Principles of Marketing
Seventeenth Edition
Chapter 7
Customer Value-Driven Marketing Strategy:
Creating Value for Target Customers
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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
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
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
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Market Segmentation
Segmenting Consumer Markets
Geographic Demographic
segmentation segmentation
Psychographic Behavioral
segmentation segmentation
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Market Segmentation
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
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
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
Segmenting Consumer Markets
Psychographic segmentation divides a market into different segments
based on –
• Social Class: Wealthy consumers value exclusivity, prestige
• Lifestyle: Health-conscious consumers care about fitness and nutrition
• Personality Characteristics: Adventure lovers seek excitement and new
experiences
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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.
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Market Segmentation
Segmenting Consumer Markets
Behavioral Segmentation
• Occasions: Hallmark cards for Valentine’s Day or Mother’s Day
• Benefits sought: Amazon’s One-Click Shopping
• User status: Starbucks loyalty members
• Usage rate: Spotify free-tier users
• Loyalty status: Apple loyalists
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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
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Market Segmentation
Segmenting International Markets
Geographic Economic
location factors
Political and Cultural
legal factors factors
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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.
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Market Segmentation
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
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources
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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.
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Market Targeting
Figure 7.2 Market-Targeting Strategies.
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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
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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
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Market Targeting
Selecting Target Markets
Concentrated marketing targets a large
of a smaller market.
• Limited company resources
• Knowledge of the market
• More effective and efficient
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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
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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
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Market Targeting
Selecting Target Markets
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
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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
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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
Positioning maps show consumer
perceptions of marketer’s brands
versus competing products on
important buying dimensions.
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Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Value proposition is the full mix of benefits
upon which a brand is positioned.
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