Chapter 8 customer-driven marketing strategy creating values for target customers
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1 Chapter 8 custmer-driven marketing strategy creating values fr target custmers - Target marketing: indentifying market segments, selecting 1+ and develping prducts and marketing prgrams tailred t each shtgun apprach = scattering marketing effrts rifle apprach = firms t fcus n the buyers wh have greater interest in the values they create best - Market segmentatin: dividing a market int smaller grups w/ distinct needs, characteristics, r behaviurs that might require separate marketing strategies r mixes - Market targeting (targeting): the prcess f evaluating each market segment s attractiveness and selecting 1+ segments t enter - Differentiatin: actually differentiating the market ffering t create superir custmer value - Psitining: arranging fr a market ffering t ccupy a clear, distinctive, and desirable place relative t cmpeting prducts in the minds f target cnsumers Market segmentatin - Market segmentatin t DIVIDE LARGE heter markets int small segments (can better math t unique needs) Segmenting cnsumer markets Gegraphic segmentatin - Gegraphic segmentatin: dividing a market int different gegraphical units such as natins, regins, prvinces, cunties, cities, r neighburhds Demgraphic segmentatin - Demgraphic segmentatin: dividing the market int grups based n variables such as age, gender, family size, family life cycle, incme, ccupatin, educatin, religin, race, generatin, and natinality Mst ppular fr segmenting custmer grups Variables easier t measure in this fmr 1
2 - Age and life-cycle stage Age and life-cycle segmentatin: dividing a market int difference age and life-cycle grups Be careful f steretypes when using this type f segmentatin Age = pr predictr f persn s life cycle, health, wrk, family status - Gender Gender segmentatin: dividing a market int different grups based n gender In clthing, csmetics, tiletries, magazines - Incme Incme segmentatin: dividing a market int different incme grups Targets the affluent ften but nt always (HQ htels, vs dllarama) Psychgraphic segmentatin - Psychgraphic segmentatin: dividing a market int different grups based n scial class, lifestyle, r persnality characteristics - Persnality variables t segements Ex cruise lines targeting adventure seekers Behaviural segmentatin - Behaviural segmentatin: dividing a market int grups based n cnsumer knwledge, attitudes, uses, r respnses t a prduct The best starting pint in building market segments - Occasins Occasin segmentatin: dividing the market int grups accrding t ccasins when buyers get the idea t buy, actually make their purchase, r use the purchased item Builds prduct usage - Benefits sught Benefit segmentatin: Dividing the market int grups accrding t the different benefits that cnsumers seek frm the prduct - User status Reinfrce & retain regular users Attract targeted NONusers Reinvigrate relatinship w/ ex-users Ptential user grup are ppl that are facing life-stage changes -> ex newlyweds/parents - Usage rate Heavy users -> small % f market but HIGh % f ttal cnsumptin - Lyalty status Lyal t brands, stres, cmpanies Using multiple segmentatin bases - T identify smaller, better-defined target grups 2
3 - Ex multivariable segmentatin systems merging gegraphic, demgraphic, lifestyle, behaviural data Segmenting business markets - Additinal variables w/ business marketers Custmer perating characteristics Purchasing appraches Situatinal facts Persnal characteristics - Buying behaviurs and benefits = best basis fr segmenting business markets* Segmenting internatinal markets - Segment by Gegraphic lcatin: gruping cuntries by regins Ecnmic factrs -> ex by pp n incme lvls Plitical & legal factrs Cultural factrs - Intermarket segmentatin (aka crss market segmentatin): frming segments f cnsumers wh have similar needs and buying behaviur even thugh they are lcated in different cuntries Requirements fr effective segmentatin - Market segments, t be useful, must be Measurable-> the size, purchasing pwer, and prfiles f the segments can be measured Accessible -> segments t be effectively reached and served Substantial-> segments are large/prfitable enugh t serve Differentiable-> segments distinguishable and respnd differently t diff marketing mix elements and prgrams Actinable-> prgrams designed fr attracting and serving segments Market targeting Evaluating market segments - THREE factrs in evaluating market segments Segment size & grwth Segment structural attractiveness Pwer f buyers affects Pwerful suppliers make less attractive Less attractive if have already many strng and aggressive cmpetitrs Ie existence f actual/ptential substitute prducts limits prices/prfits Cmpany bjectives and resurces 3
