Fundamentals Of

Marketing
By
Tauseef Iqbal Khan
Faculty Member – IQRA University
Introduction
• Importance of understanding consumers and the marketplace
environment
• Key customer-driven marketng strategy decisions—dividing up
markets into meaningful customer groups (segmentaton)
• Choosing which customer groups to serve (targetng)
• Creatng market oferings that best serve targeted customers
(diferentaton)
• And positoning the oferings in the minds of consumers (positoning)
Chapter 7 Customer-Value-Driven
Marketing Strategy
Learning Objectves
• Defne the maoor steps in designing a customer-driven marketng
strategy: market segmentaton, targetng, diferentaton, and
positoning
• List and discuss the maoor bases for segmentng consumer and business
markets
• Explain how companies identfy atractve market segments and choose
a market-targetng strategy
• Discuss how companies diferentate and positon their products for
maximum compettve advantage
Market Segmentation
• Buyers in any market difer in their wants, resources, locatons, buying
attudes, and buying practces
• Through market segmentaton, companies divide large,
heterogeneous markets into smaller segments that can be reached
more efciently and efectvely with products and services that match
their unique needs
• Four important segmentaton topics: segmentng consumer markets,
segmentng business markets, segmentng internatonal markets
Segmenting Consumer Markets
Geographic Segmentaton
• Geographic segmentaton calls for dividing the market into diferent geographical units,
such as natons, regions, states, countes, cites, or even neighborhoods
Demographic Segmentaton
• Demographic segmentaton divides the market into segments based on variables such as
age, life-cycle stage, gender, income, occupaton, educaton, religion, ethnicity, and
generaton
• Demographic factors are the most popular bases for segmentng customer groups.
• One reason is that consumer needs, wants, and usage rates ofen vary closely with
demographic variables.
• Another is that demographic variables are easier to measure than most other types of
variables
Segmenting Consumer Markets
• Age and life-cycle segmentaton Dividing a market into diferent age
and life-cycle groups
• Gender segmentaton Dividing a market into diferent segments
based on gender
• Income segmentaton Dividing a market into diferent income
segments
Segmenting Consumer Markets
Psychographic Segmentaton
• Psychographic segmentaton divides buyers into diferent segments based on social
class, lifestyle, or personality characteristcs. People in the same demographic group can
have very diferent psychographic characteristcs
• Behavioral segmentaton Dividing a market into segments based on consumer
knowledge, attudes, uses of a product, or responses to a product.
• Occasion segmentaton Dividing the market into segments according to occasions when
buyers get the idea to buy, actually make their purchase, or use the purchased item.
• Beneft segmentaton Dividing the market into segments according to the diferent
benefts that consumers seek from the product.
•
Segmenting Consumer Markets
• User Status Markets can be segmented into nonusers, ex-users, potental users,
frst-tme users, and regular users of a product Marketers want to reinforce and
retain regular users, atract targeted nonusers, and reinvigorate relatonships
with ex-users
• Usage Rate Markets can also be segmented into light, medium, and heavy
product users. Heavy users are ofen a small percentage of the market but
account for a high percentage of total consumpton
• Loyalty Status. A market can also be segmented by consumer loyalty.
Consumers can be loyal to brands (Tide), stores (Target), and companies (Apple)
• Buyers can be divided into groups according to their degree of loyalty-
Completely Loyal ---- Somewhat Loyal
Segmenting Business Markets
• Consumer and business marketers use many of the same variables to
segment their markets
• Business buyers can be segmented geographically, demographically
(industry, company size), or by benefts sought, user status, usage
rate, and loyalty status
• Yet, business marketers also use some additonal variables, such as
customer operatng characteristcs, purchasing approaches,
situatonal factors, and personal characteristcs
Segmenting International Markets
• Forming segments of consumers who have similar needs and buying
behaviors even though they are located in diferent countries
• Also called Cross-Market Segmentaton
Requirements for Efective
Segmentation
• Measurable The size, purchasing power, and profles of the segments
can be measured
• Accessible The market segments can be efectvely reached and served
• Substantal The market segments are large or proftable enough to
serve
• Differentable The segments are conceptually distnguishable and
respond diferently to diferent marketng mix elements and programs
• Actonable Efectve programs can be designed for atractng and
serving the segments
Market Targeting
• Market segmentaton reveals the frm’s market segment
opportunites
• In evaluatng diferent market segments, a frm must look at three
factors: segment size and growth, segment structural atractveness,
and company oboectves and resources
• To select segments that have the right size and growth characteristcs
• To examine maoor structural factors that afect long-run segment
atractveness (Michael Porter’s Forces Model- Industry Analysis)
Selecting Target Market Segments
• Target market A set of buyers sharing common needs or characteristc that a
company decides to serve
• Undifferentated (mass) marketng A market-coverage strategy in which a frm
decides to ignore market segment diferences and go afer the whole market with
one ofer.
• Differentated (segmented) marketng A market-coverage strategy in which a frm
decides to target several market segments and designs separate ofers for each
• By ofering product and marketng variatons to segments, companies hope for
higher sales and a stronger positon within each market segment. Developing a
stronger positon within several segments creates more total sales than
undiferentated marketng across all segments
Selecting Target Market Segments
Concentrated Marketng
• When using a concentrated marketng (or niche marketng) strategy, instead of
going afer a small share of a large market, a frm goes afer a large share of
one or a few smaller segments or niche
• Micromarketng Tailoring products and marketng programs to the needs and
wants of specifc individuals and local customer segments; it includes local
marketng and individual marketng
• Local marketng Tailoring brands and marketng to the needs and wants of
local customer segments—cites, neighborhoods, and even specifc stores
• Individual marketng Tailoring products and marketng programs to the needs
and preferences of individual customers
Choosing a Target Strategy
Strategy Reasons

