Week 3 – Marketing Principles

Customer-driven Marketing strategy

Segmentation – Divide the total market into smaller segments

Targeting – Select the segment or segments to enter

Differentiation – Differentiate the market offering to create superior customer value

Positioning – Position the market offering in the minds of target customers

Step 1 – Market Segmentation

The process that companies use to divide large heterogeneous markets into small markets that can be
reached more efficiently and effectively with products and services that match their unique needs

Segmentation variables to segment the market: Behavioral, Geographic, Psychographic, Demographic

●Geographic Segmentation

There are several ways that a market can be geographically segmented:

-By city, county, state, region, country, or international region.

-By rural, suburban, and urban market segments.

-By climate or total population in each area.

●Demographic Segmentation

This segmentation divides the market into groups based on variables such as: age, gender, family size,
family life cycle, income, occupation, education, religion, race, generation, and nationality.

Age and life-cycle stage segmentation is the process of offering different products or using different
marketing approaches for different age and life-cycle groups.

Demographic factors are the most popular bases for segmenting customer groups.

●Psychographic Segmentation

This segmentation divides buyers into different groups based on social class, lifestyle, or personality
characteristics.

●Behavioural Segmentation

This segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to
a product.

-Occasions: when they buy or when they consume products.

-Benefits sought: different customer seek for different benefits in the same item.

-User status: markets can be segmented into non-users, ex-users, potential users, first time users, etc.

-Usage rate: light, medium and heavy users of a product.

-Loyalty status: degree of loyalty level.

-> A segment is useful when it is:

-Measurable: The size, purchasing power, and profiles of the segments can be measured

-Substantial: The market segments are large or profitable enough to serve.

-Accessible: The market segments can be effectively reached and served

-Actionable: Effective programs can be designed for attracting and serving the segments

-Differentiable: The segments are conceptually distinguishable and respond differently to different
marketing mix elements and programs

Step 2 – Market Targeting

●Market Targeting Strategies

1.Undiffirentiated Marketing (Mass Marketing)

Using this strategy, a firm might decide to ignore market segment differences and target the whole
market with one offer. Such a strategy focuses on what is common in the needs of consumers rather
than on what is different

MARKETING MIX -> Whole Market

2.Differentiated Marketing (Segmented)

Using this strategy, a firm decides to target several market segments and designs separate offers for
each.

MARKETING MIX 1 -> Segment 1

MARKETING MIX 2 -> Segment 2

MARKETING MIX 3 -> Segment 3

MARKETING MIX 4 -> Segment 4

3.Concentrated Marketing (Niche Marketing)

Instead of going for a small market share of the large market, firm will pursue a large market share of a
small market. It is suitable when it is few competitors and the firm have a strong capability in this
market.

MARKETING MIX -> Segment 1

4.Micro Marketing

The practice of tailoring products and marketing programs to the needs and wants of specific individuals
and local customers segments – includes:

-Local Marketing: Tailoring brands and promotions to the needs and wants of local customer segments –
cities, neighborhoods, and even specific stores.

-Individual Marketing: Tailoring products and marketing programs to the needs and preferences of
individual customers – also labelled ‘one-to-one marketing’, ‘customized marketing’, and ‘markets-of-
one marketing’.

Step 3 and 4 – Differentiating and Positioning

●Positioning strategy

Product position – The complex set of perceptions, impressions, and feelings that consumers have for
the product compared with competing products.

A product’s position is the way the product is defined by consumers on important attributes – that is,
the place the product occupies in consumers’ mind relative to competing products.

Positioning of a market offering should occupy a clear, distinctive, and desirable place relative to
competing products in the minds of target consumers

●How to positioning a brand?

Marketers often prepare perceptual positioning maps that show consumer perceptions of their brands
versus competing products on important buying dimensions.

It also helps marketers to identify the gaps.

●How to draw a positioning map?

Draw 2 axes.

Identify 2 most important & determinant attributes when consumers choose the product and name your
axis after them.

Identify the adjective for your chosen attributes.

Place competing brands on the market, based on these 2 attributes’ ratings, decided by the
management team.

●Choosing a differentiation and positioning strategy

Identifying a set of differentiating competitive advantages upon which to build a position

Choosing the right competitive advantages

Selecting an overall positioning strategy

1.Identifying possible value differences and competitive advantages

To build profitable relationships with target customers, marketers must understand customer needs
better than competitors do and deliver more customer value. To the extent that a company can
“differentiate” and “position” itself as providing superior customer value, it gains competitive
advantage.

A company can differentiate along the lines of product, services, channels, people or image:

-Product/Service differentiation: features, performance, style, design, superior services, etc.

-Channel differentiation: speedy, convenient or careful delivery.

-People differentiation: hiring and training better people than competitors.

-Image differentiation: a company/brand image should convey the product’s distinctive benefits and
positioning.

2.Choosing the right competitive advantages

A difference is worth establishing to the extent that it satisfies the following criteria: Important,
Distinctive, Superior, Communicable, Pre-emptive (can’t be copied), Affordable, Profitable.

3.Selecting an overall Positioning Strategy

Value Proposition: The full positioning of a brand – the full mix of benefits upon which it is positioned

Price
More The Same Less
Benefits More More for more More for the same More for less
The Same The same for less
Less Less for much less