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CHAPTER 7
CUSTOMER VALUE-DRIVEN
MARKETING STRATEGY: CREATING
VALUE FOR TARGET CUSTOMERS

THU NGUYEN

LEARNING OBJECTIVES
1. Define the major steps in designing a customer-driven marketing
strategy: market segmentation, targeting, differentiation, and
positioning.
2. List and 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.

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SUMMARY
LO1: Define the major steps in designing a customer-driven marketing strategy: market
segmentation, targeting, differentiation, and positioning.
Four major steps in designing a customer value–driven marketing strategy
•Segmenting consumer markets
•Segmenting business markets
•Segmenting international markets

•Value proposition
•Product position
•Positioning map
•Competitive advantage

•Undifferentiated (mass) marketing

•Differentiated (segmented) marketing
•Concentrated (niche) marketing
•Micromarketing (local or individual marketing)
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SUMMARY
LO1: Define the major steps in designing a customer-driven marketing strategy:
market segmentation, targeting, differentiation, and positioning (cont.).
• Market Segmentation:
o Four important segmentation topics:
✓ Segmenting consumer markets
✓ Segmenting business markets
✓ Segmenting international markets
✓ Requirements for effective segmentation

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MARKET SEGMENTATION (CONT.)

Segmenting Consumer Markets

Nations, regions, states, counties, Age, life-cycle stage, gender,

cities, neighborhoods, income, occupation,
population density (urban, Geographic Demographic education, religion, ethnicity,
suburban, rural), segmentation segmentation generation
climate

Lifestyle, personality Occasions, benefits, user

status, usage rate, loyalty
Psychographic Behavioral status
segmentation segmentation

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MARKET SEGMENTATION (CONT.)

• Segmenting Business Markets:
o Consumer and business marketers use many of the same variables to segment their
markets.
o Additional variables include:
▪ Customer operating characteristics
▪ Purchasing approaches
▪ Situational factors
▪ Personal characteristics

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MARKET SEGMENTATION (CONT.)

• Segmenting International Markets:

Region Geographic location Economic factors Income levels, overall

level of economic
development

Type and Common

stability of government, languages, religions,
receptivity to foreign Political and legal values and attitudes,
Cultural factors
firms, monetary factors customs, and behavioral
regulations, and amount patterns
of bureaucracy

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MARKET SEGMENTATION (CONT.)

• Requirements for Effective Segmentation:
o To be useful, market segments 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. A segment
should be the largest possible homogeneous group worth pursuing with a tailored
marketing program. It would not pay, for example, for an automobile manufacturer to
develop cars especially for people whose height is greater than seven feet.
▪ Differentiable. The segments are conceptually distinguishable and respond differently to
different marketing mix elements and programs. If men and women respond similarly to
marketing efforts for soft drinks, they do not constitute separate segments.
▪ Actionable. Effective programs can be designed for attracting and serving the segments.

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MARKET TARGETING
A target market consists of a set of buyers who share common needs or characteristics that a company
decides to serve. Market targeting can be carried out at several different levels.

Evaluating market segment Selecting market segment

Market- targeting strategies

•Segment size and growth
•Segment structural attractiveness
•Company objectives and resources

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MARKET TARGETING (CONT.)

• Selecting Target Market Segments (cont.):

Differentiated
Undifferentiated Concentrated
(segmented) Micromarketing
(mass) marketing (niche) marketing
marketing

Ignore market Targets several Go after a large Tailor products &

segment market segments, share of one or a marketing programs
differences, design separate few segments or to the needs and
go after the whole offers for each niches wants of:
market with ONE - Local customer
offer (Local marketing)
- Specific individuals
(Individual marketing)

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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—how it will create differentiated value for targeted segments and
what positions it wants to occupy in those segments.
• Product position is the way a product is defined by consumers on important attributes—
the place the product occupies in consumers’ minds relative to competing products.
• Consumers are overloaded with information about products and services. They cannot
reevaluate products every time they make a buying decision.
• Consumers position products with or without the help of marketers.
• Positioning Maps:
o Marketers often prepare perceptual positioning maps that show consumer
perceptions of their brands versus those of competing products on important buying
dimensions.

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DIFFERENTIATION AND POSITIONING (CONT.)

Choosing a Differentiation and Positioning Strategy

Identify Possible
Choose the Right Developing a
Value Differences Select an Overall
Competitive Positioning
and Competitive Positioning Strategy
Advantages Statement
Advantages

▪ Product ▪ How many? ▪ To (target segment

▪ Services ▪ Which? (Important, ▪ and need) our
▪ Channels Distinctive, (brand) is (concept)
▪ People Superior, that (point of
▪ Image Communicable, difference)
Preemptive,
Affordable, Profitable)

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DIFFERENTIATION AND POSITIONING (CONT.)

