Chapter 7: Customer Value-driven Marketing Strategy

Topic Outline
01 Customer-Driven Marketing Strategy

02 Market Segmentation

03 Market Targeting

04 Differentiation and Positioning

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Market Market
segmentation targeting
Dividing the Selecting 01 Select the
market into one or more customers to serve
smaller segments to
segments serve.

Differentiation Positioning
02 Decide on a value Differentiating Positioning the
proposition the market
offering to
market offering
in the minds of
create superior target customers
customer value.

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Market Segmentation
Market segmentation is
the process that
companies use to divide Segmenting
large, heterogeneous consumer markets
markets into small
markets that can be Market Segmenting
segmentation
reached more efficiently business markets
and effectively with
products and services that
match their unique needs
Segmenting
international markets
Requirements for effective
segmentation??
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Segmenting consumer markets

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Geographic
segmentation
Divides the market into
different geographical units
such as nations, regions,
states, counties, or cities

Principle of Marketing_ Ms. Dang Thi Uyen Thao

Principle of Marketing_ Ms. Dang Thi Uyen Thao
 L’OREAL BREAKDOWN OF THE SKINCARE MARKET

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Demographic
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

Principle of Marketing_ Ms. Dang Thi Uyen Thao

Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Psychographic
segmentation

Divides buyers into different

groups based on social class,
lifestyle, or personality traits

Principle of Marketing_ Ms. Dang Thi Uyen Thao

Principle of Marketing_ Ms. Dang Thi Uyen Thao
 luxury

practicality environment
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Lifestyle segment examples
• Class (Working class family, Middle class, Upper-class family)
• Personality (Ongoing, Creative, Serious)
• Attitudes (Hope, Optimism, Realism)
• Lifestyles (Healthy lifestyle, Gluten-free lifestyle)
• Special character traits (Religious, Adventurous)
• Expectations (Explicit, Implicit expectations, Technological expectations)
• Hobbies (Reading, Horse Ridding, Footballs, Walking)
• Interests (Interested in food, technology, fashion)
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Behavioral
segmentation Usage
05
Loyalty
status
rate
04
Divides buyers into
groups based on their
User 03
knowledge, attitudes,
status
uses, or responses to
a product
02
Benefits
sought 01 Occasions
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Behavioral segment examples

• Occasion (Birthday, Anniversary, Graduating)

• Brand knowledge (None, Some, Strong Knowledge)
• Types of loyalty (No Loyalty, Inertia Loyalty, Latent Loyalty, Premium Loyalty)
• Price sensitivity (Sensitive to price changes, Not sensitive)
• Shopping style (Avoid shopping, Enjoy shopping)
• Usage rate (Heavy, Light)
• User status (Never, Occasional, Regular)
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Multiple
Segmentation
Bases

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Segmenting Business Markets

• Consumer and business marketers use many of the same variables to

segment.
• Business buyers can be segmented geographically, demographically
(industry, company size), or by benefits sought, user status, usage
rate, and loyalty status.
• Yet business marketers also use some additional variables, such as
customer operating characteristics, purchasing approaches,
situational factors, and personal characteristics.

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 EXAMPLES

➢ IT firm: 2 segmentation
variables used (operating
characteristics and
situational factors)

➢ A manufacturer of tomato:
many segmentation
variables used (operating
characteristics,
purchasing
approaches,…)

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Segmenting International markets

Geographic Economic
location factors

Political-legal Cultural
factors factors
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Requirements for Effective Segmentation
✓ Measurable The size, purchasing
power, and profiles of the segments can be
measured

To be useful, ✓ Accessible be effectively reached and

serve
market
✓ Substantial are large or profitable
segments enough to serve
must be: ✓ Differentiable respond differently to
different marketing mix elements and programs
✓ Actionable can be designed for attracting
and serving the segments
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 • Target market consists of a set of buyers who share common needs or
characteristics that the company decides to serve
• The firm now has to evaluate the various segments and decide how many
and which segments it can serve best.
• We now look at
**Evaluating Market Segments
**Selecting Target Market Segments

Market Targeting
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Evaluating Market Segments
In evaluating different market segments, a firm
must look at three factors:
• Segment size and growth
• Segment structural attractiveness: strong
and aggressive competitors; the existence of
many actual or potential substitute products;
the relative power of buyers; the presence of
powerful suppliers
• Company objectives and resources

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Selecting Target Market Segment
01 02 03 04
broadly narrowly

Differentiated
Undifferentiated Concentrated
(segmented) Micromarketing
(mass) marketing (niche) marketing
marketing
Decisions to ignore Targeting several A firm goes after Tailoring to
market segment market segments a large share of individuals and
differences and and designing one or a few local segments;
target the whole separate offers segments or includes local
market with one for each. niches. and individual
offer. marketing
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Selecting Target Market Segment

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 About 10% of population is lefties, is this a significant ignore?

