ch7-creating-value-for-target-customers.ppt

8/17/2019 Ch7-Creating-Value-for-Target-Customers.ppt

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Chapter 7- slide 1Copyright © 2009 Pearson Education, Inc.

Publishing as Prentice all

Chapter !e"en

Customer-DrivenMarketing Strategy:

Creating Value for Target

Customers


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Custo#er-$ri"en %ar&eting !trategy'Creating (alue )or *arget Custo#ers

• Market Segmentation

• Market Targeting

• Diferentiation and Positioning

Topic Outline


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Chapter 7- slide +Copyright © 2010 Pearson Education, Inc.


• Companies today recognize that they cantappeal to all buyers in the marketplace or

at least not to all buyers in the same way.• uyers are too numerous! too widely

scattered and too "aried in their needsand buying practices.

• Companies "ary widely in their abilities toser"e diferent segments o# the market.

Introduction


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Chapter 7- slide Copyright © 2010 Pearson Education, Inc.


• Most companies ha"e mo"ed away#rom mass marketing and toward

target marketing$ identi#yingmarket segments! selecting one ormore o# them! and de"eloping

products and marketing programstailored to each.

Introduction


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Market segmentation is theprocess that companies use to

di"ide large heterogeneousmarkets into small markets thatcan be reached more e%ciently

and efecti"ely with products andser"ices that match their uni&ueneeds

%ar&et !eg#entation


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%ar&et !eg#entation


7/108Chapter 7- slide 7

Copyright © 2010 Pearson Education, Inc.


• The 'gure shows the #our ma(or stepsin designing a customer dri"en

marketing strategy! in the 'rst twosteps! the company selects thecustomer that it will ser"e.

• )n the 'nal two steps ! the companydecides on a "alue proposition ! on howit will create "alue #or targetcustomers.

%ar&et !eg#entation


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• Dierentiation in"ol"es actuallydiferentiating the 'rm*s market

ofering to create superior customer"alue.

• Positioning consists o# arranging #or amarket ofering to occupy a clear!distincti"e and desirable place relati"eto the competing products in the mindso# target customers.

%ar&et !eg#entation





• Segmenting consumer markets

• Segmenting business markets

• Segmenting international markets• +e&uirements #or efecti"e

segmentation

%ar&et !eg#entation





%ar&et !eg#entation

Segmenting Consumer Markets


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%ar&et !eg#entation

• Geograpic segmentation di"idesthe market into diferent geographical

units such as nations! regions! states!counties! cities or e"en neighborhoods.

• , company may decide to operate inone or a #ew geographical areas! or tooperate in all areas but pay attention togeographical diferences in needs andwants.



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%ar&et !eg#entation

• Many companies today are localizingtheir products! ad"ertising! promotion

and sales efort to 't the needs o#indi"idual regions! cities! and e"enneighborhoods.

• -or eample /one consumer products

company ships additional cases o# lowcalorie snack #ood to stores inneighborhoods near0weight loss1 clinics



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Chapter 7- slide 1+Copyright © 2010 Pearson Education, Inc.


%ar&et !eg#entation

Demograpicsegmentation di"ides

the market into groupsbased on "ariables suchas age! gender! #amilysize! #amily li#e cycle!

income! occupation!education! religion! race!generation! andnationality



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%ar&et !eg#entation

• Demographic #actors are the mostpopular bases #or segmenting

customer groups. 2ne reason is thatconsumer needs ! wants! and usagerates o#ten "ary closely withdemographic "ariables! another reason

is that demographics "ariables areeasier to measure than most othertypes o# the "ariables.



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%ar&et !eg#entation

• Marketers 'rst de'ne segmentsusing other bases such as bene'ts

sought or beha"ior! they mustknow segment demographiccharacteristics in order to assess

the size o# the target market andto reach it e%ciently.



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%ar&et !eg#entation

!ge an" life-cycle stagesegmentation is the process o#

ofering diferent products or usingdiferent marketing approaches #ordiferent age and li#e$cycle groups

Gen"er segmentation di"ides themarket based on se 0male or#emale1

http://www.gurl.com/


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• 3ender segmentation has been long usedin clothing ! cosmetics and magazines.

• Many women*s cosmetics makers ha"ebegun marketing men*s lines.

• 4i"ea markets 4i"ea #or men 5 anad"ance line o# enriching skincare and

soothing a#tersha"e products speciallydesigned #or the acti"e! healthy men*sli#estyle6

%ar&et !eg#entation


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Chapter 7- slide 1/Copyright © 2010 Pearson Education, Inc.


