Chapter 6: Customer-Driven Marketing Strategy

Introduction

• Focus on creating value for target customers.
• Importance of gaining insights into consumers and the marketplace.
• Key components of customer-driven marketing strategy include:
  • Segmentation
  • Targeting
  • Differentiation
  • Positioning
• Future chapters will cover tactical marketing tools and the extended marketing mix.
• Learning Objectives:
  • LO 6.1: Define steps in designing a customer-driven marketing strategy.
  • LO 6.2: Discuss main bases for segmenting consumer and business markets.
  • LO 6.3: Explain how companies identify attractive market segments.
  • LO 6.4: Discuss how companies differentiate and position products.

Customer-Driven Marketing Strategy

• Companies cannot appeal to all buyers in the same way due to diverse consumer needs.
• Shift from mass marketing to target marketing.
• Shotgun Approach vs. Rifle Approach:
  • Shotgun: Scattering marketing efforts broadly.
  • Rifle: Focusing on specific buyers with greater interest.
• Four Steps in Designing Strategy:
  1. Segmentation: Divide market into distinct groups.
  2. Targeting: Select which segments to enter.
  3. Differentiation: Differentiate offerings from competitors.
  4. Positioning: Create a distinctive place in consumers' minds.

Market Segmentation

• Buyers differ in wants, resources, locations, attitudes, and practices.
• Segmentation Topics:
  • Consumer Markets
  • Business Markets
  • International Markets
  • Effective Segmentation Requirements

Segmenting Consumer Markets

• Geographic Segmentation:
  • Divide market by geographical units (nations, regions, cities, neighborhoods).
  • Companies localize products and marketing efforts per region.
• Demographic Segmentation:
  • Segment by age, gender, family size, income, occupation, etc.
  • Popular due to close correlation with consumer needs and ease of measurement.
• Psychographic Segmentation:
  • Divide by social class, lifestyle, or personality characteristics.
  • Example: Different coffee shop atmospheres catering to lifestyle differences.
• Behavioral Segmentation:
  • Divide by knowledge, attitudes, uses, or responses to a product.
  • Example: Grouping buyers by occasions, benefits sought, user status, usage rate, loyalty status.
• Multiple Segmentation Bases:
  • Use multiple bases to identify better-defined target groups.

Segmenting Business Markets

• Business markets use similar variables as consumer markets but include additional variables like purchasing approaches, customer characteristics.
• Custom programs and systems for larger customers.

Segmenting International Markets

• Companies focus on specific countries due to varying economic, cultural, political factors.
• Segmentation Methods:
  • Geographic, economic, political, cultural.
  • Intermarket Segmentation: Focus on consumers with similar needs globally.

Effective Segmentation Requirements

• Segments must be measurable, accessible, substantial, differentiable, and actionable.

Market Targeting

• Evaluate segments by size, growth, attractiveness, and company compatibility.

• Market Targeting Strategies:

  • Undifferentiated Marketing: Mass marketing approach.
  • Differentiated Marketing: Target several segments with separate offers.
  • Concentrated Marketing: Focus on large share of smaller segments or niches.
  • Micromarketing: Tailor offers to individual customers or local areas.

• Choosing a Targeting Strategy depends on:

  • Company resources
  • Product variability
  • Product lifecycle stage
  • Market variability
  • Competitors’ strategies

Positioning and Differentiation

• Differentiation Strategies:

  • Product differentiation (features, performance, design)
  • Services differentiation (delivery, support)
  • Channel differentiation (distribution)
  • People differentiation (staff)
  • Image differentiation (brand image)

• Positioning Maps: Visual representation of positioning relative to competitors.

• Choosing a Differentiation and Positioning Strategy:

  • Identify competitive advantages.
  • Choose right competitive advantages.
  • Select overall positioning strategy.

• Value Propositions:

  • More for More: Premium products at higher prices.
  • More for the Same: Comparable quality at a lower price.
  • Same for Less: Similar products at lower prices.
  • Less for Much Less: Basic products for less.
  • More for Less: Difficult to sustain; offering more for a lower price.

• Developing Positioning Statement:

  • Define target segment and need, brand concept, and point of difference.

Socially Responsible Target Marketing

• Benefits both companies and consumers.
• Concerns with targeting vulnerable groups.
• Importance of ethical guidelines and advertising codes.

Conclusion

• Effective segmentation and targeting benefit both buyers and sellers.
• Positioning is key to differentiating and establishing brand perception in consumer minds.
• Continual adaptation and monitoring are necessary to maintain effective positioning.