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Chapter Four
Customer-Driven Marketing
Strategy:
SEGMENTATION, TARGETING AND
POSITIONING
By
By
Dinkisa
DinkisaK.
K.
(PhD,
(PhD,Assistant
Assistantprofessor
professor))
Copyright © 2012Pearson
2012 PearsonEducation,
Education,Inc.
Inc.
7- 1
Publishing as Prentice Hall
Customer-Driven Marketing Strategy:
Creating Value for Target Customers
Topic Outline
• Market Segmentation
• Market Targeting
• Positioning
• In concept, marketing boils down to two questions:
(1) Which customers will we serve? and
(2) How will we serve them?
• Of course, the tough part is coming up with good
answers to these simple-sounding yet difficult
questions.
• The goal is to create more value for the customers
we serve than competitors do
Market segmentation is the division of a
market into distinct groups of buyers who
have different needs, characteristics, or
behavior and who might require separate
products or marketing mixes
Market segment is a group of consumers
who respond in a similar way to a given set
of marketing efforts
06/07/20
Market Segmentation
Market Segmentation
Segmenting Consumer Markets
Market Segmentation
Segmenting Consumer Markets
• Geographic segmentation divides the
market into different geographical units such
as nations, regions, states, counties, or cities
Market Segmentation
Segmenting Consumer Markets
Demographic segmentation
divides the market into
groups based on variables
such as age, gender, family
size, family life cycle, income,
occupation, education,
religion, race, generation,
and nationality
Market Segmentation
Age and life-cycle stage segmentation is the
process of offering different products or
using different marketing approaches for
different age and life-cycle groups
Gender segmentation divides the market
based on sex (male or female)
Market Segmentation
Segmenting Consumer Markets
Income segmentation divides
the market into affluent,
middle-income or low-
income consumers
Market Segmentation
Segmenting Consumer Markets
Psychographic segmentation divides buyers
into different groups based on social class,
lifestyle, or personality traits
Market Segmentation
Segmenting Consumer Markets
Behavioral segmentation
divides buyers into groups
based on their knowledge,
attitudes, uses, or responses
to a product
• Occasions
• Benefits sought
• User status
• Usage rate
• Loyalty status
Behavioral variables
• Occasions – birthdays, lunchtime, vacations
• Benefits – eg.travel – business, vacation,
educational
• User status – non users, ex users, first time
users, regular users, potential users
• Usage rate – light, medium, heavy
• Loyalty status – diehards, shifters,
switchers
• Buyer Readiness – unaware – aware –
informed – interested – desire – intention
to buy
• Attitude – enthusiastic, positive, indifferent,
negative, hostile
Market Segmentation
Segmenting International markets
Market Segmentation
Segmenting International Markets
Intermarket segmentation divides
consumers into groups with similar needs
and buying behaviors even though they are
located in different countries
Market Segmentation
Requirements for Effective Segmentation
To be useful, market segments must be:
• Measurable: The size, purchasing power, and profiles of
the segments can be measured.
• Accessible: The market segments can be effectively
reached and served.
• Substantial: The market segments are large or profitable
enough to serve.
• Differentiable: The segments are conceptually
distinguishable and respond differently to different
marketing mix elements and programs.
– If men and women respond similarly to marketing efforts for soft drinks, they
do not constitute separate segments.
• Actionable: Effective programs can be designed for
attracting and serving the segments.
Market Targeting
Selecting Target Market Segments
Market targeting is the process of evaluating
each market segment’s attractiveness and
selecting one or more segments to enter
Target market consists of a set of buyers who
share common needs or characteristics that
the company decides to serve
Market Targeting
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
Structural attractiveness includes factors that affect long-run
attractiveness.
These factors might include strong and aggressive competitors,
substitute products, and high power of buyers or powerful
suppliers.
• Company objectives and resources
Market Targeting
Selecting Target Market Segments
Market-Targeting Strategies
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Market Targeting
Target Marketing Strategies
Undifferentiated marketing targets the
whole market with one offer
– Mass marketing
– Focuses on common needs rather than what’s
different
Market Targeting
Target Marketing Strategies
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
Market Targeting
Target Market Strategies
• Concentrated marketing
targets a small share of a
large market
• Limited company resources
• Knowledge of the market
• More effective and efficient
• Gains certain economies
through specialization
Marketing Targeting
Target Market Strategies
Micromarketing is the practice of tailoring
products and marketing programs to suit
the tastes of specific individuals and
locations
• Local marketing
• Individual marketing
Market Targeting
Target Market Strategies
Local marketing involves tailoring brands and
promotion to the needs and wants of local
customer groups
• Cities
• Neighborhoods
• Stores
Market Targeting
Target Market Strategies
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
– Markets-of-one marketing
Market Targeting
Choosing a Target Market
Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
Positioning
Product position is the way
the product is defined by
consumers on important
attributes—the place the
product occupies in
consumers’ minds relative
to competing products
Perceptions
Impressions
Feelings
Positioning
Choosing a 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
Positioning
Identifying Possible Value Differences and
Competitive Advantages
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
Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible
competitive advantages to build
a position by providing superior
value from:
• Product differentiation, brands can be differentiated on
features, performance, or style and design.
• Services differentiation through speedy, convenient, or careful
delivery.
Example: It is open seven days a week, including evenings.
• Channel differentiation gain competitive advantage through
the way they design their channel’s coverage, expertise, and
performance.
• People differentiation—hiring and training better people than
their competitors do.
• Image differentiation: The chosen symbols, characters, and
other image elements a brand chooses must be
communicated through advertising that conveys the
company’s or brand’s personality.
Positioning
Choosing the Right Competitive Advantage
Difference to promote should be:
• Important: The difference delivers a highly valued benefit to target
buyers.
• Distinctive: Competitors do not offer the difference, or the company
can offer it in a more distinctive way.
• Superior: The difference is superior to other ways that customers
might obtain the same benefit.
• Communicable: The difference is communicable and visible to buyers.
• Preemptive: Competitors cannot easily copy the difference.
• Affordable: Buyers can afford to pay for the difference.
• Profitable: The company can introduce the difference profitably.
Positioning
Selecting an Overall Positioning Strategy
Value proposition
is the full mix of
benefits upon
which a brand is
positioned
Differentiation and Positioning
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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End of Chapter 4
Any Question?
