which segments of the market it will target, the

company must decide on a value proposition—on how it will create
differentiated value for targeted market segments and what positions
it want to occupy in those segments. A product position is the way
the product is defined by consumers on important attributes—the
place the product occupies in consumers’ mind relative to competing
products.
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Positioning Maps: In planning their differentiation and positioning strategies,
marketers often prepare perceptual positioning maps, which show consumers’
perceptions of their brands versus competing products on important buying
dimensions.
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 Choosing a Differentiation and Positioning Strategy: The

differentiation and positioning task consists of three steps:
 Identifying Possible Value Differences and Competitive Advantages
 Choosing the Right Competitive Advantages
 Choosing an Overall Positioning Strategy
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 Identifying Possible Value Differences and Competitive Advantages: To
the extent that a company can differentiate and position itself as
providing superior customer value, it gains competitive advantage (an
advantage over competitors gained by offering greater customer
value, either by through lower prices or by providing more benefits
that justify higher prices). A company can differentiate by following
any combination of the following differentiation strategies—
 Product Differentiation
 Services Differentiation
 Channel Differentiation
 People Differentiation
 Image Differentiation
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 Choosing the Right Competitive Advantages: The following two issues are to be
addressed here—
 How Many Differences to Promote: Marketers must critically consider whether to
use one or more points of differences. Some marketers favor using unique
selling proposition (USP) for each brand while others prefer using multiple
points of differences when several companies in the same product category
claim superiority on the same attribute.
 Which Differences to Promote: A difference is worth establishing to the extent
that it satisfies the following criteria—
 Important
 Distinctive
 Superior
 Communicable
 Preemptive
 Affordable
 Profitable
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 Selecting an Overall Positioning Strategy: The full positioning of a

brand is called the brand’s value proposition—the full mix of benefits
upon which the brand is differentiated and positioned. It is the
answer to the customer’s question “why should I buy your brand?”
The following figure shows possible value propositions upon which a
company might position its products—
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 Developing a Positioning Statement: A statement that summarizes

company or brand positioning—it takes this form: To (target segment
and need) our (brand) is (concept) that (point of difference).
Thank You!