Chapter 6 Customer Driven Marketing Strategy: Creating Value for Target Customers

Affordable:

Buyers can afford to pay for the difference

Int'l Cultural factors:

Grouping markets according to common languages, religions, values and attitudes, customs and behavioral patterns

Value Proposition:

How a company will create differentiated value for targeted segments and what positions it wants to occupy in those segements

Differentiation:

Involves actually differentiating the firm's market offering to create superior customer value

Market Segmentation:

Involves dividing a market into smaller groups of buyers with distinct needs, characteristics or behaviors that might require separate marketing strategies or mixes

PRIZM -

Leading segmentation systems that classifies every American household based on a host of demographic factors

Using Multiple Segmentation bases -

Marketers rarely limit their segmentation analysis to only one or a few variables

Less for Much Less -

Meet consumers' lower performance or quality requirements at a much lower price

Unique Selling Proposition (USP)...

is what ad man Rosser Reeves believes a company should develop for each brand and stick to it

A segment is ___ ___ if it already contains many strong and aggressive competitors.

less attractive

A company also needs to examine ___ ___ ___ that affect long-run segment attractiveness.

major structural factors

The largest, fastest-growing segments are...

not always the most attractive ones for every company

Age and Life-Cycle Stage:

offering different products or using different marketing approaches for different age and life-cycle groups

The relative ___ __ ___ also affects segment attractiveness

power of buyers

A segment may be less attractive if it contains ___ ___ who can control prices.

powerful suppliers

Micromarketing:

practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations

A company can differentiate along the lines of ...

product, services, channels, people or image

Int'l Economic Factors:

Countries may be grouped by population income levels or by their overall level of economic developement

Local Marketing does of drawbacks...

- it can drive up manufacturing and marketing costs by reducing economies of scale - it can create logistics problems - the brand's overall image might be diluted if the product and message vary too much in different localitites

Developing a Positioning Statement

-A statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference) -All the company's marketing mix efforts must support the chosen positioning strategy

Choosing the best Targeting Strategy depends on...

-Company resources -Product variability - Product's life-cycle stage - Market variability - Competitors' Marketing Strategies

Types of Demographic Segmentation -

1. Age and Life-Cycle Stage 2. Gender Segmentation 3. Income Segmentation

Segmenting International Markets variables:

1. Geographic Factors 2. Economic Factors 3. Political and Legal Factors 4. Cultural Factors

Types of Market Segmentation -

1. Geographic Segmentation 2. Demographic Segmentation 3. Psychographic Segmentation 4. Behavioral Segmentation

The differentiation and positioning task consists of 3 steps:

1. Identifying a set of differentiating competitive advantages upon which to build a position 2. Choosing the right competitive advantages 3. Selecting an overall positioning strategy

Promote differences that are:

1. Important 2. Distinctive 3. Superior 4. Communicable 5. Preemptive 6. Affordable 7. Profitable

Micromarketing includes:

1. Local Marketing 2. Individual Marketing

4 major steps in designing a customer-driven marketing strategy:

1. Market Segmentation 2. Market Targeting 3. Differentiation 4. Positioning

Requirements for Effective Segmentation:

1. Measurable 2. Accessible 3. Substantial 4. Differentiable 5. Actionable

Winning Value Propostions

1. More for More 2. More for the same 3. the same for less 4. Less for Much less 5. More for less

Types of Behavioral Segmentation:

1. Occasion Segmentation 2. Benefit Segmentation 3. User Status 4. Usage Rate 5. Loyalty Status

Individual Marketing has also been labeled -

1. One-to-one marketing 2. Mass customization 3. markets-of-one marketing

Business Markets also use -

1. Operating Characteristics 2. Purchasing Approaches 3. Situational Factors 4. Personal Characteristics

Evaluating Market Segments; firm must look at 3 factors

1. Segment size and growth 2. Segment structural attractiveness 3. Company Objectives and resources

4 Market Targeting Strategies -

1. Undifferentiated Marketing 2. Differentiated Marketing 3. Concentrated Marketing 4. Micromarketing

In concept, marketing boils down to two questions:

1. Which customers will we serve? 2. How will we serve them?

Target Market:

A set of buyers sharing common needs or characteristics that the company decides to serve

Competitive advantage -

An advantage over competitors gained by offering greater customer value, either by having lower prices or providing more benefits that justify higher prices

More for the Same -

Attack a competitor's positioning by introducing a brand offering comparable quality at a lower price

Choose the right competitive advantage...

