Principles of Marketing/
Marketing Management
Hanif Shahzad Malik
Customer Value-Driven Marketing Strategy:
Creating Value for Target Customers
Learning Objectives
Define the major steps in designing a customer-driven
marketing strategy: market segmentation, targeting,
differentiation, and positioning.
List and discuss the major bases for segmenting consumer
markets.
Explain how companies identify attractive market segments
and choose a market-targeting strategy.
Discuss how companies differentiate and position their
products for maximum competitive advantage.
Customer Driven Marketing Strategy
Markets consist of buyers, and buyers differ in one or more
ways.
Through market segmentation, companies divide large,
heterogeneous markets into smaller segments
Companies today recognize that they cannot appeal to all
buyers in the marketplace
Moreover, the companies themselves vary widely in their
abilities to serve different segments of the market
Thus, most companies are more selective about the
customers with whom they wish to connect.
Most have moved away from mass marketing and toward
market segmentation and targeting
Steps in Target Marketing:
There are three major steps in target marketing.
The first is market segmentation— dividing a market into smaller
groups of buyers with distinct needs, characteristics, or behaviors
who might require separate products or marketing mixes.
The second step is market targeting—evaluating each market
segment's attractiveness and selecting one or more of the market
segments to enter.
Differentiation involves actually differentiating the firm’s market
offering to create superior customer value.
The third step is market positioning—setting the competitive
positioning for the product and creating a detailed marketing mix.
Market Segmentation
Because buyers have unique needs and wants, each buyer is
potentially a separate market. Ideally, then, a seller might
design a separate marketing program for each buyer.
1. Identify bases for segmenting the market
2. Develop segment profiles Market Targeting
3. Develop measure of segment attractiveness
4. Select target segments Market positioning
5. Develop positioning for target segments
6. Develop a marketing mix for each segment
Levels of marketing segmentation
a) Mass Marketing Companies have not always practiced target
marketing. In fact, for most of the 1900s, major consumer
products companies held fast to mass marketing—mass
producing, mass distributing, and mass promoting about the
same product in about the same way to all consumers.
b) Segment Marketing A company that practices segment
marketing isolates broad segments that make up a market and
adapts its offers to more closely match the needs of one or
more segments.
c) Niche Marketing Market segments are normally large,
identifiable groups within a market—for example, luxury car
buyers, performance car buyers, utility car buyers, and
economy car buyers.
Levels of marketing segmentation
d) Micro marketing Segment and niche marketers tailor
their offers and marketing programs to meet the needs of
various market segments. At the same time, however, they
do not customize their offers to each individual customer.
local marketing
individual marketing
The Major Variables for Segmenting
Consumer Markets
Geographic Segmentation
Demographic Segmentation
Age and Life-Cycle Segmentation
Gender segmentation
Income segmentation
Psychographics segmentation
Behavioral segmentation
Occasion segmentation
Benefit segmentation
Next………….Lecture Part-2
Customer Value-Driven Marketing Strategy:
Creating Value for Target Customers
Market Segmentation (cont..)
Requirements for Effective
Segmentation
1) Measurable
2) Accessible
3) Substantial
4) Differential
5) Actionable
Market Targeting
Market segmentation reveals the firm's market segment
opportunities. The firm now has to evaluate the various
segments and decide how many and which ones to target.
In evaluating different market segments, a firm must look
at three factors:
segment size and growth,
segment structural attractiveness,
and company objectives and resources.
The company must first collect and analyze data on current
segment sales, growth rates, and expected profitability for
various segments.
Market Targeting……..
The largest, fastest-growing segments are not always the
most attractive ones for every company.
Smaller companies may lack the skills and resources
needed to serve the larger segments or may find these
segments too competitive.
The company should enter only segments in which it can
offer superior value and gain advantages over
competitors.
Market Targeting Strategies
Undifferentiated Marketing Using an undifferentiated
marketing (or mass-marketing) strategy, a firm might decide to
ignore market segment differences and go to the whole market
with one offer..for example grapefruit or steel.
Differentiated Marketing Using a differentiated marketing
strategy, a firm decides to target several market segments or
niches and designs separate offers for each such as cameras
and automobiles
Concentrated Marketing A third market-coverage strategy,
concentrated marketing, is especially appealing when
company resources are limited. Instead of going after a small
share of a large market, the firm goes after a large share of
one or a few segments or niches.
Choosing a Market-Coverage Strategy
Many factors need to be considered when choosing a
market-coverage strategy. Which strategy is best depends on
company resources.
Degree of product variability
The product's life-cycle stage
market variability
Finally, competitors' marketing strategies
Positioning for Competitive Advantage
Once a company has decided which segments of the
market it will enter, it must decide what positions it
wants to occupy in those segments.
A product's 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.
Positioning involves implanting the brand's unique benefits
and differentiation in customers' minds.
Identifying Possible Competitive
Advantages
The key to winning and keeping customers is to
understand their needs and buying processes better than
competitors do and to deliver more value.
To the extent that a company can position itself as
providing superior value to selected target markets it
gains competitive advantage.
Choosing the Right Competitive
Advantages
1-How Many Differences to Promote?
2- Which Differences to Promote?
A difference is worth establishing to the extent that it satisfies
the following criteria:
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
Selecting an Overall Positioning
Strategy
Consumers typically choose products and services that
give them the greatest value.
Thus, marketers want to position their brands on the key
benefits that they offer relative to competing brands.
The full positioning of a brand is called the brand's value
proposition—the full mix of benefits upon which the brand
is positioned. It is the answer to the customer's question
"Why should I buy your brand?"
Communicating and Delivering the
Chosen Position
Designing the marketing mix—product, price, place, and
promotion—essentially involves working out the tactical details of
the positioning strategy. Thus, a firm must produce
high-quality products,
charge a high price,
distribute through highquality dealers,
and advertise in high-quality media.
It must hire and train more service people,
find retailers who have a good reputation for service,
and develop sales and advertising messages that broadcast its
superior service.
Conclusion
positions that have taken years to build can quickly be lost.
Once a company has built the desired position, it must take
care to maintain the position through consistent
performance and communication.
It must closely monitor and adapt the position over time to
match changes in consumer needs and competitors'
strategies.
However, the company should avoid abrupt changes that
might confuse consumers. Instead, a product's position
should evolve gradually as it adapts to the ever-changing
marketing environment.
Thank You
