Marketing Chapter 7

Describe a customer-driven marketing strategy?

The major elements of a customer-driven marketing strategy: 1. segmentation: dividing a market into smaller segments of buyers with distinct needs, characteristics or behaviors that might require separate marketing strategies or mixes 2. targeting: evaluating each market segment's attractiveness and selecting one or more segments to enter. 3. differentiation: differentiating the market offering to create superior customer value 4. positioning: arranging for a market offering to occupy a clear distinctive, and desirable place relative to competing products in the minds of target consumers. Marketers know that they cannot appeal to all buyers in their markets, or at least not to all buyers in the same way. Therefore, most companies today practice target marketing - identifying market segments - selecting one or more of them: This would be the target market, a set of buyers sharing common needs or characteristics that the company decides to serve. - developing products and marketing mixes tailored to each.

Define the major steps in designing a customer-driven marketing strategy: market segmentation, targeting, differentiation, and positioning.

A customer-driven marketing strategy begins with selecting which customers to serve and determining a value proposition that best serves the targeted customers. It consists of 4 steps. 1. Market segmentation is the act of dividing a market into distinct segments of buyers with different needs, characteristics or behaviors who might require separate products or marketing mixes. 2. Once the groups have been identified, marketing targeting evaluates each market segment's attractiveness and selects one or more segments to serve. 3. Differentiation involves actually differentiating the market offering to create superior customer value. 4. Positioning consists of positioning the market offering in the minds of target customers. A customer-driven marketing strategy seeks to build the right relationships with the right customers.

Discuss how companies differentiate and position their products for maximum competitive advantage.

Once a company has decided which segments to enter, it must decide on its differentiation and positioning strategy. Product Position: The way a product is defined by consumers on important attributes - the place the product occupies in consumer' minds relative to competing products. The differentiation and positioning task consists of 3 steps: 1. identifying a set of possible differentiations that create 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.) 2. choosing advantages on which to build a position 3. selecting an overall positioning strategy. The brand's full positioning is called its value proposition - the full mix of benefits on which the brand is positioned. In genera,l companies can choose from one of 5 winning value propositions on which to position their products: 1. more for more 2. more for the same 3. the same for less 4. less for much less 5. more for less. Company and brand positioning are summarized in 1. positioning statements that state the target segment and need 2. positioning concept 3. specific points of difference. It's a statement that summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference). The company must then effectively communicate and deliver the chosen position to the market.

List and discuss the major bases for segmenting consumer and business markets.

There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are 1. geographic: divided into different geographical units, such as nations, regions, states, counties, cities, or even neighborhoods 2. demographic: the market is divided into groups based on demographic variables, including age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation 3. psychographic: the market is divided into different groups based on social class, lifestyle or personality characteristics 4. behavioral: the market is divided into groups based on consumers' knowledge, attitudes, uses, or responses concerning a product. Also, includes occasion segmentation and benefit segmentation- benefits that consumers seek from the product. Business marketers use many of the same variables to segment their markets. But business markets also can be segmented by 1. business demographics (industry, company size), 2. operating characteristics 3. purchasing approaches 4. situational factors 5. personal characteristics. Intermarket (cross-market) segmentation: forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries. The effectiveness of the segmentation analysis depends on finding segments that are 1. measurable 2. accessible 3. substantial 4. differentiable 5. actionable.

Explain how companies identify attractive market segments and choose a market targeting strategy.

To target the best market segments, the company first evaluates each segment's 1. size and growth characteristics 2. structural attractiveness 3. compatibility with company objectives and resources. It then chooses one of the 4 market targeting strategies - ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated (or mass) marketing. This involves 1. mass-producing 2. mass distributing 3. mass promoting about the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing - developing different market offers for several segments Concentrated marketing (or niche marketing) involves focusing on one or a few market segments only. It's where a firm goes after a large share of one or a few segments or niches. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes: 1. local marketing: Tailoring brands and marketing to the needs and wants of local customer segments - cities, neighborhoods, and even specific stores. 2. individual marketing: Tailoring products and marketing programs to the needs and preferences of individual customers. Which targeting strategy is best depends on: 1. company resources 2. product variability 3. product life-cycle stage 4. market variability 5. competitive marketing strategies.