• , neglected gender segment canofer new opportunities in markets

ranging #rom motorcycles to

3uitars

%ar&et !eg#entation


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%ar&et !eg#entation

Marketers o# productsand ser"ices such asclothing! 'nancialser"ices and tra"el ha"elong used incomesegmentation

#ncome segmentationdi"ides the market intoa7uent or low$incomeconsumers



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%ar&et !eg#entation

• Many companies target a7uentconsumers with luury goods and

con"enience ser"ices.• -or eample/ luury hotels pro"ide

amenities to attract speci'c groups

o# a7uent tra"elers such as#amilies.



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%ar&et !eg#entation

• 8owe"er! not all the companies thatuse income segmentation target the

a7uent.• -or eample/ when eperts scout

locations #or new pound and dollarstores! they look #or lower$middle class

neighborhoods where people wear lessepensi"e shoes and dri"e old cars thatdrip a lot o# oil.



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%ar&et !eg#entation

• Psycograpic segmentationdi"ides buyers into diferent groups

based on social class! li#estyle! orpersonality traits

• Marketers o#ten segment their

markets by consumer li#estyles andbase their marketing strategies onli#estyle appeals.



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Chapter 7- slide 2+Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

%ar&et !eg#entation

$eavioralsegmentation di"ides

buyers into groups basedon their knowledge!attitudes! uses! orresponses to a product

Many marketers belie"ethat beha"ioral "ariablesare the best startingpoint #or building marketsegments.



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%ar&et !eg#entation

• 2ccasions

• ene'ts sought• 9ser status• 9sage rate

• :oyalty status



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• uyers can be grouped according tothe occasions when they get the ideato buy! actually make their purchase!or use the purchased item.

• 2ccasion segmentation can help 'rmsbuild up product usage

• -or eample! most consumers drink

orange (uice in the morning butorange growers ha"e promoteddrinking orange (uice as a coolre#resher at other times o# the day.

ccasions


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• Some holidays such as themother*s day was originally

promoted partly to increase thesale o# candy! ;owers! cards andother gi#ts.

• Many marketers prepare specialofers and ads #or holidayoccasions.

ccasions


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• , power#ul #orm o# segmentation is togroup buyers according to the diferent

bene'ts that they seek #rom theproduct

• ene't segmentation re&uires 'ndingthe ma(or bene'ts people look #or in

the product class! the kinds o# peoplewho look #or each bene't! and thema(or brands that deli"er each bene't.

ene)its !ought


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Chapter 7- slide 2/Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

• -or eample/ Champion athleticwear segments its markets

according to the bene'ts thatdiferent consumers seek #romtheir acti"e wear ! consumers seek

a balance between #unction andstyle.

ene)its !ought


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• Markets can be segmented into nonusers!e$users ! potential users! 'rst time usersand regular users o# the product

• Marketers want to rein#orce and retainregular users! attract targeted nonusers !and rein"igorate relationships witheusers.

• )ncluded in the potential user group areconsumers #acing li#e$ stage changes suchas new parents

ser status


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Chapter 7- slide +0Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

• Markets can also be segmented intolight ! medium ! and hea"y product users.

• 8ea"y users are o#ten a small percentageo# the market but account #or a highpercentage o# total consumption

• -or eample / urger king targets what it

calls 5 super #ans6! they eat at burgerking an a"erage o#


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• , market can also be segmented byconsumer loyalty.

• Consumers can be loyal to brands !stores ! and companies

• uyers can be di"ided into groups

according to their degree o# loyalty• Some consumers are completely

loyal! they buy one brand all the time.

4oyalty status


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• 2ther consumers are somewhat loyal !they are loyal to two or three brands o#

a gi"en product or #a"or one productwhile sometimes buying others.

• Still other buyers show no loyalty toany brand. They either want

something diferent each time theybuy or they buy whate"er*s on sale.

4oyalty status


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• , company can learn a lot by analyzingloyalty patterns in its market

• Studying less loyal buyers! the companycan detect which brands are mostcompetiti"e with its own

• y looking at customers who are shi#ting

away #rom its brand! the company canlearn about its marketing weakness.