4 Selecting target market segments - Target market: a set f buyers sharing cmmn needs r characteristics that the cmpany decides t serve - Marketing targeting strategies Undifferentiated marketing - Undifferentiated marketing (mass marketing): a market cverage strategy in which a firm decides t ignre market segment differences and g after the whle market with ne ffer Fcuses n cmmn needs Truble t cmpete w/ mre fcused firms Fr mre UNIFORM prducts (ex grapefruits/steel) Used in early stage f prduct life Strategy used fr ppl that have the same tastes and buy the same amnt BAD is cmpetitrs using differentiated/cncentrated marketing Differentiated marketing - Differentiated marketing (segmented marketing): a market cverage strategy in which a firm decides t target several market segments and designs separate ffers fr each Requires extra marketing research, frecasting, sales analysis, prm planning and channel mgmt Must weigh increased sales against increased csts Fr prducts that can vary in design Used in mature stage f prduct Cncentrated marketing - Cncentrated marketing (niche marketing): a market cverage strategy in which a firm ges after a large share f ne r a few segments r niches Can achieve strng market psitin Why? Bc greater knwledge f cnsumer needs in the served niche Markets effectively thrugh fine-tuning Markets efficiently by targeting its services t cnsumers that it can serve best Niches = SMALL attracts nly FEW cmpetitrs Fcuses limited resurces n serving the niches Start as niche t get fthld against larger cmpetitrs Ex: WestJet 4
5 Megamarketers create niche markets t create sales grwth Ex: Zapps Used in early stage f prduct life Higher-than-nrmal risks Fr prducts that can vary in design Micrmarketing - Micrmarketing: the practice f tailring prducts and marketing prgrams t the needs and wants f specific individuals and lcal custmer grups includes lcal marketing and individual marketing - Lcal marketing: tailring brands and prmtins t the needs and wants f lcal custmer grups cities, neighburhds, and even specific stres Ex Walmart (accrding t neighburhd characteristics) Cab drive up manufacturing and marketing csts by reducing ecnmies f scale Creates lgistic prblems Diluted brand image Meets the needs f first line custmers - Individual marketing: tailring prducts and marketing prgrams t the needs and preferences f individual custmers aka ne-t-ne marketing mass custmizatin and markets-f-ne marketing Custmizing fferings Stand ut against cmpetitrs Builds relatinships Chsing a targeting strategy - Strategy depends n resurces, prduct variability, prduct s life cycle stage, market variability, cmpetitrs marketing strategies Scially respnsible target marketing - Targeting yunger children by mistake.. - Issue f hw and what in target marketing Differentiatin and psitining - Prduct psitin: the way the prduct is defined by cnsumers n imprtant attributes the place the prduct ccupies in cnsumers minds relative t cmpeting prducts Cmplex set f perceptins, impressins, and feelings that cnsumers have fr the prduct cmpared t cmpetitrs Plan psitins t give prduct greatest advantage in selected target markets 5
6 Psitining maps - Perceptual psitining maps: shw cnsumer perceptins f their brands vs cmpeting prducts n imprtant buying dimensins Chsing a differentiatin and psitining strategy - THREE steps in differentiatin and psitining tasks Identifying a set f differentiating cmpetitive adv up which t build a psitin Chsing the right cmpetitive advantages Selecting an verall psitining strategy - Need t cmmunicate and deliver the chsen psitin t the market Identifying pssible value differences and cmpetitive advantages - Cmpetitive advantage: an advantage ver cmpetitrs gained by ffering greater custmer value, either thrugh lwer prices r by prviding mre benefits that justify higher prices - Differentiate by Prduct By features, perfrmance, style & design Services Thrugh speedy, cnvenient, careful delivery, HQ custmer care Channels Cmpetitive advantage thrugh cverage, expertise, and perfrmance Ppl Thrugh hiring, and training better ppl than cmpetitrs Image Image t cnvey benefits and psitining Chsing the right cmpetitive advantages - Hw many difference t prmte The mre claims n brands -> risking lss f clear psitining Each brand shuld pick ne benefit and stick t it (unique selling prpsitin USP) - Which differences t prmte Difference wrth establishing if it satisfies: Imprtant: the difference delivers highly values benefit t target buyers Distinctive: cmpetitrs d nt ffer the difference, r the cmpany can ffer it in mre distinctive way Superir: the difference is superir t ther ways that custmers might btain he same benefit Cmmunicable: visible and cmmunicable t buyers Preemptive: difference cannt be easily cpied Affrdable: buyer can affrd t pay the difference 6
7 Selecting an verall psitining strategy Prfitable: intrduce difference prfitably - Value prpsitin: the full psitining f a brand = the full mix f benefits upn which it is psitined - Mre fr mre -> prvides mst upscale prduct/service fr higher price t cver its high csts Can be vulnerable imitatrs - Mre fr the same -> cmparable quality at lwer price - The same fr less -> pwerful prpsitin, ffers same brands w/ LARGE discunts - Less fr much less -> meets cnsumers lwer perfrmance/quality requirements at much lwer price (dllar stres) - Mre fr less-> the BEST value prpsitin but its hard t sustain in the LR Develping a psitining statement - Psitining statement: a statement that summarizes cmpany r brand psitining it takes this frm : T (target segment and need) ur (brand) is (cncept) that (pint f difference) Ex: t busy, mbile prs wh need t always be in the lp, BB is a wireless cnnectivity sl n that gives yu an easier, mre reliable way t stay cnnected t data, ppl, and resurces while n the g Cmmunicating and delivering the chsen psitin - After a psitin is built need t maintain it thrugh cnsistent perfrmance and cmmunicatin - Mnitr and adapt t changes in cnsumer needs and cmpetitrs strategies - Psitin shuld change GRAUDALLY if adapting t changing marketing envirnment - 7
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