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Niche Marketing

A Big Fish In A Small Pond

“As a strategy, niche

marketing is aimed at
being a big fish in a small
pond instead of being a
small fish in a big pond”

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Micromarketing
• Local marketing Tailoring brands and
marketing to the needs and wants of local
customer segments—cities, neighborhoods,
and even specific stores.
• Individual marketing involves tailoring
products and marketing programs to the
needs and preferences of individual
customers. Also known as: One-to-one
marketing/ Mass customization/ Markets-of-
one marketing
Principle of Marketing_ Ms. Dang Thi Uyen Thao
AirTags: the most Apple
 Differentiation and Positioning
• Products are made in factories, but brands
happen in the minds of consumers.

• Product position is the way the product is defined by

consumers on important attributes—the place the
product occupies in consumers’ minds relative to
competing products

• A product’s position is the complex set of perceptions,

impressions, and feelings that consumers have for
the product compared with competing products
(perceptual positioning maps)

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 Positioning maps
show consumer
perceptions of their
brands versus
competing products
on important buying
dimensions

Principle of Marketing_ Ms. Dang Thi Uyen Thao

Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Differentiation and Positioning
The differentiation and positioning task consists of three steps:

Selecting an
overall
Choosing the positioning
right strategy
Identifying a set competitive
of possible advantages
competitive
advantages to
build a position

Principle of Marketing_ Ms. Dang Thi Uyen Thao

 ** To the extent that a company can differentiate and
position itself as providing superior customer value,
it gains competitive advantage
** It can differentiate along the lines of
Step 1- • Product differentiation- features, performance, or
style and design (BMW The ultimate driving machine)
Identifying a set • Services differentiation- speedy, convenient service
of possible (Bamboo airway “Hãng hàng không của sự hiếu
competitive khách)
advantages to • Channels differentiation-designs of their channel’s
coverage, expertise, and performance (Mobile world-
build a position Thế giới di động)
• People differentiation- hiring and training better
people than their competitors do (Điện máy xanh)
• Image differentiation- brand recognition (Apple,
Nike, Coca Cola, IBM)
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 • Important. Does the difference deliver a highly
valued benefit to the target customer?
• Distinctive. Do your competitors also offer the
difference? Can you offer it to customers in a more
distinctive and meaningful way?
Step 2- • Superior. Is the difference superior to other ways
Choosing the that customers can obtain the same “benefit”?
• Communicable. Can the difference be easily
right competitive communicated and also visible to consumers?
advantages • Preemptive. Is it difficult for your competitors to
copy the difference?
• Affordable. Can consumers afford to pay for the
difference?
• Profitable. Are you able to introduce the difference
profitably?
Principle of Marketing_ Ms. Dang Thi Uyen Thao
 Selecting an Overall Developing a
Positioning Strategy Positioning Statement
A statement that summarizes company
or brand positioning using this form:
To (target segment and need) our
The answer for “Why should I (brand) is (concept) that (point of
buy your brand?” difference)
=> “To busy multitaskers who need help
Value proposition is the full mix remembering things, Evernote is a digital
of benefits upon which a brand content management application that
makes it easy to capture and remember
is positioned moments and ideas from your everyday
life using your computer, phone, tablet,
and the web.”

Principle of Marketing_ Ms. Dang Thi Uyen Thao

Principle of Marketing_ Ms. Dang Thi Uyen Thao
 More for More. Providing them the best possible
product or service, hence charging a higher price to
cover the higher costs. However, it often invites
imitators who claim the same quality but at a lower
price.
Examples: Apple, Starbucks, Louis Vuitton

The same for Less. Offering the

same for less (deep discounts based
on superior purchasing power and
lower-cost operations)
Examples: Best Buy

More for the Same. Offering more for the same price
Examples: Walmart Principle of Marketing_ Ms. Dang Thi Uyen Thao