Principles of

Marketing
EIGHTEENTH EDITION, GLOBAL
EDITION
Principles of Marketing

Defining Understanding Designing Marketing

Defining Marketing and the Understanding the Designing a Customer Extending Marketing
Marketing Process Marketplace and Consumer Value–Driven Strategy and •Covers how marketing adapts to
•Establishes what marketing is, its Value Mix global, digital, and societal
scope, and the steps involved in contexts, expanding beyond
•Focuses on analyzing customer •Explains how to build strategies
creating value. traditional boundaries.
needs, wants, and behaviors, and and use the marketing mix
how markets operate. (product, price, place, promotion)
to deliver value.
Part 3: Designing a Customer Value–Driven Strategy
and Mix
Chapter 7: Creating Value for Target Customers

Chapter 8: Products, Services, and Brands: Building Customer Value

Chapter 9: Developing New Products and Managing the Product Life Cycle

Chapter 10 & 11: Pricing: Understanding and Capturing Customer Value

Chapter 12 & 13: Marketing Channels: Delivering Customer Value

Chapter 14, 15 & 16 Engaging Consumers and Communicating Customer Value: Promotion
Principles of Marketing
Eighteenth Edition, Global Edition

Chapter 7
Customer Value-Driven Marketing
Strategy: Creating Value for Target
Customers
Why would a company have multiple brands under the same product
category as four different soaps?
Why would a company have multiple brands under the same product
category as four different soaps?
Henkel’s Persil in the Gulf States
By focusing on
generating insights to
understand market
trends and customers’
special needs in
different regions,
Henkel found huge
success with its brands
in the Middle East.
 7.1 Define the major steps in designing a
customer-driven marketing strategy:
market segmentation, targeting,
differentiation, and positioning.
7.2 List and discuss the major bases for
segmenting consumer and business
Learning markets.
Objectives 7.3 Explain how companies identify
attractive market segments and choose
a market-targeting strategy.
7.4 Discuss how companies differentiate
and position their products for
maximum competitive advantage.
Customer-Driven Marketing Strategy
Steps in Market Segmentation, Targeting, and
Positioning (Fig. 7.1)
Market Segmentation
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
Segmentation
Market
Segmentation
Market segmentation is a
marketing term that refers to
aggregating prospective buyers
into groups or segments with
common needs and who
respond similarly to a marketing
action.
Market segmentation enables
companies to target different
categories of consumers who
perceive the full value of certain
products and services differently
from one another.
Understanding
Market
Segmentation
Companies can generally use
three criteria to identify
different market segments:
1. Homogeneity, or common
needs within a segment

2. Distinction, or being unique

from other groups
3. Reaction, or a similar
response to the market
Market Segmentation: Segmenting
Consumer Markets

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation
Geographic segmentation: The where?
By comparison, geographic segmentation is often one of the
easiest to identify, grouping customers with regards to their
physical location. This can be defined in any number of ways:

● Country
● Region
● City
● Postal code
For example, it’s possible to group customers within a set radius of a
certain location – an excellent option for marketers of live events
looking to reach local audiences. Being aware of your customers’
location allows for all sorts of considerations when advertising to
consumers.
Demographic
segmentation: The who?
Demographic segmentation might be the first thing people think of
when they hear ‘market
segmentation’. This is perhaps the most straightforward way of defining
customer groups, but it remains powerful. Demographic segmentation
looks at identifiable non-character traits such as:

● Age
● Gender
● Ethnicity
● Income
● Level of education
● Religion
● Profession/role in a company
Demographic
Segmentation
Age and life-cycle stage
segmentation is the process of
offering different products or using
different marketing approaches for
different age and life-cycle groups
Gender segmentation divides the
market based on sex (male or
female)
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Age & Life Cycle, Gender(Sex)

Family Life cycle
Income
segmentation
divides the market into
affluent, middle-
income or low-income
consumers
Psychographic
segmentation: The why
Psychographic segmentation is focused on your
customers’ personalities and interests. Here we might
look at customers and define them by their:

