Principles of Marketing
Nineteenth Edition, Global 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 value-
driven marketing strategy: market segmentation,
targeting, differentiation, and positioning.
7.2 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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FACEBOOK (META): Targeting the Diverse
Needs of Different Social Media Segments
Thanks to successful segmentation and targeting, Facebook/Meta’s four
huge social media platforms—Facebook, Instagram, WhatsApp, and
Messenger—now constitute four or the world’s top five social media
brands.
rvlsoft/Shutterstock
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Learning Objective 1
Define the major steps in designing a customer value-driven
marketing strategy: market segmentation, targeting,
differentiation, and positioning.
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Customer Value–Driven Marketing
Strategy
Figure 7.1 Designing a Customer Value–Driven Marketing
Strategy
D ②
A
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Learning Objective 2
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.>
·
S
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Market Segmentation (6 of 14)
Segmenting Consumer Markets
Psychographic segmentation divides a market into different segments
based on social class, lifestyle, or personality characteristics.
-
=
Hyperlocal social marketing:
Mazda uses personalized
ads for customers within a
certain radius of a dealer.
Car Collection/Alamy Stock Photo
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Market Segmentation (7 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.
Gender segmentation: Toy
company LEGO Group announced
recently that it will work harder to
remove gender stereotypes from its
products and marketing.
Creativa Images/Shutterstock
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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.
Lifestyle segmentation: Rocky
Mountain Tiny Houses caters to
the “tiny house” lifestyle segment
of consumers seeking “a place of
pride and comfort, yet one of
simplicity and affordability.” “Live
Simply,” advises the company.
pp a/Shutterstock
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Market Segmentation (9 of 14)
Segmenting Consumer Markets
Behavioral Segmentation
• Occasions
• Benefits sought
• User status
• Usage rate
• Loyalty status
Used with permission of Pacific Cycle Inc
Benefit segmentation: Schwinn
makes bikes for every benefit
segment. “No matter what you’re
looking for,” says Schwinn, “we’ve
got a line of bikes for you.”
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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 can
paint a surprisingly precise picture of
who you are and what you buy. Acxiom Corporation
Personicx clusters carry such colorful
names as “Skyboxes and Suburbans,”
“Shooting Stars,” “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.
Intermarket segmentation: Today’s
technologies let fast-fashion retailer
Zara target like-minded style conscious
Eyal Dayan Photography
but value-seeking consumers anywhere
in the world they live.
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Market Segmentation (14 of 14)
Requirements for Effective Segmentation
• Measurable -=
• Accessible Ba Jed
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• Substantial S
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• Differentiable i
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.
• Actionable -1 -
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Discussion Question (1 of 2)
What are the requirements for effective segmentation?
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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
-m (1)
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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: The
InterContinental Hotels Group (IHG)
serves a wide range of customer
segments through 16 differentiated hotel
brands. It offers something for every travel
segment, from the Holiday Inn (for
customers looking for essentials) to Hotel
[Link]/Alamy Stock Photo; Radharc
Indigo (for those who want to be “part of Images/Alamy Stock Photo
the pulse and rhythm of a place”).
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Market Targeting (6 of 10)
Selecting Target Markets u
Concentrated marketing targets
a large share of a smaller market.
• Limited company resources
• Knowledge of the market
• More effective and efficient
Concentrated marketing: Apparel
company American Giant has
grown explosively in its back-to- David Paul Morris/Bloomberg via Getty Images
basics, made-in-America niche.
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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
Local marketing: The Kroger app
personalizes and optimizes the
customer’s experience in a
preferred local store. Its Google
Maps pickup service shares a pick-
up customer’s estimated time of
arrival with the store so orders are
ready for handover just when the
customer arrives at the store. Koshiro K/Shutterstock
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Market Targeting (9 of 10)
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
Individual marketing: Based on
images submitted by a customer
using its smartphone app,
FitMyFoot 3-D prints footwear
that fits that customer and no
one else.
FitMyFoot
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Market Targeting (10 of 10) >
-
Undifferentiated
>
- grapefruit
Selecting Target Market Segments
Choosing a targeting strategy
depends on
• Company resources
• Product variability
• Product life-cycle stage >
-
only
one version
• Market variability
• Competitor’s marketing strategies Cagkan Sayin/Shutterstock
Socially responsible targeting: In
this era of increased social
responsibility, marketers must
consider not just whether targeted
consumers buy and like their
products but also whether they use
them wisely.
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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: Spotify does
more than just stream music.
It gives you “Music for every
mood.”
rafapress/Shutterstock
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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
highest Price
rafapress/Shutterstock
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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 and
Positioning Strategy
Identifying a set of possible competitive
advantages to differentiate along the
lines of:
• Product
• Services
• Channels anzheni/Shutterstock
• People
• Image
Positioning on multiple competitive
advantages: Land Rover positions its
new Defender as combining its legacy
off-road performance with state-of-the-art
electronics and luxury on-road comforts.
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Differentiation and Positioning (6 of 9)
Choosing a Differentiation and Positioning Strategy
A competitive advantage should be:
• Important
1 3 5 7 ,
• 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)
Positioning statement: Public Goods
is positioned as an online food and Courtesy of Public Goods
household goods retailer that makes
healthy, sustainable, everyday
essentials accessible at a fair price.
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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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Discussion Question (2 of 2)
Describe the more-for-more positioning strategy.
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