• Choosing a Differentiation and Positioning Strategy (cont.):
1 o Identifying Possible Value Differences and Competitive Advantages:
▪ 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.
▪ To find points of differentiation, marketers must think through the customer’s entire
experience with the company’s product or service. It can differentiate along the lines of
product, services, channels, people, or image.
✓ Product differentiation: features, performance, or style and design.
✓ Services differentiation: speedy, convenient service.
✓ Channel differentiation: the way company design their channel’s coverage,
expertise, and performance.
✓ People differentiation—hiring and training better people than their competitors do.
✓ Company or brand image differentiation: product’s distinctive benefits and
positioning

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DIFFERENTIATION AND POSITIONING (CONT.)

• Choosing a Differentiation and Positioning Strategy (cont.):
2 o Choosing the Right Competitive Advantages:
▪ A competitive advantage should be:
✓ Important. The difference delivers a highly valued benefit to target buyers.
✓ Distinctive. Competitors do not offer the difference, or the company can offer it
in amore distinctive way.
✓ Superior. The difference is superior to other ways that customers might obtain
the same benefit.
✓ Communicable. The difference is communicable and visible to buyers.
✓ Preemptive. Competitors cannot easily copy the difference.
✓ Affordable. Buyers can afford to pay for the difference.
✓ Profitable. The company can introduce the difference profitably.

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DIFFERENTIATION AND POSITIONING (CONT.)

• Choosing a Differentiation and Positioning Strategy (cont.):
3 o Selecting an Overall Positioning Strategy:
▪ The full positioning of a brand is called the brand’s value proposition—the full
mix of benefits on which a brand is differentiated and positioned

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DIFFERENTIATION AND POSITIONING (CONT.)

• Choosing a Differentiation and Positioning Strategy (cont.):
3 o Selecting an Overall Positioning Strategy (cont.):
▪ The five winning value propositions:
1. More-for-more positioning involves providing the most upscale product or
service and charging a higher price to cover the higher costs. A more-for-
more market offering not only offers higher quality, it also gives prestige to
the buyer. It symbolizes status and a loftier lifestyle. 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.
2. More for the Same. A company can attack a competitor’s value proposition
by positioning its brand as offering more for the same price.
3. The Same for Less. Offering the same for less can be a powerful value
proposition— everyone likes a good deal

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DIFFERENTIATION AND POSITIONING (CONT.)

• Choosing a Differentiation and Positioning Strategy (cont.):
3 o Selecting an Overall Positioning Strategy (cont.):
▪ The five winning value propositions (cont.):
4. 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 for a lower price. Less-for-much-less positioning involves meeting
consumers’ lower performance or quality requirements at a much lower
price.
5. More for Less- the winning value proposition

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DIFFERENTIATION AND POSITIONING (CONT.)

• Choosing a Differentiation and Positioning Strategy (cont.):
4 o Developing a Positioning Statement:
▪ Positioning statement: A statement that summarizes company or brand
positioning using this form: To (target segment and need) our (brand) is (concept)
that (point of difference).

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DIFFERENTIATION AND POSITIONING (CONT.)

• Communicating and Delivering the Chosen Position:
o Choosing the positioning is often easier than implementing the position.
o Establishing a position or changing one usually takes a long time.
o Maintaining the position requires consistent performance and communication.

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DISCUSSION 1
• Debate: Mass marketing is dead (Pro) versus mass marketing is
still a viable way to build a profitable brand (Con).

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DISCUSSION 2: BMW SEGMENTATION AND TARGETING

https://www.youtube.com/watch?v=B42ks76uiGc

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DISCUSSION 3: AIR ASIA SUCCESS IN TARGETING THE

RIGHT MARKETS
Questions:
1. What is the target market of Air Asia?
2. Search further information to raise
more reason Air Asia is successful
with this target market.

https://www.youtube.com/watch?v=TN5maC8qXl0

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DISCUSSION 4: MARKETING ETHICS

Discretionary income- It’s the amount of money we have left over after paying for life’s necessities.
And many teens have plenty of it. According to a recent Nielsen survey, 29 percent of teens live in
homes where household income is $100,000 or higher. These teens aren’t just buying for
themselves, either. In addition to having discretionary income, teens have a strong influence on
the purchasing decisions of their parents. According to Mary Leigh Bliss, trends editor at youth-
focused market research firm YPulse, “Teens are now passing technology down to their parents,
not the other way around.” This presents significant opportunities for marketers. However, some
critics worry that teens may be especially vulnerable to targeted marketing messages and offers
from high-powered or unscrupulous marketers.
Question: Discuss how companies can reach their teen markets using socially responsible target
marketing. Cite an example of a company being responsible in targeting teens and another
example where a company is not responsible.

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DISCUSSION 5: DARDEN RESTAURANTS: BALANCING

STANDARDIZATION AND DIFFERENTIATION

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DISCUSSION 6: VIRGIN AMERICA: FLIGHT

SERVICE FOR THE TECH SAVVY
• Read and answer the questions regarding the company case Virgin
America: Flight Service for the Tech Savvy on page 239-241

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