• Concentrated Market When the frm’s resources are limited

• Best Strategy Degree of Product Variability
• Undiferentated For Uniform Products – Low Market Variability
• Diferentaton / Products that can vary in design such as car / camera
Concentraton
• Undiferentated For a frm starts new business
Marketng / Concentrated
• Diferentated In case if the maturity
Compettor’s startegies
Diferentiation and Positioning
• The company must decide on a value propositon—how it will create
diferentated value for targeted segments and what positons it
wants to occupy in those segment
• A product positon is the way a product is defned by consumers on
important atributes—the place the product occupies in consumers’
minds relatve to competng products
• Products are made in factories, but brands happen in the minds of
consumers.
Positioning Maps
• In planning their diferentaton and positoning strategies, marketers
ofen prepare perceptual positoning maps that show consumer
perceptons of their brands versus those of competng products on
important buying dimensions
Choosing a Diferentiation and
Positioning Strategy
• A brand’s positoning must serve the needs and preferences of well-
defned target market
• To build proftable relatonships with target customers, marketers
must understand customer needs and deliver more customer value
beter than compettors do
• To fnd points of diferentaton, marketers must think through the
customer’s entre experience with the company’s product or service
• It can diferentate along the lines of product, services, channels,
people, or image
How Many Diferences to Promote
• Important The diference delivers a highly valued beneft to target buyers
• Distnctve Compettors do not ofer the diference, or the company can
ofer it in a more distnctve way
• Superior The diference is superior to other ways that customers might
obtain the same beneft
• Communicable The diference is communicable and visible to buyers
• Preemptve Compettors cannot easily copy the diference
• Affordable Buyers can aford to pay for the diference
• Proftable The company can introduce the diference proftable
Positioning statement
• A statement that summarizes company or brand positoning using this
form: To (target segment and need) our (brand) is (concept) that
(point of diference)
• Here is an example using the popular digital informaton management
applicaton Evernote: “To busy mult-taskers who need help
remembering things, Evernote is a digital content management
applicaton that makes it easy to capture and remember moments
and ideas from your everyday life using your computer, phone, tablet,
and the Web