Lecture 5

Customer Value-Driven Marketing

Strategy: Creating Value for Target
Customers
 Learning Objectives
1 Define the major steps in designing a customer-driven marketing
strategy: market segmentation, targeting, differentiation, and
positioning.
2 List and discuss the major bases for segmenting consumer and business
markets.
3 Explain how companies identify attractive market segments and choose a
market-targeting strategy.
4 Discuss how companies differentiate and position their products for
maximum competitive advantage.
 P&G: Competing with Itself—
and Winning

By offering brands and sub-

brands that target specific
segments of detergent
preferences, here Tide Free &
Gentle, Tide offers a unique
value proposition to each
distinct customer segment.
 Learning Objective 1

Define the major steps in designing a customer-driven marketing

strategy: market segmentation, targeting, differentiation, and
positioning.
 Customer-Driven
Marketing Strategy
 Learning Objective 2

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

Market segmentation requires dividing a market into smaller segments with

distinct needs, characteristics, or behaviors that might require separate marketing
strategies or mixes.
 Market Segmentation

• Segmenting consumer markets

• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
 Market Segmentation

Segmenting Consumer Markets

• Geographic segmentation
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation
 Market Segmentation

Segmenting Consumer Markets

Geographic segmentation divides the market into different geographical
units such as nations, regions, states, counties, cities, or even neighborhoods.
 Market Segmentation

Segmenting Consumer Markets

Demographic segmentation divides the market into segments based on
variables such as age, life-cycle stage, gender, income, occupation, education,
religion, ethnicity, and generation.
 Market Segmentation

Segmenting Consumer Markets

Age and life-cycle stage segmentation divides a market into different age and
life-cycle groups.
Gender segmentation divides a market into different segments based on gender.
Income segmentation divides a market into different income segments.
 Market Segmentation
Segmenting Consumer Markets
Psychographic segmentation divides a market into different segments based on
social class, lifestyle, or personality characteristics.

Lifestyle segmentation: Panera caters to a healthy eating lifestyle segment

of people who want more than just good-tasting food—they want food
that’s good for them, too.
 Market Segmentation

Segmenting Consumer Markets

Behavioral segmentation divides a market into segments based on
consumer knowledge, attitudes, uses of a product, or responses to a
product.
 Market Segmentation

Segmenting Consumer Markets Benefit segmentation: Schwinn makes

Behavioral Segmentation bikes for every benefit segment. For
example, its e-bikes “help make the
• Occasions morning commute or ride around town
• Benefits sought a little bit easier.”
• User status
• Usage rate
• Loyalty status
 Market Segmentation

Segmenting Consumer Markets

Multiple segmentation is used to identify smaller, better-defined target groups.
Experian’s Mosaic USA system classifies U.S. households into one of 71 lifestyle segments and 19 levels of
affluence.

Using Acxiom’s Personicx segmentation system, marketers paint a surprisingly precise

picture of who you are and what you buy. Personicx clusters carry such colorful names
as “Skyboxes and Suburbans,” “Shooting Stars,” “Hard Chargers,” “Soccer and SUVs,”
“Raisin’ Grandkids,” “Truckin’ and Stylin’,” “Pennywise Mortgagees,” and “Cartoons
and Carpools.”
 Market Segmentation

Segmenting Business Markets

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

Additional variables include:

• Customer operating characteristics
• Purchasing approaches
• Situational factors
• Personal characteristics
 Market Segmentation

Segmenting International Markets

• Geographic location
• Economic factors
• Political and legal factors
• Cultural factors
 Market Segmentation

Segmenting International Markets

Intermarket segmentation involves forming segments of consumers who have

similar needs and buying behaviors even though they are located in different countries.
 Learning Objective 3

Explain how companies identify attractive market segments and choose a

market-targeting strategy.
 Market Targeting

Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness
• Company objectives and resources
 Market Targeting

Selecting Target Market Segments

A target market is a set of buyers who share common needs or

characteristics that the company decides to serve.
 Market Targeting

Figure 7.2 Market-Targeting Strategies

 Market Targeting

Selecting Target Market Segments

Undifferentiated marketing targets the whole market with one offer.

