Chapter 7 : Customer-Driven Marketing Strategy

Creating Value for Target Customers

Topic outline
• Customer-Driven Marketing Strategy
• Market Segmentation
• Market Targeting
• Differentiation and Positioning

Market segmentation involves dividing a market into distinct groups of buyers who have
different needs, characteristics, or behaviors and who might require separate marketing
strategies or mixes.
Market segmentation is 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

Market Targeting consist of evaluating each market segment’s attractiveness and selecting
one or more market segment to enter
Differentiation involves actually differentiating the market offering to create superior
cus-value
Poisoning consists of arranging for a market offering to occupy a clear, distinctive and
desirable place relative to competing products in the minds of target consumers.
Market Segmentation
Segmenting consumer markets
Segmenting business markets
Segmenting international markets
Requirements for effective segmentation

Segmenting Geographic segmentation divides the market into different geographical units
consumer such as nations, regions, states, countries, or cities
markets
Demographic segmentation divides the market into groups based on variables as
age, gender, family size, family life cycle, income,
occupation, education, religion, race, generation and
nationality

Psychographic segmentation divides buyers into groups based on social class,

lifestyle, personality traits

Behavioral segmentation divides buyers into groups based on their knowledge,

attitudes, uses, or responses to a product
● occasions
● benefits sought
MAR PLan

Business portfolio : the collection of businesses and products that make up the company

Portfolio Analysis : the process by which management evaluates the products and
business that make up the company

Growth - share matrix : a portfolio-planning method that evaluates a co

BCG

1. Stars. Stars are high-growth, high-share

businesses or products. They often need heavy
investments to finance their rapid growth.
Eventually their growth will slow down, and they will
turn into cash cows.
2. Cash cows. Cash cows are low-growth,
high-share businesses or products. These
established and successful SBUS need less
investment to hold their market share. Thus, they
produce a lot of the cash that the company uses to
pay its bills and support other SBUS that need
investment.

3. Question marks. Question marks are low-share business units in high-growth markets.
They require a lot of cash to hold their share, let alone increase it. Management has to think
hard about which question marks it should try to build into stars and which should be phased
out.
4. Dogs. Dogs are low-growth, low-share businesses and products. They may generate
enough cash to maintain themselves but do not promise to be large sources of cash.

SWOT Analysis: An overall evaluation of the company’s strength (S), weakness,

opportunities and threats.

Strengths Internal capabilities that may help a company reach its objectives
Weaknesses Internal limitations that may interfere with a company's ability to achieve its
objectives
Opportunities External factors that the company may be able to exploit to its advantage
Threats Current and emerging external factors that may challenge the company's
performance

Ansoft
Product/market expansion grid : A portfolio-planning tool for identifying company growth
opportunities through market penetration, market development, product development, or
diversification
Market penetration: Company growth by increasing sales of current products to current
market segments without changing the product.

Market development: Company growth by identifying and developing new market

segments for current company products.

Product development: Company growth by offering modified or new products to current

market segments.

Diversification: Company growth through starting up or acquiring businesses outside the

company's current products and markets.

PLC

1. Product development begins when the company finds and develops a new product idea.
During product development, sales are zero, and the company's investment costs mount.
2. Introduction is a period of slow sales growth as the product is introduced in the market.
Profits are nonexistent in this stage because of the heavy expenses of product introduction.
3. Growth is a period of rapid market acceptance and increasing profits.
4. Maturity is a period of slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits level off or decline because of increased
marketing outlays to defend the product against competition.
5. Decline is the period when sales fall off and profits drop.

Not all products follow all five stages of the PLC. Some products are introduced and die
quickly; others stay in the mature stage for a long, long time. Some enter the decline stage
and are then cycled back into the growth stage