Conclusion


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%ar&et !eg#entation

Multiple segmentation:

Marketers rarely limit their segmentation

analysis to one or a #ew "ariables. +ather !they o#ten use multiple segmentation basesin an efort to identi#y smaller! better de'nedtarget groups

> Se"eral business in#ormation ser"icespro"ide multi"ariable segmentation systemsthat merge geographic! demographic !li#estyle and beha"ioral data to help in

segmenting the markets

%sing Multiple Segmentation $ases


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• Geo"emograpic segmentation

is an eample o# multi"ariablesegmentation that di"ides groupsinto consumer li#estyle patterns

%ar&et !eg#entation


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%ar&et !eg#entation

P'M () classi'es e"ery,merican household into ==uni&ue segments organized

into


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• Consumer and business marketersuse many o# the same "ariables to

segment their markets.• usiness buyers can be segmented

geographically! demographically or

by bene'ts sought! user status!usage rate! and loyalty status.

!eg#enting business #ar&ets


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Chapter 7- slide +/Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

• usiness marketers also use someadditional "ariables such as customer! operating characteristics!

purchasing approaches! situational#actors! and personal characteristics.

• y going a#ter segments instead o#

the whole market! companies candeli"er (ust the right "alue propositionto each segment ser"ed and capturemore "alue in return.

!eg#enting business #ar&ets


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@hich o# the #ollowing is not a way to

segment consumer marketsA


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@hich o# the #ollowing is not a way to

segment consumer marketsA


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Di"iding a market based on consumer

attitude! use! or response to aproduct is called segmentation.


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Di"iding a market based on consumer

attitude! use! or response to aproduct is called segmentation.


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, marketer selling diferent oferings in

diferent communities would be using segmentation.


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Chapter 7- slide Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

, marketer selling diferent oferings in

diferent communities would be using segmentation.


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Marketers selling luury cars o#ten use

income as a segmenting "ariable.)ncome is one component o# segmentation.


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Marketers selling luury cars o#ten use

income as a segmenting "ariable.)ncome is one component o# segmentation.


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Many marketers belie"e that

"ariables are the best starting point#or building market segments.


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Chapter 7- slide /Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

Many marketers belie"e that

"ariables are the best starting point#or building market segments.


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%ar&et !eg#entation

Segmenting #nternational markets


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• -ew companies ha"e either theresources or the will to operate in all !

or e"en most! o# the countries thatdot the globe! although some largecompanies sell products in more thanBEE countries such as 0 Coca$ Cola1

• 2perating in many countries presentsnew challenges.

!eg#enting international #ar&ets


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• Diferent countries! e"en those that arecloser together! can "ary greatly in theireconomic! cultural! and political make

up.• )nternational 'rms need to group their

world markets into segments withdistinct buying needs and beha"iors

• Companies can segment internationalmarkets using one or a combination o#se"eral "ariables



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• Marketers can segment the market bythe geographic location! grouping

countries by regions such as @esternFurope! Paci'c +im! the Middle Fast or,#rica .

• 3eographic segmentation assumes

that nations close to one another willha"e many common traits andbeha"iors



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• @orld markets can also be segmentedon the basis o# economic #actors . -oreample countries might be grouped

by population income le"els or by theiro"erall le"el o# economic de"elopment.

• , country*s economic structure shapesits population*s product and ser"iceneeds! and there#ore! the marketingopportunities it ofers



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• Countries can be segmented bypolitical and legal #actors such as the

type and stability o# go"ernment!monetary regulations and the amounto# bureaucracy.

• Cultural #actors can also be used!

grouping markets according to thecommon languages! religions! "aluesand attitudes.



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%ar&et !eg#entation

#ntermarket segmentation di"idesconsumers into groups with similar needsand buying beha"iors e"en though theyare located in diferent countries.

Coca cola is the o%cial sponsor o#

,merican )dol! the country*s no.


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Mercedes enz targets the world*s well$to$

do and )GF, targets the aspiring globalmiddle class. These companies arein"ol"ed with segmentation.


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Mercedes enz targets the world*s well$to$

do and )GF, targets the aspiring globalmiddle class. These companies arein"ol"ed with segmentation.


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%ar&et !eg#entation

• To be use#ul! market segmentsmust be/

&e*uirements for )ective Segmentation

&e*uirements for )ective


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• Measura+le/ the size! purchasingpower! and pro'les o# the segments canbe measured! certain segmentation

"ariables are di%cult to measure.• -or eample/ there are many le#thanded people in the world! yet #ewproducts are targeted toward them. The

main problem maybe that the segmentis hard to identi#y and measure.

&e*uirements for )ectiveSegmentation

& i t f ) ti


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• !ccessi+le / the market segments canbe efecti"ely reached and ser"ed.

• -or eample / a #ragrance company'nds that hea"y users o# its brand aresingle men and women who stay outlate and socialize a lot. 9nless this

group shops at certain places and iseposed to certain media! it memberswill be di%cult to reach.


