Question: Define the major steps in designing a customer value-driven marketing strategy,
market segmentation, targeting, differentiation, and positioning?
Designing a Customer Value-Driven Marketing Strategy
A customer value-driven marketing strategy focuses on creating, delivering, and
communicating superior value to the target audience. It involves identifying different customer
needs, selecting the most promising groups, and positioning the brand effectively in the market.
The strategy consists of four key steps:
1. Market Segmentation
Market segmentation is the process of dividing a broad market into smaller groups of consumers
with similar characteristics, needs, and behaviors. By segmenting the market, businesses can
tailor their offerings and marketing efforts to better meet customer expectations.
1.1. Basis of Market Segmentation
Companies use various criteria to segment their markets, including:
Demographic Segmentation – Based on variables such as age, gender, income,
education, occupation, religion, etc.
o Example: Luxury brands target high-income consumers, while budget brands
cater to price-sensitive buyers.
Geographic Segmentation – Dividing the market based on location (country, region,
city, climate, etc.).
o Example: McDonald's offers different menu items in different countries based on
local preferences.
Psychographic Segmentation – Based on lifestyle, personality, values, attitudes, and
social class.
o Example: A brand like Patagonia targets environmentally conscious consumers.
Behavioral Segmentation – Based on customer behavior such as brand loyalty, benefits
sought, usage rate, or purchasing patterns.
o Example: Airlines offer frequent flyer programs to retain loyal customers.
2. Market Targeting
Once a company has segmented the market, it must evaluate each segment’s attractiveness and
decide which ones to serve. This process is known as market targeting.
2.1. Criteria for Selecting Target Segments
Companies evaluate market segments based on:
Market Size and Growth Potential – Is the segment large and growing?
Profitability – Will the segment generate sufficient revenue and profit?
Competitive Landscape – How intense is the competition?
Alignment with Business Goals – Does the segment fit the company’s objectives and
resources?
2.2. Market Targeting Strategies
Businesses adopt different targeting strategies depending on their goals and resources:
Undifferentiated (Mass) Marketing – A single marketing strategy for the entire market.
o Example: Coca-Cola’s general brand messaging appeals to all consumers.
Differentiated (Segmented) Marketing – Creating tailored marketing strategies for
different customer segments.
o Example: Nike offers different product lines for athletes, casual wearers, and
children.
Concentrated (Niche) Marketing – Focusing on a single, well-defined segment with
specialized needs.
o Example: Rolex targets luxury watch buyers, not the general public.
Micromarketing (Local/Individual Marketing) – Customizing products and marketing
for specific individuals or small groups.
o Example: Starbucks' rewards program personalizes offers based on customer
preferences.
3. Differentiation
Differentiation is the process of making a company’s products or services stand out from
competitors by offering unique value to customers.
3.1. Types of Differentiation
Companies can differentiate their offerings in several ways:
Product Differentiation – Offering superior product features, quality, or innovation.
o Example: Apple differentiates its iPhones with unique design and technology.
Service Differentiation – Providing superior customer service, warranties, or faster
delivery.
o Example: Amazon Prime differentiates itself with fast shipping and exclusive
content.
Brand Image Differentiation – Creating a strong brand identity and reputation.
o Example: Luxury brands like Louis Vuitton command high prices due to their
prestige.
Price Differentiation – Offering competitive pricing strategies to appeal to different
customer segments.
o Example: Walmart attracts price-sensitive shoppers with low-cost products.
4. Positioning
Positioning involves establishing a distinct brand image in the minds of consumers relative to
competitors. It defines how customers perceive a product or service in the marketplace.
4.1. Steps in Positioning
1. Identify the Unique Value Proposition – Determine what makes the product different
and valuable to customers.
2. Develop a Positioning Statement – A concise message that highlights the brand’s key
differentiators.
3. Communicate the Positioning – Reinforce the brand message through advertising,
packaging, and customer interactions.
4.2. Positioning Strategies
Common positioning approaches include:
Positioning by Product Attributes – Highlighting a key feature or benefit.
o Example: Volvo positions itself as the safest car brand.
Positioning by Price and Quality – Offering superior quality at a premium or
affordability at a lower price.
o Example: Rolex positions itself as a premium brand, while Timex targets budget-
conscious buyers.
Positioning by Use or Application – Associating the product with a specific use case.
o Example: Gatorade positions itself as the go-to drink for athletes.
Positioning by Competitor Comparison – Directly comparing a brand’s strengths with
competitors.
o Example: Pepsi’s advertising often positions it as a better-tasting alternative to
Coca-Cola.
Conclusion
A successful customer value-driven marketing strategy follows a structured approach using
segmentation, targeting, differentiation, and positioning (STP model). By identifying the
right market segments, selecting profitable targets, differentiating products effectively, and
positioning them strategically, businesses can attract and retain customers, ensuring long-term
success in a competitive marketplace.