• Mass marketing
• Focuses on common needs rather than what’s different
 Market Targeting

Selecting Target Market Segments

Differentiated marketing targets several different market segments and designs separate offers for
each.
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing

Differentiated marketing: With more than 30 differentiated hotel brands, Marriott

International dominates the hotel industry, capturing a much larger share of the
travel and hospitality market than it could with any single brand alone.
 Market Targeting
Selecting Target Markets
Concentrated marketing targets a large share of a smaller market.
• Limited company resources
• Knowledge of the market
• More effective and efficient
Concentrated marketing: Nicher
Harry’s concentrates its
resources on direct-to-consumer
sales of high-quality razors
and shaving products to a
value- and convenience-oriented
segment of buyers previously
not well served by giant
competitors like Gillette.
 Market Targeting

Selecting Target Market Segments

Micromarketing is the practice of tailoring products and marketing programs to suit
the tastes of specific individuals and locations.
• Local marketing
• Individual marketing
 Market Targeting

Selecting Target Market Segments

Local marketing involves tailoring brands and promotion to the needs and
wants of local customer segments.
• Cities
• Neighborhoods
• Stores
 Market Targeting
Selecting Target Markets
Individual marketing: The Rolls-
Individual marketing involves tailoring Royce Bespoke design team works
products and marketing programs to the closely with individual customers to
needs and preferences of individual help them create their own unique
Rolls-Royces.
customers.
Also known as:
• One-to-one marketing
• Mass customization
 Market Targeting

Selecting Target Market Segments

Choosing a targeting strategy depends on
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
 Learning Objective 4

Discuss how companies differentiate and position their products for

maximum competitive advantage.
 Differentiation and Positioning
Product position is the way the product is defined by consumers on important
attributes.

Positioning: Sonos does more

than just sell speakers; it
unleashes “All the music on
earth, in every room of your
house, wirelessly.”
 Differentiation and Positioning
Positioning maps show consumer perceptions of marketer’s brands
versus competing products on important buying dimensions.

Figure 7.3 Positioning map: Large luxury SUVs

 Differentiation and Positioning

Choosing a Differentiation and Positioning Strategy

• Identifying a set of possible competitive advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen position to the market
 Differentiation and Positioning

Choosing a Differentiation and Positioning Strategy

Competitive advantage is an advantage over competitors gained by offering consumers
greater value, either through lower prices or by providing more benefits that justify higher
prices.
 Differentiation and Positioning
Choosing a Differentiation and Services differentiation:
Positioning Strategy Quicken Loans’ Rocket
Identifying a set of possible Mortgage doesn’t just offer
competitive advantages to mortgage loans; its online-
differentiate along the lines of: only interface lets users get a
• Product loan decision in only minutes.
• Services
• Channels
• People
• Image
 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
A competitive advantage should be:
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
 Differentiation and Positioning
Choosing a
Differentiation and
Positioning Strategy
Value proposition is the full
mix of benefits upon which a
brand is positioned.

Figure 7.4 Possible Value Propositions

 Differentiation and Positioning

Choosing a Differentiation and Positioning Strategy

Positioning statement summarizes company or brand positioning using this
form: To (target segment and need) our (brand) is (concept) that (point of
difference)
 Differentiation and Positioning

Communicating and Delivering the Chosen Position

• Choosing the positioning is often easier than implementing the position.
• Establishing a position or changing one usually takes a long time.
• Maintaining the position requires consistent performance and communication.
 Group Activity

Assuming that your team wants to start your own business as a

local fashion brand in Vietnam. Applying what you have learnt
in Lecture 4 and Lecture 5 to perform a marketing research and
develop a customer-driven marketing strategy for your business.
References

KOTLER, P. and ARMSTRONG, G. (2018) Principles of Marketing, 17th edition. London:

Prentice Hall.