● Personality traits
● Hobbies
● Life goals
● Values
● Beliefs
● Lifestyles
Compared to demographic segmentation, this can be a
harder set to identify. Good research is vital and, when
done well, psychographic segmentation can allow for
incredibly effective marketing that consumers will feel
speaks to them on a much more personal level.
 Behavioral
segmentation: The how?
Behavioral segmentation is possibly the most useful of all
for e-commerce businesses. As with psychographic
segmentation, it requires a little data to be truly effective –
but much of this can be gathered via your website itself.
Here we group customers with regards to their:

● Spending habits
● Purchasing habits
● Browsing habits
● Interactions with the brand
● Loyalty to brand
● Previous product ratings
● Usage rate (Non-user, ex-user, light user, heavy user;
Pareto rule or 80/20 rule)
Segmentation Types: an overview
Segmentation Types: an overview
Using Multiple
Segmentation Basis
Every segmentation type has its
own advantages and
disadvantages
Often marketers utilize a mixture
of two different segmentations as
well
Geodemographic segmentation
 Requirements for Effective Segmentation
To be useful, market segments must be:

Measurable Accessible Substantial

Differentiable Actionable
Evaluating Market Segments:
Segment Size and Growth
◦ Analyze current sales, growth rates and expected profitability for various segments.

Segment Structural Attractiveness

◦ Consider effects of: competitors, availability of substitute products and, the power of
buyers & suppliers.

Company Objectives and Resources

◦ Company skills & resources needed to succeed in that segment(s).
◦ Look for Competitive Advantages.
Market Targeting
Targeting in marketing is a strategy that breaks a
large market into smaller segments to concentrate
on a specific group of customers within that
audience. ... Instead of trying to reach an entire
market, a brand uses target marketing to put their
energy into connecting with a specific, defined group
within that market.
Market Targeting
Figure 7.2 Market-Targeting Strategies
Market Targeting
Target market consists of a set of buyers who
share common needs or characteristics that
the company decides to serve
Common strategies are:
➢Undifferentiated (Mass marketing)
➢Differentiated (Segment marketing)
➢Concentrated (Niche marketing)
➢Micro Marketing (Local/Individual)
Undifferentiated (Mass) marketing
It targets the whole
market with one offer
◦Mass marketing
◦Focuses on common
needs rather than
what’s different
Differentiated (Segment)
marketing
It 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
Concentrated
marketing (Niche)
Marketing
It targets a small share of
a large market
Limited company
resources
Knowledge of the market
More effective and
efficient
Movie%20icon

Micromarketing
Micromarketing is the practice of
tailoring products and marketing
programs to suit the tastes of
specific individuals and locations
Local marketing
Individual marketing
Local Marketing
Local marketing involves
tailoring brands and
promotion to the needs and
wants of local customer
groups
Cities
Neighborhoods
Stores
Individual marketing
Individual marketing involves
tailoring products and
marketing programs to the
needs and preferences of
individual customers
Also known as:
◦ One-to-one marketing
◦ Mass customization
◦ Markets-of-one marketing
Market Coverage Strategies
Company Market
Marketing Mix

A. Undifferentiated Marketing

Company Marketing Mix 1 Segment 1

Company Marketing Mix 2 Segment 2

Company Marketing Mix 3 Segment 3

B. Differentiated Marketing

Segment 1
Company
Marketing Segment 2
Mix
Segment 3

C. Concentrated Marketing
Choosing a Positioning Strategy
Product 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
◦ Perceptions
◦ Impressions
◦ Feelings

Marketers must:
◦ Plan positions to give their products the greatest advantage in selected target markets,
◦ Design marketing mixes to create these planned positions.
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Differentiation and Positioning
Positioning maps show
consumer perceptions of their
brands versus competing
products on important buying
dimensions
Positioning Map
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
Identifying Possible Value Differences
and Competitive Advantages
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
➢MOAT
Choosing the Right Competitive
Advantages

Important

Profitable Criteria Distinctive

For Determining
Which Differences
To Promote
Superior
Unique Selling Proposition
Affordable

