Chapter 7 Customer-driven marketing strategy: Creating value for target customersSome definitions >» Market segmentation: dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate products or marketing programs. >» Market targeting: the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. > Positioning: arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. > Differentiation: actually differentiating the market offering to create superior customer value.Market segmentation » Market segmentation is dividing a market into distinct groups that have have common needs » Before considering a segment a viable target for a company, companies should ensure: » Individuals or businesses within the segment should be uniform » The segment should differ from other segments.Bases for Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation: (Occasion segmentation) Benefit segmentationGeographic segmentation » In the geographic segmentation approach, markets are divided into different geographic units. These units may include nations, cities, or even neighborhoods. For example, seasonal products, such as coats, overcoats, boots and winter gear are marketed to geographic areas where the temperature gets very low. People living around beaches, will need swimwear and beach attire.Demographic segmentation > Demographic segmentation divides the market into groups based on variables such as age, gender, family size, birth era, household size, life stage, religion, race, marital status and nationality.Psychographic segmentation >» Psychographic segmentation: it divides buyers into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic groups can have very different psychographic make ups.Heart is a body Engine oiling it with Saffola..... — a peBehavioral segmentation Behavioral segmentation: divides consumers into groups according to the following characteristics: User status: in terms of smoking: non-smokers, ex-smokers, potential smokers, first time smokers, regular smokers. Usage Rate: light user, medium user, heavy user: (Mobile phone operators offer smart plans according to the usage rate of consumers.) Loyalty status: low, high (example Apple diehards have high loyalty). Will Apple users shift to Samsung ? Buyer involvement: (minimum effort). igh involvement (special effort), low involvementOccasion segmentation » Occasion segmentation: dividing the market into groups according to occasions when buyers get the idea to buy. actually make their purchase or use the purchased item.Benefit segmentation Benefit segmentation: In purchasing products, consumers are generally trying to satisfy specific needs. Hence, they are looking for products which provide specific benefits that satisfies these needs. The grouping of consumers on the basis of the benefits they are looking for in a product is known as benefit segmentation. Example: The sensitive segment (Sensodyne), the healthy segment (Pepsodent, white plus, Colgate), for fresh breath segment (Close-Up), the economic toothpaste segment (Magic toothpowder), for cavity protection (Crest), for teeth whitening (Pepsodent whitening, Medi plus whitening etc.)Table 7.1 E > Major Segmentation Variables for - - Consumer MarketsRequirements for effective segmentation To be useful, market segments must be: Measurable: the size and the profiles of the segment must be measurable. 2 Accessible: the segment should be effectively reached and served. 3. Substantial: the segment must be large or profitable enough to serve. 4. Differentiable: the segments must be different from one another. 5. Actionable: the segment should be such that effective programs can be designed for attracting and serving.Selecting a target market (Market Targeting) The market targeting process involves two steps: 1. Determining how many segments to enter 2. Determining which segments offer the most potential.Market Targeting Strategies Whole market with Decide to target one offer several different > Ignore segments market segments, separate offers for each ‘Targeting broadly Local Marketing Y Concentrate on one > cities, orafew segments —neighbour- or niches hoods, specific stores Targeting narrowly Individual Marketing >1 person1. Undifferentiated marketing: >» Undifferentiated marketing: involves ignoring segment differences and offering just one product or service to the entire market. This strategy helps to keep the cost down. For example, Coca-Cola with one regular flavor. 4 open happiness2. Differentiated marketing > Differentiated marketing: Marriott's Brands involves marketing in a jeer number of segments and 2 BYERS! RETIN, developing separate marketing program for each. However, this increases the cost for the company.Undifferentiated marketing Differentiated marketing Heterogeneous tigeds in the overall market, homogeneous needs within the segment Homogeneous needsin the overall market One product for a mass market Specific products for defined segments Competitive advantages due to a product with a clear price advantage, better properties or strong advertising Competitive advantages due to unique products that meet the needs of certain segments Special profit opport in production and mark through economies of scale | Special profit opportunities through higher margins for specific productsinvolves firms selecting one segment and attempting to capture a large share of this market.Concentrated marketing * Is especially appealing when company resources are limited. * Instead of going after a small share of a large market, the company goes after a large share of one or few sub segments * E.g marketing a product specifically for teenage girls, or a retailer might market his business to residents in a specific town. * Concentrated marketing strategies are often geared for smaller groups of people, because they are designed to appeal to a @ specific segment.4. Micro-marketing >» Micro-marketing: the Practice of tailoring products and marketing Programs to the needs and wants of specific individuals.¢ Tailoring products and marketing programs to tastes of specific people and locations — Local Marketing: Tailoring brands and promotions to the needs and wants of local customer groups — Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers 15.42Market Targeting Micromarketing * Drawbacks for local marketing: “ii, It can drive up manufacturing and marketing costs by reducing the economies of scale. It also create logistics problems as companies try to meet the varied requirements of different regional and local markets. A brand’s overall image might be diluted if the product and message vary too much in different localities.