& i t f ) ti


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• Su+stantial/ the market segments arelarge or pro'table enough to ser"e. ,

segment should be the largest possiblehomogenous group worth pursuingwith a tailored marketing program

• -or eample/ #or an automobile

manu#acturer to de"elop carsespecially #or people whose height isgreater than H #eet


& i t f ) ti


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• Dierentia+le / the segments areconceptually distinguishable and

respond diferently to diferentmarketing mi elements and programs

• -or eample / i# married andunmarried women respond similarly to

a sale on per#ume! they don*tconstitute separate segments.



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• !ctiona+le/ efecti"e programscan be designed #or attracting and

ser"ing the segments.• -or eample/ although one small

airline identi'ed se"en market

segments! its staf was too small tode"elop separate marketingprograms #or each segment.

&e*uirements for )ective

Segmentation


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)n order to be use#ul! market segments

need to be which o# the #ollowingA


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)n order to be use#ul! market segments

need to be which o# the #ollowingA


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%ar&et *argeting

• Target market consists o# a set o#buyers who share common needs orcharacteristics that the company

decides to ser"e• Market segmentation re"eals the

'rm*s market segment opportunities.

• The 'rm has to e"aluate the "arioussegments and decide how many andwhich segments it can ser"e best.

Selecting Target Market Segments


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%ar&et *argeting

• )n e"aluating diferent marketsegments! a 'rm must look at

three #actors/


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• The company must 'rst collect andanalyze data on current segment

sales! growth rates and epectedpro'tability #or "arious segments!the 'rm will be interested in

segments that ha"e the right sizeand growth characteristics.

)valuating Market Segments

)valuating MarketS t


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gSegments

• 5 +ight size and growth 5 is a relati"ematter. The largest! #astest growing

segments are not always the mostattracti"e ones #or e"ery company.

• Smaller companies may lack theskills and resources needed to ser"ethe larger segments! or they may'nd these segments too competiti"e.

, Segment si.e an" Gro/t



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gSegments

• Such companies may target

segments that are smaller and lessattracti"e! in an absolute sense!but that are more pro'table #or

them

, Segment si.e an" Gro/t



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gSegments

• The company also needs to eaminema(or structural #actors that afect longrun segment attracti"eness.

• -or eample ! the segment is lessattracti"e i# it already contains manystrong and aggressi"e competitors

• The eistence o# many actual or

potential substitute products may limitprices and the pro't that can be earnedin a segment

0 Segment structural attractiveness



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gSegments

• The power o# buyers afects segmentattracti"eness! buyers with strongbargaining power relati"e to sellers willtry to #orce prices down! demand more

ser"ices and set competitors againstone another

• , segment may be less attracti"e i# it

contains power#ul suppliers who cancontrol prices or reduce the&ualityI&uantity o# ordered goods andser"ices

0 Segment structural attractiveness

)valuating Market


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)valuating MarketSegments

• Some attracti"e segments can bedismissed &uickly because they don*tmesh with the company*s long runob(ecti"es! or the company may lackthe resources and skills needed tosucceed in an attracti"e segment.

• , company should enter only segmentsin which it can create superiorcustomer "alue

1Company o+2ectives an" resources


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@hich o# the #ollowing structural #actors is

not related to a segment*sattracti"enessA


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@hich o# the #ollowing structural #actors is

not related to a segment*sattracti"enessA


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%ar&et *argetingTarget Marketing Strategies

% & t * ti


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%ar&et *argeting

%n"ierentiate": marketing targetsthe whole market with one ofer

J Mass marketing

J -ocuses on common needs rather thanwhat*s diferent

J The company designs a product and amarketing program that will appeal tothe largest numbers o# buyers

%n"ierentiate" marketing

% & t * ti


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Chapter 7- slide 7/Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

%ar&et *argeting

• Most modern marketers ha"e strongdoubts about this strategy

• Di%culties arise in de"eloping a productor brand that will satis#y all consumers.

• Moreo"er! mass marketers o#ten ha"etrouble competing with more #ocused

'rms that do a better (ob o# satis#yingthe needs o# speci'c segments andniche.

%n"ierentiate" marketing

% & t * ti


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%ar&et *argeting

Dierentiate" marketing targetsse"eral diferent market segments

and designs separate ofers #oreach

• 3oal is to achie"e higher sales and

stronger position• More epensi"e than

undiferentiated marketing

Dierentiate" marketing


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Chapter 7- slide /0Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

@hen using a0n1 marketing 0mass$

marketing1 strategy! a 'rm decides toignore market segment diferences andtarget the whole market with one ofer.


