Customer-Driven Marketing Strategy: Creating Geographic segmentation divides the market

Value for Target Customers into different geographical units such as

nations, regions, states, counties, or cities
Learning Objectives
After studying this chapter, you should be able Demographic segmentation divides the market
to: into groups based on variables such as age,
1.Define the three steps of target marketing: gender, family size, family life cycle, income,
market segmentation, target marketing, and occupation, education, religion, race,
market positioning generation, and nationality
2.List and discuss the major bases for
segmenting consumer and business markets Demographic segmentation is the most popular
3.Explain how companies identify attractive segmentation method because consumer
consumer and business markets needs, wants, and usage often vary closely with
4.Discuss how companies position their demographic variables and are easier to
products for maximum competitive advantage measure than other types of variables
in the marketplace
Age and life-cycle stage segmentation is the
Market Segmentation process of offering different products or using
1.Discuss the need to understand competitors different marketing approaches for different
as well as customers through competitor age and life-cycle groups
analysis
2.Explain the fundamentals of competitive Gender segmentation divides the market based
marketing strategies based on creating value for on sex (male or female)
customers
3.Demonstrate the need for balancing customer Income segmentation divides the market into
and competitor orientations in becoming a truly affluent or low-income consumers
market-centered organization
Psychographic segmentation divides buyers
Market segmentation is the process that into different groups based on social class,
companies use to divide large heterogeneous lifestyle, or personality traits
markets into small markets that can be reached
more efficiently and effectively with products Behavioral segmentation divides buyers into
and services that match their unique needs groups based on their knowledge, attitudes,
uses, or responses to a product
Market Segmentation •Occasion
•Segmenting consumer markets •Benefits sought
•Segmenting business markets •User status
•Segmenting international markets •Usage rate
•Requirements for effective segmentation •Loyalty status

Segmenting Consumer Markets Occasion segmentation divides buyers into

•Geographic groups according to occasions when they get
•Demographic the idea to buy, actually make purchases, or
•Psychographic respond to a product
•Behavioral
Benefit segmentation requires finding the Segmenting Business Markets
major benefits people look for in the product
class, the kinds of people who look for each In addition to the same segmentation variables
benefit, and the major brands that deliver each as consumers, business can also be segmented
benefit by:
•Customer-operating characteristics
User status divides buyers into ex-users, •Purchasing approaches
potential users, first-time users, and regular •Situational factors
users of a product •Personal characteristics

Usage rate divides buyers into light, medium, Segmenting international markets
and heavy product users •Geographic location
•Economic factors
Loyalty status divides buyers into groups •Political and legal factors
according to their degree of loyalty •Cultural factors

Using Multiple Segmentation Bases Intermarket segmentation divides consumers

into groups with similar needs and buying
Multiple segmentation is used to identify behaviors even though they are located in
smaller, better-defined target groups different countries

Geodemographic segmentation is an example Requirements for Effective Segmentation

of multivariable segmentation that divides
groups into consumer lifestyle patterns To be useful, a market segment must be:
•Measurable
PRIZM NE classifies every American household •Accessible
into 66 unique segments organized into 14 •Substantial
different social groups. These groups segment •Differentiable
people and locations into marketable groups of •Actionable
like-minded consumers that exhibit unique
characteristics and buying behavior based on a Measurable examples include the size,
host of demographic factors. purchasing power, and profiles of the segments

Prizm classifications include Accessible refers to the fact that the market can
•Age be effectively reached and served
•Educational level
•Income Substantial refers to the fact that the markets
•Occupation are large and profitable enough to serve
•Family composition
•Ethnicity Differentiable refers to the fact that the
•Housing markets are conceptually distinguishable and
•Behavioral and lifestyle factors respond differently to marketing mix elements
•Purchases and programs
•Free-time activities
•Media preferences Actionable refers to the fact that effective
programs can be designed for attracting and
serving the segments
Evaluating Market Segments Concentrated marketing targets a small share
of a large market
•Segment size and growth •Limited company resources
•Segment structural attractiveness •Knowledge of the market
•Company objectives and resources •More effective and efficient

Segment size and growth Micromarketing is the practice of tailoring

•Smaller versus larger segments products and marketing programs to suit the
•Growth potential tastes of specific individuals and locations
•Local marketing
Segment structural attractiveness •Individual marketing
•Competition
•Substitute products Local marketing involves tailoring brands and
•Power of buyers promotion to the needs and wants of local
•Power of suppliers customer groups
•Cities
Company objectives and resources •Neighborhoods
•Competitive advantage •Stores
•Availability of resources
•Consistent with company objectives Local Marketing
Benefits:
Selecting Target Market Segments •Increased marketing effectiveness in
competitive markets
•Undifferentiated marketing •More customer-specific offerings
•Differentiated marketing
•Concentrated marketing Local marketing
•Micromarketing Challenges:
•Increased manufacturing and marketing costs
Target Marketing Strategies •Less economy of scale
•Logistics
Undifferentiated marketing targets the whole •Dilution of company image
market with one offer
•Mass marketing Individual marketing involves tailoring products
•Focuses on common needs rather than what’s and marketing programs to the needs and
different preferences of individual customers
Also known as:
Differentiated marketing targets several •One-to-one marketing
different market segments and designs separate •Mass customization
offers for each •Markets-of-one marketing
•Goal is to achieve higher sales and stronger
position Mass customization is the process through
•More expensive than undifferentiated which firms interact one-to-one with masses of
marketing customers to design products and services
tailor-made to meet individual needs. Has made
relationships with customers important in the
new economy.
•Provides a way to distinguish the company
against competitors
Choosing a Targeting Strategy Competitive Advantage
Depends on:
•Company resources Competitive Advantage is the advantage over
•Product variability competitors gained by offering greater value
•Product life-cycle stage either through lower prices or by providing
•Market variability more benefits that justify higher prices
•Competitor’s marketing strategies
Choosing the Right Competitive Advantages
Socially Responsible Target Marketing
A difference is worth establishing to the extent
Benefits customers with specific needs that it satisfies the following criteria:
Concern for vulnerable segments •Important
Children •Distinctive
•Alcohol •Superior
•Cigarettes •Communicable
•Preemptive
Product position is the way the product is •Affordable
defined by consumers on important attributes
—the place the product occupies in consumers’ Selecting an Overall Strategy
minds relative to competing products
•Perceptions Value proposition is the full mix of benefits
•Impressions upon which a brand is positioned
•Feelings •More for more
•More for the same
Positioning maps show consumer perceptions •Same for less
of their brands versus competing products on •Less for much less
important buying dimensions •More for less
•Price and orientation
Developing a Positioning Statement
Choosing a Differentiation and Positioning
Strategy Positioning statement states the product’s
membership in a category and then shows its
•Identifying a set of possible competitive point-of-difference from other members of the
advantages to build a position category.
•Choosing the right competitive advantages
•Selecting an overall positioning strategy

Identifying a set of possible competitive

advantages to build a position by providing
superior value from:
•Product differentiation
•Service differentiation
•Channels
•People
•Image

Identifying Possible Value Differences and