CHAPTER 6

DESIGNING A CUSTOMER VALUE-DRIVEN MARKET STRATEGY

SEGMENTATION, TARGETING, DIFFERENTIATION, POSITIONING

Market targeting

 Evaluating each market segment’s attractiveness and selecting one or more market
segments to enter

MAJOR SEGMENTATION VARIABLES

1. Geographic
a. Nations, regions, state, counties, cities
2. Demographic – segment based on variables
a. Age, life-cycle, gender, income, occupation, religion, ethnicity, generation
3. Psychographic
a. Social class, lifestyle, personality
b. Products people buy reflect their lifestyles
4. Behavioural
a. Occasions (example: usually people drink orange juice in the morning, but
orange growers pushing the idea of drinking orange juice at other times of the
day) , benefits(different benefits that consumers seek from the product.
Example: FitBit), user status(non-users, ex-users, potential users etc), usage
rate(light, medium,heavy) , loyalty status
MULTIPLE SEGMENTATION BASES

 Help
o Identify smaller, better-defined target groups
o Identify and understand key customer segments
o Reach customers more efficiently by tailoring market offerings and messages
to customers specific needs
SEGMENTING BUSINESS MARKETS

 Many same with consumer

 Variables
o Operating characteristics
o Purchasing approaches – identify and classify all companys products and
services into several groups
o Situational factors – external influence
o Personal characteristics

SEGMENTING INTERNATIONAL MARKETS

 Geographic
 Economic
 Political and legal – type and stability of government
 Cultural – religions, languages
 Intermarket segmentation
o Group consumers with similar needs and buying behaviours irrespective of
their location
REQUIREMENTS FOR EFFECTIVE SEGMENTATION

 Measurable – size, purchasing power, profiles of market segments

 Accessible – effectively reached and served
 Substantial – large or profitable enough
 Differentiable – conceptually distinguishable
 Actionable – effective programs can be designed

MARKET TARGETING

 Evaluate based on
o Segment size and growth
o Structural attractiveness
o Company objectives and resources
 Target market: set of buyers sharing common needs or characteristics that the
company decides to serve
Undifferentiated
- Ignore market segment differences, one offer only
Differentiated
- Target several market segments with separate offers for each
Concentrated (niche)
- Goes after a large share of one or a few smaller segments
Micromarketing
- Tailor products and marketing programs to suit tastes of specific individuals and
locations
- Local marketing
o Local customers
- Individual marketing
o Tailor to needs and preferences of individual customers

CHOOSING A TARGETING STRATEGY

Factors to consider:
1. Company resources
a. Concentrated makes the most sense
2. Product variability
3. Life-cycle stage
a. New product, practical to launch one versions only
b. Undifferentiated or concentrated makes most sense
4. Market variability
a. If most buyers have similar tastes, buy same amounts, react the same to
marketing efforts -> undifferentiated
5. Competitors marketing strategies
a. If different than competitors, could be suicidal

SOCIALLY RESPONSIBLE TARGET MARKETING

 Sometimes could be controversial

 Target vulnerable consumers with controversial or potential harmful products

DIFFERENTIATION AND POSITIONING

 Product position: the way a product is defined by consumers on important attributes

CHOOSING A DIFFERENTIATION AND POSITIONING STRATEGY

1. Identify a set of differentiating competitive advantages

a. Competitive advantage: over competitors by offering greater customer value
either by lower prices, more benefits to justify higher prices
b. Product differentiation
i. Features, performance, style, design
 c. Services differentiation
i. Speedy, convenient
d. Channel
i. Channel coverage, expertise, performance
e. People differentiation
i. Hire and train people better than competitors
f. Image differentiation
2. Choose right advantage
a. Develop Unique Selling Proposition (USP)
b. Importance
c. Distinctive – competitors do not offer the difference
d. Superior
e. Communicable
f. Preemptive
g. Affordable
h. profitable

full positioning of brand is called brands value proposition:

DEVELOPING A POSITIONING STATEMENT

 positioning statement: summarises a company or brand positioning

 to (target segment and need) our (brand) is (concept) that (point of difference)
  example: To busy multitaskers who need help remembering things, Evernote is a
digital content management application that makes it easy to capture and remember
moments and ideas from your everyday life using your computer, phone, tablet, and
the Web.”

COMMUNICATING AND DELIVERING THE CHOSEN POSITION

 marketing mix must help positioning strategy

 maintain through consistent performance and communication
 position should be monitored and adapted over time