Principles of Marketing, An Asian Perspective
Fifth Edition, Global Edition
Chapter 7
Customer Value-Driven
Marketing Strategy: Creating
Value for Target Customers
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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.
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Learning Objectives
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 markets.
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.
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Learning Objective 1
Define the major steps in designing a customer-driven
marketing strategy: market segmentation, targeting,
differentiation, and positioning.
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Customer-Driven Marketing Strategy
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Learning Objective 2
List and discuss the major bases for segmenting consumer
and business markets.
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Market Segmentation (1 of 14)
Market segmentation requires dividing a market into
smaller segments with distinct needs, characteristics, or
behaviors that might require separate marketing strategies
or mixes.
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Market Segmentation (2 of 14)
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
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Market Segmentation (3 of 14)
Segmenting Consumer Markets
• Geographic segmentation
• Demographic segmentation
• Psychographic segmentation
• Behavioral segmentation
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Market Segmentation (4 of 14)
Segmenting Consumer Markets
Geographic segmentation divides the market into different
geographical units such as nations, regions, states,
counties, cities, or even neighborhoods.
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Market Segmentation (5 of 14)
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.
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Market Segmentation (6 of 14)
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.
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Market Segmentation (7 of 14)
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.
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Market Segmentation (8 of 14)
Segmenting Consumer Markets
Behavioral segmentation divides a market into segments
based on consumer knowledge, attitudes, uses of a product,
or responses to a product.
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Market Segmentation (9 of 14)
Segmenting Consumer Benefit segmentation: Schwinn
Markets makes bikes for every benefit
Behavioral Segmentation segment. For example, its e-
bikes “help make the morning
• Occasions
commute or ride around town a
• Benefits sought
little bit easier.”
• User status
• Usage rate
• Loyalty status
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Market Segmentation (10 of 14)
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.”
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Market Segmentation (11 of 14)
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
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Market Segmentation (12 of 14)
Segmenting International Markets
• Geographic location
• Economic factors
• Political and legal factors
• Cultural factors
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Market Segmentation (13 of 14)
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.
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Market Segmentation (14 of 14)
Requirements for Effective Segmentation
• Measurable
• Accessible
• Substantial
• Differentiable
• Actionable
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Learning Objective 3
Explain how companies identify attractive market segments
and choose a market-targeting strategy.
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Market Targeting (1 of 10)
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
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Market Targeting (2 of 10)
Selecting Target Market Segments
A target market is a set of buyers who share common
needs or characteristics that the company decides to serve.
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Market Targeting (3 of 10)
Figure 7.2 Market-Targeting Strategies
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Market Targeting (4 of 10)
Selecting Target Market Segments
Undifferentiated marketing targets the whole market with
one offer.
• Mass marketing
• Focuses on common needs rather than what’s different
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Market Targeting (5 of 10)
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.
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Market Targeting (6 of 10)
Selecting Target Markets Concentrated marketing: Nicher
Harry’s concentrates its resources
Concentrated marketing targets a on direct-to-consumer sales of high-
large share of a smaller market. quality razors and shaving products
• Limited company resources to a value- and convenience-
• Knowledge of the market oriented segment of buyers
• More effective and efficient previously not well served by giant
competitors like Gillette.
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Market Targeting (7 of 10)
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
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Market Targeting (8 of 10)
Selecting Target Market Segments
Local marketing involves tailoring brands and promotion to
the needs and wants of local customer segments.
• Cities
• Neighborhoods
• Stores
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Market Targeting (9 of 10)
Selecting Target Markets Individual marketing: The
Individual marketing Rolls-Royce Bespoke design
involves tailoring products team works closely with
and marketing programs to individual customers to help
the needs and preferences of them create their own unique
individual customers. Rolls-Royces.
Also known as:
• One-to-one marketing
• Mass customization
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Market Targeting (10 of 10)
Selecting Target Market Segments
Choosing a targeting strategy depends on
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
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Learning Objective 4
Discuss how companies differentiate and position their
products for maximum competitive advantage.
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Differentiation and Positioning (1 of 9)
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.”
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Differentiation and Positioning (2 of 9)
Positioning maps show consumer perceptions of
marketer’s brands versus competing products on important
buying dimensions.
Figure 7.3 Positioning map: Large luxury SUVs
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Differentiation and Positioning (3 of 9)
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
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Differentiation and Positioning (4 of 9)
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.
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Differentiation and Positioning (5 of 9)
Choosing a Differentiation Services differentiation:
and 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
loan decision in only minutes.
• Product
• Services
• Channels
• People
• Image
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Differentiation and Positioning (6 of 9)
Choosing a Differentiation and Positioning Strategy
A competitive advantage should be:
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
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Differentiation and Positioning (7 of 9)
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
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Differentiation and Positioning (8 of 9)
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)
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Differentiation and Positioning (9 of 9)
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.
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