CIF1001 - LECTURE 5 (Updated)

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Principles of Marketing
Eighteenth Edition, Global Edition
Lecture 5
Customer Value-Driven Marketing
Strategy: Creating Value for Target
Customers
Copyright © 2021 Pearson Education Ltd.

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Marketing Vignette: Henkel’s Persil in the

Gulf Region (GCC)
Henkel has segmented its market carefully and concentrated on
serving men and women’s needs separately. By focusing on
generating insights to understand market trends and customers’
special needs in different regions, Henkel found huge success
with its brands in the Middle East.
Persil White for White Thobes Persil Abaya Shampoo
(Oud/Agarwood) (Musk and Flower)

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Learning Objectives
7.1 Define the major steps in designing a customer-driven
marketing strategy: market segmentation, targeting,
differentiation, and positioning.
7.2 List and discuss the major bases for segmenting
consumer and business markets.
7.3 Explain how companies identify attractive market
segments and choose a market-targeting strategy.
7.4 Discuss how companies differentiate and position their
products for maximum competitive advantage.

Learning Objective 1
Define the major steps in designing a customer-driven
marketing strategy: market segmentation, targeting,
differentiation, and positioning.

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Customer-Driven Marketing Strategy

List and discuss the major bases for segmenting consumer
and business markets.

Market Segmentation (1 of 9)
Market segmentation requires dividing a market into
smaller segments with distinct needs, characteristics, or
behaviors that might require separate marketing strategies
or mixes.
• Segmenting consumer markets

• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
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© 2021 Pearson Education Ltd.
Segmenting Consumer Markets
• Geographic segmentation
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation
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Geographic segmentation divides the market into different
geographical units such as nations, regions, states, counties,
cities, or even neighbourhoods.
Demographic segmentation divides the market into segments
based on variables such as age, life-cycle stage, gender, income,
occupation, education, religion, ethnicity, and generation.
Psychographic segmentation divides a market into different
segments based on social class, lifestyle, or personality
characteristics.
Behavioural segmentation divides a market into segments
based on consumer knowledge, attitudes, uses of a product, or
responses to a product.
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Behavioural Segmentation

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Segmenting Consumer Benefit segmentation: “There’s
Markets a Fitbit for Everyone.”
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Behavioural Segmentation
• Occasions
• Benefits sought Fitbit makes health and fitness
• User status tracking devices aimed at
• Usage rate buyers in three major benefit
• Loyalty status segments: Everyday Fitness,
Active Fitness, and
Performance Fitness

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Multiple segmentation is used to identify smaller, better-defined target groups.
Experian’s Mosaic USA system classifies U.S. households into one of 71
lifestyle segments and 19 levels of affluence.
Using Acxiom’s Personicx segmentation system, marketers paint a surprisingly
precise picture of who you are and what you buy. Personicx clusters carry such
colorful names as “Skyboxes and Suburbans,” “Shooting Stars,” “Hard Chargers,”
“Soccer and SUVs,” “Raisin’ Grandkids,” “Truckin’ and Stylin’,” “Pennywise
Mortgagees,” and “Cartoons and Carpools.”

Segmenting Business Markets
Consumer and business marketers use many of the same
variables to segment their markets.
Additional variables include:
• Customer operating characteristics
• Purchasing approaches
• Situational factors
• Personal characteristics
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Segmenting International Markets
• Geographic location
• Economic factors
• Political and legal factors
• Cultural factors

Segmenting International Markets
Intermarket segmentation involves forming segments of

consumers who have similar needs and buying behaviors
even though they are located in different countries.
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Requirements for Effective Segmentation
• Measurable
• Accessible
• Substantial
• Differentiable
• Actionable

Explain how companies identify attractive market segments
and choose a market-targeting strategy.

Market Targeting (1 of 9)
Evaluating Market Segments
• Segment size and growth

• Segment structural attractiveness
• Company objectives and resources
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Selecting Target Market Segments
A target market is a set of buyers who share common
needs or characteristics that the company decides to serve.
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Figure 7.2 Market-Targeting Strategies

Undifferentiated marketing targets the whole market with
one offer.
• Mass marketing
• Focuses on common needs rather than what’s different
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Differentiated marketing targets several different market segments and designs
separate offers for each.
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing
• Differentiated marketing: With more than 30 differentiated hotel brands,
Marriott International dominates the hotel industry, capturing a much larger
share of the travel and hospitality market than it could with any single brand
alone.

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Selecting Target Markets Concentrated marketing: Fila owes
its resurgence not only to the retro
Concentrated marketing targets a wave but the brand’s ability to
large share of a smaller market. create a narrative about its
• Limited company resources products.
• Knowledge of the market
Read:
• More effective and efficient https://www.cnbc.com/2019/06/19/h
ow-a-90s-nostalgia-trend-powered-
the-comeback-of-champion-and-
fila.html

Micromarketing is the practice of tailoring products and
marketing programs to suit the tastes of specific individuals
and locations.
• Local marketing involves tailoring brands and promotion to
the needs and wants of local customer segments.
– Cities
– Neighborhoods
– Stores
• Individual marketing
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Selecting Target Markets Individual marketing: The
Individual marketing Rolls-Royce Bespoke design
involves tailoring products team works closely with
and marketing programs to individual customers to help
the needs and preferences of them create their own unique
individual customers. Rolls-Royces.
Also known as:
• One-to-one marketing
• Mass customization

Choosing a targeting strategy depends on
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
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Discuss how companies differentiate and position their

products for maximum competitive advantage.