Choose weather to promote a single benefit or multiple benefits

Distinctive:

Competitiors do not offer the difference, or the company can offer it in a more distinctive way

Preemptive:

Competitors cannot easily copy the difference

Positioning:

Consists of arranging for a market offering to occupy a clear, Distinctive and desirable place relative to competing products in the minds of target consumers

Market Targeting:

Consists of evaluating each market segment's attractiveness and selecting one or more market segments to enter

Segmenting Business Markets -

Consumer and business marketers use many of the same variables to segment their markets

Demographic Segmentation (Most Popular) -

Divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation and nationality

Actionable:

Effective programs can be designed for attracting and serving the segmants

Int'l Geographic Factors

Nations close to one another will have many common traits and behaviors.(But not always - be careful here)

The Same for Less -

Offer similar products at much reduced prices

More for Less -

Offer the best products at the lowest prices

More for More -

Provide the most upscale product and charge a higher price to cover the higher costs

Profitable:

The company can introduce the difference profitably

Important:

The difference delivers a highly valued benefit to target buyers

Communicable:

The difference is communicable and visible to buyers

Superior:

The difference is superior to other ways that customers might obtain the same benefit

Substantial:

The market segments are large or profitable enough to serve

Accessible:

The market segments can be effectively reached and served

Differentiable:

The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs

Measureable:

The size, purchasing power and profiles of the segments can be measured

Mass Customization -

is the process by which firms interact one-to-one with masses of customers to design products and services tailor-made to individual needs such as via cell phones or social media

Int'l Political and legal factors:

Type and stability of government, receptivity to foreign firms, monetary regulations and the amount of bureaucracy

Differentiated Marketing (Segmented Marketing):

Using this strategy, a firm decides to target several market segments and designs separate offers for each

Undifferentiated Marketing (Mass Marketing):

Using this strategy, a firm might decide to ignore market segment differences and target the whole market with one offer

Concentrated Marketing (Niche Marketing):

Using this strategy, instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches.

Geographic Segmentation -

calls for dividing the market into different geographical units such as nations, regions, states, counties, cities or even neighborhoods

This mass-marketing strategy focuses on what is ___ in the needs of consumers rather than on what is ___.

common; different

Psychographic Segmentation

divides buyers into different groups based on social class, lifestyle or personality characteristics

Behavioral Segmentation:

divides buyers into groups based on their knowledge, attitudes, uses or responses to a product

Loyalty Status:

dividing buyers into groups according to their degree of loyalty

Occasion Segmentation:

grouping buyers according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item

Benefit Segmentation:

grouping buyers according to the different benefits that they seek from the products

Usage Rate:

grouping markets into light, medium and heavy product users

Income segmentation:

has long been used by the marketers of products and services such as automobiles, clothing, cosmetics, financial services and travel

Gender Segmentation:

has long been used in clothing, cosmetics, toiletries and magazines

Local Marketing -

involves tailoring brand and promotions to the needs and wants of local customer groups - cities, neighborhoods and even specific stores

Socially responsible marketing calls for...

segmentation and targeting that serve not just the interests of the company, but also the interests of those targeted. Marketing generates concern when targeting: -Vulnerable, minority or disadvantaged populations -Children and teens -Controversy arises when an attempt is made to profit at the expense of these segments

User Status:

segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product

Intermarket Segmentation:

segmenting of consumers who have similar needs and buying behavior even though they are located in different countries

Perceptual positioning map -

shows consumers perceptions of their brands versus competing products on important buying dimensions

The existence of many actual or potential ___ ___ products may limit prices and profits.

substitute products

Individual Marketing -

the tailoring of products and marketing programs to the needs and preferences of individual customers

A product's positions is...

the way the product is defined by consumers on important attributes

The full positioning of a brand is called the brand's___ ___.

value proposition