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@hen using a0n1 marketing 0mass$

marketing1 strategy! a 'rm decides toignore market segment diferences andtarget the whole market with one ofer.


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%ar&et *argeting

• Concentrated marketingtargets a small share o#a large market

• :imited companyresources

• Gnowledge o# the

market• More efecti"e and

e%cient

Target Market Strategies

%ar&eting *argeting


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Chapter 7- slide /+Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

%ar&eting *argeting

Micromarketing is the practice o#tailoring products and marketing

programs to suit the tastes o#speci'c indi"iduals and locations

• :ocal marketing

• )ndi"idual marketing



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%ar&et *argeting

3ocal marketing in"ol"es tailoringbrands and promotion to the needs

and wants o# local customergroups

• Cities

• 4eighborhoods

• Stores


%ar&et *argeting


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%ar&et *argeting

#n"ivi"ual marketingin"ol"es tailoringproducts and marketing

programs to the needsand pre#erences o#indi"idual customers

• ,lso known as/J 2ne$to$one marketing

J Mass customization

J Markets$o#$one marketing



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This type o# micromarketing is also

known as one-to-one marketing ormass customization.


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This type o# micromarketing is also

known as one-to-one marketing ormass customization.


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Chapter 7- slide //Copyright © 2010 Pearson Education, Inc.Publishing as Prentice all

%ar&et *argeting

Depends on/

• Company resources

• Product "ariability• Product li#e$cycle stage

• Market "ariability

• Competitor*s marketing strategies

Coosing a Target Market

%ar&et *argeting


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%ar&et *argeting

• ene'ts customerswith speci'c needs

• Concern #or "ulnerablesegments

• Children

J ,lcoholJ Cigarettes

J )nternet abuses

Socially &esponsi+le Target Marketing


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)# a beer manu#acturer were to place a

commercial on a TK show that waspredominantly "iewed by children! itcould be considered using .


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)# a beer manu#acturer were to place a

commercial on a TK show that waspredominantly "iewed by children! itcould be considered using .


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$i))erentiation and Positioning

Pro"uct position is theway the product isde'ned by consumerson important attributesLthe place the productoccupies in consumers*minds relati"e tocompeting products

J Perceptions

J )mpressionsJ -eelings



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Positioningmaps showconsumer

perceptions o#their brands"ersuscompetingproducts on

importantbuyingdimensions



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• )denti#ying a set o# possible

competiti"e ad"antages to build aposition

• Choosing the right competiti"ead"antages

• Selecting an o"erall positioningstrategy

• De"eloping a positioning statement

Coosing a Dierentiation an" Positioning Strategy


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, product*s is the way the

product is de'ned by consumers onimportant attributes relati"e to thecompetition.


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, product*s is the way the

product is de'ned by consumers onimportant attributes relati"e to thecompetition.


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Competitive a"vantage is an

ad"antage o"er competitorsgained by ofering consumersgreater "alue! either through lower

prices or by pro"iding morebene'ts that (usti#y higher prices

#"entifying Possi+le Value Dierences an" Competitive !"vantage



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Chapter 7- slide 9/Copyright © 2010 Pearson Education, Inc.



)denti#ying a set o# possiblecompetiti"e ad"antages to

build a position by pro"idingsuperior "alue #rom/

Coosing a Dierentiation an" Positioning Strategy


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, 'rm that practices

diferentiation gains competiti"ead"antage by the way it designs itschannel co"erage.


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, 'rm that practices

diferentiation gains competiti"ead"antage by the way it designs itschannel co"erage.


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Diference to promote should be/

Coosing te &igt Competitive !"vantage


http://www.youtube.com/watch?v=HOYnOeo42ko


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Value

propositionis the #ull mio# bene'ts

upon which abrand ispositioned

Selecting an Overall Positioning Strategy



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Chapter 7- slide 10+Copyright © 2010 Pearson Education, Inc.



• To 0target segment and need1 our0brand1 is 0concept1 that 0point o#

diference1

Developing a Positioning Statement

4e+ link

Co##unication and $eli"ering theCh P iti

http://www.youtube.com/watch?v=YOiKG7hb8Pg


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Chosen Position

Choosing thepositioning iso#ten easier

thanimplementingthe position.


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@hat is the 'rst step in target

marketingA


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@hat is the 'rst step in target

marketingA


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@hich o# the #ollowing steps o# target

marketing takes into accountcompetitors* oferings to the marketA


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@hich o# the #ollowing steps o# target

marketing takes into accountcompetitors* oferings to the marketA

ch7-creating-value-for-target-customers.ppt

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