Preemptive Communicable
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible
competitive advantages to build a
position by providing superior value
from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
Differentiation and Positioning Strategy
Product differentiation: This involves emphasizing specific features, design, quality, or
performance aspects of a product that make it different from similar offerings in the
market.(features like Mobile, Hybrid cars)
Service differentiation: This focuses on how a company delivers its service, including customer
support, delivery methods, personalized experiences, and post-sale interactions, to stand out from
competitors Speedy or in a different way Turkish Food ice cream)
Channel differentiation: This strategy involves choosing unique distribution channels, like
selling directly online, through exclusive retailers, or using a specific sales approach to reach
customers differently. (ELO, OLX, Pak Wheal, Fly Dubai)
People differentiation: This means hiring and training highly skilled employees who provide
exceptional customer service, creating a positive perception of the company based on its
workforce. (DHL, TCS, Emirates)
Image differentiation: This is about crafting a distinct brand image through marketing,
messaging, and visual identity to convey a specific perception of the company and its
products in the market (Four season, Apple, Ritz Carlton, Google Search)
Points of differentiation
Product differentiation

Through product differentiation, brands can be differentiated on

features, performance, or style and design. BMW positions itself
as “The Ultimate Driving Machine” that’s “designed for driving
pleasure.”
Jazz 4G - “Pakistan’s Fastest Data Experience.”
Olper’s Milk - “Pure Goodness for Modern Families.”
Tapal Danedar - “The Perfect Cup, Every Time.”
 Points of differentiation
Services differentiation
Beyond differentiating its physical product, a firm can also gain
services differentiation through outstanding customer service. In
the highly competitive luxury automobile market, Lexus stands out
not just for its reliable cars but for the outstanding service quality
its dealers provide.
Foodpanda – Quick Commerce + Live Tracking
HBL Konnect – Branchless Banking Convenience
Toyota Pakistan – After-Sales & Maintenance
Indrive – E-Wallet, Convenience & Doorstep Service
 Points of differentiation
Channel differentiation
Firms that practice channel differentiation gain competitive
advantage through the way they design their channel’s
coverage, expertise, and performance. In recent years, many
brands have set themselves apart by selling only through
direct-to-consumer (DTC) online channels, offering
increased convenience and savings by cutting out retail
intermediaries.
Daraz – Online Marketplace as a Primary Channel
Nestlé Pakistan – Direct Store Delivery (DSD)
Coca-Cola – Cold Chain Distribution Network
Foodpanda – QuickCommerce Channels (Pandamart)
JazzCash – Branchless Financial Channel
McDonald’s – Multiple Access Channels
 Points of differentiation
People differentiation

Companies can also gain a strong competitive advantage

through people differentiation— hiring and training better
people than their competitors do. People differentiation
requires that a company select its customer-contact people
carefully and train them well.
McDonald’s Pakistan – Consistent, Friendly Crew
Emirates Airline (operating in Pakistan)
Beaconhouse School System – Trained Teachers
Nishat Hotel Lahore – Hospitality Excellence
Meezan Bank – Trained Islamic Banking Staff
 Points of differentiation
Image differentiation
Even when competing offers look the same, buyers may perceive a
difference based on company or brand image differentiation. A
company or brand image should convey a product’s distinctive
benefits and positioning. Developing a strong and distinctive image
calls for creativity and hard work. A company cannot develop an
image in the public’s mind overnight by using only a few ads. If Ritz-
Carlton means quality, this image must be supported by everything
the company is, says, and does.
Pepsi – Youthful, Fun, Music-Centric Image
Shan Masala – Premium, Pakistani Authentic Culinary Image
J. (Junaid Jamshed) – Modesty + Islamic Cultural Identity
Coca-Cola – Happiness & Togetherness
Lux – Glamorous, Celebrity & Beauty Image
Bahria Town – Luxurious, Grand Lifestyle Image
 Value Proposition

Value proposition is the full

mix of benefits upon
which a brand is
positioned
Value Proposition Canvas
Communicating and
Delivering the Chosen Position
Once position is chosen, company must take strong steps to
deliver and communicate the desired position to target
consumers.
All the company’s marketing mix must support the
positioning strategy.
Positioning strategy must be monitored and adapted over
time to match changes in consumer needs and competitor’s
strategies.
Communication
and Delivering
the Chosen
Position
CHOOSING THE POSITIONING
I S OFTEN EASIER THAN
I MPLEMENTING THE
POSITION.
STP Model