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Differentiation and Positioning (1 of 9)

Product position is the way the product is defined by
consumers on important attributes.
Positioning: Sonos does more than just sell speakers; it
unleashes “All the music on earth, in every room of your
house, wirelessly.”

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Positioning maps show consumer perceptions of
marketer’s brands versus competing products on important
buying dimensions.
Figure 7.3 Positioning map: Large luxury SUVs

Choosing a Differentiation and Positioning Strategy
• Identifying a set of possible competitive advantages to
build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen position to the
market
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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.
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Choosing a Differentiation Services differentiation:
and Positioning Strategy Quicken Loans’ Rocket
Identifying a set of possible Mortgage doesn’t just offer
competitive advantages to mortgage loans; its online-
differentiate along the lines of: only interface lets users get a
loan decision in only minutes.
• Product
• Services
• Channels
• People
• Image

A competitive advantage should be:
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
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Value proposition is the full mix of benefits upon which a
brand is positioned.
Figure 7.4 Possible Value Propositions

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Winning Value Propositions
Value proposition Description

More for more • Provides the most upscale
product or service
More for the same • High quality at lower prices
More for less • Best winning proposition
The same for less • Gives a good deal
Less for much less • Meeting consumers’ lower
performance or quality
requirements at a lower price

Positioning statement summarizes company or brand
positioning using this form: To (target segment and need)
our (brand) is (concept) that (point of difference/benefit)
support points (reason to believe)
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Developing a Positioning Statement

Positioning statement: Summarises company or brand
positioning

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Apple’s Positioning Statement

Communicating and Delivering the Chosen Position
Choosing the positioning is often easier than implementing
the position.
Establishing a position or changing one usually takes a long
time.
Maintaining the position requires consistent performance
and communication.
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Rebranding vs Repositioning
REBRANDING REPOSITIONING
While rebranding deals with outward factors like the overall brand
image, repositioning deals with what's on the inside.
A brand can be repositioned without changing its identity.

Repositioning focuses on the customer perception of the brand relative to
the major competitors.

CQC7025 - AAMA
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Rebranding
• From ‘healthy food’ to more affordable and accessible image. Read:
Behind dahmakan’s Drastic Decision To Drop The Healthy Food Image &
Revamp As Pop Meals (Vulcan Post, 2021)
• The redesigned logo reflects a new era for Burger King and its
commitment to fresher, cleaner ingredients is best represented by
looking back to simpler, less processed times. Read: Burger King Rolls Out
Its First Rebrand In More Than 20 Years (Forbes, 2021)

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Repositioning
• Spotify was already a well-positioned brand in the market, but a crisis like the COVID-
19 pandemic can reshape business models and consumer needs.
• The music streaming platform already seemed to have built the perfect brand to thrive
during the pandemic because it is digital and remote, which provides struggling people
with a much-needed escape from daily life.
• However, the pandemic caused many advertisers to cut budgets. As a result,

Spotify’s business model–which relies heavily on revenue from advertisements–faltered.
• To successfully reposition the brand, they increased their focus on original content
like podcasts and put enormous effort into curating playlists from internal
experts, external experts and celebrities. This strategy (re)positioned the company
not only as a music provider, but also a tastemaker and content creator.

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1

Copyright © 2021 Pearson Education Ltd.

Marketing Vignette: Henkel’s Persil in the

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Customer-Driven Marketing Strategy

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

• Segmenting consumer markets

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Intermarket segmentation involves forming segments of

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

• Segment size and growth

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Discuss how companies differentiate and position their

Copyright © 2021 Pearson Education Ltd.

Differentiation and Positioning (1 of 9)

Copyright © 2021 Pearson Education Ltd.

Differentiation and Positioning (2 of 9)

Copyright © 2021 Pearson Education Ltd.

Differentiation and Positioning (5 of 9)

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

Differentiation and Positioning (7 of 9)

Copyright © 2021 Pearson Education Ltd.

Winning Value Propositions

Value proposition Description

Copyright © 2021 Pearson Education Ltd.

Developing a Positioning Statement

Copyright © 2021 Pearson Education Ltd.

Apple’s Positioning Statement

Copyright © 2021 Pearson Education Ltd.

A brand can be repositioned without changing its identity.

Copyright © 2021 Pearson Education Ltd.

Copyright © 2021 Pearson Education Ltd.

• However, the pandemic caused many advertisers to cut budgets. As a result,

Copyright © 2021 Pearson Education Ltd.

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