Customer Value–Driven
Marketing Strategy:
Creating Value for Target
Customers
Chapter Seven
Learning
Objectives
-To understand the major steps in designing a customer
value–driven marketing strategy: market segmentation,
targeting, differentiation, and positioning.
-To List and discuss the major bases for segmenting
consumer and business markets.
-Explain how companies identify attractive market
segments and choose a market-targeting strategy.
-Discuss how companies differentiate and position their
products for maximum competitive advantage.
2. Customer Value-Driven Marketing Strategy
To design a winning marketing strategy, 1. What customers 2. How can we
the marketing manager must answer two will we serve serve these
important questions: customers best?
Value Driven Marketing
Strategy
Select Customers to Decide on a Value
Serve Proposition
Differentiation
Segmentation
Differentiate the
Divide the total
Create Value market offering
market into
for targeted to create superior
smaller segments
customers customer value
Positioning
Targeting Position the
Select the market offering
segment or in
segments to the minds of
enter target customers
Market Segmentation
Geographic Psychographic
Demographic Behavioral
Geographic Segmentation
Dividing a market into
different geographical
units, such as nations,
Geographic
states, regions, counties,
cities, or even
neighborhoods.
Hyperlocal social marketing: Location-based
targeting to consumers in local communities or
neighborhoods using digital and social media.
Example: Find a pizza place near me
Demographic
Segmentation
Age, gender, ethnicity,
income and wealth,
Demographic occupation, marital status,
Segmentation household type and size, and
geographical
location
• Most fundamental factors for segmentation
- Precise data measurement
- Most cost-effective way to locate and reach segments
- Identify new segments (by shift in age, income, location)
- Determines consumption, attitudes, and media exposure
patterns
Demographic Segmentation:
Age
Based on Age:
-Banking need varies
-Preference for shoe varies (older prefer more comfort)
-Price point varies (affordability vs. luxury)
-Product preference varies (jeans from Dhaka college vs
from branded outlets)
Demographic Segmentation:
Gender
Gender roles have blurred and
no longer an accurate way of
segmentation for some
product categories.
Demographic Segmentation:
Households
Family Life Cycle: phases that most families go
through
Marital Status
Size of the Family
Family Life Age of Family
Cycle Members
Birth/Death of
Family Members
Employment
Status
Birth/Death of
Family Members
Size of the Family
Demographic Segmentation: Social
Standing
-Social Class: Dividing members of a society into a
hierarchy of distinct status classes.
• Members of each class have relatively the same
status
• Members of all other classes have higher/lower
-Education,
status. occupation, and income are closely
correlated.
-Distinct groups may offer prospects for the same core
product, but marketers should target them using
different features.
Demographic Segmentation: Social
Standing
Demographic Segmentation: Ethnicity
-Segmentation based on groups who share the same
values, beliefs, and customs.
Psychographic Segmentation: Lifestyles
-Segmentation based on consumer lifestyles, consisting
consumers’ activities, interests, and opinions.
-Psychographic variables: buying patterns, opinions
about consumption and/or social issues, values,
hobbies, leisure activities
Psychographic Segmentation: Lifestyles
Further Reading
https://web.archive.org/web/
20240419163850/https://
www.strategicbusinessinsights.com/Vals/
Ustypes.Shtml
Behavioral Segmentation
Occasion Benefits Loyalty
Segmentation Sought Status
User Status Usage Rate
Occasion Segmentation
-Consumers purchases some products for specific occasions
Examples:
- Greeting cards before New Year or Mother’s Day
- Rings for wedding
- Sunscreens before Summer
- “Shemai” before Eid
Benefit Segmentation
-Segmentation based on the benefits that consumers
seek from products and services.
-Buyers perception of getting unique and prominent
benefit ensures brand loyalty.
Benefit Segmentation
Clients’ Expectations from Their Service Providers (Dentists,
Hairdressers, Travel Agents, Financial Firms)
Social Benefits Special Treatment Confidence-Related
Benefits Benefits
Being recognized Providers paying more Providers should
immediately upon arrival attention to client’s convince clients that
and being known by specific needs. there is little risk
name something will go wrong.
Being treated in a way Providers helping clients Receiving clear
that makes them feel when something goes descriptions of services.
important. wrong.
Being treated as if they Receiving priority Providers should make
were the provider’s treatment in queues and clients feel confident
personal friends. faster service. that the service will be
provided well.
Usage-Rate Segmentation
-Heavy, medium, and light users of a given product.
- Small group of heavy users=large percentage of the
total product usage.
- Targeting heavy users is more profitable, but
expensive
- Some target light and medium users with different
offers.
Examples: Internet usage, purchase of flight tickets
User Status Segmentation
-Nonusers
-Ex-users
-Potential users (consumers facing life-stage changes)
-First time users
-Regular users
Loyalty Status Segmentation
-Buyers can be divided into groups according to their
degree of loyalty.
• Completely loyal: Buys one brand all the time
• Somewhat loyal: Loyal to two or three brands of
a given product
• No loyalty: Want something different each time
they buy, or they buy whatever’s on sale.
Using Multiple Segmentation Bases
-Hybrid Segmentation (example: Combining geography
and demographics)
- “Birds of a feather flock together”
Gulshan Outlet
Barishal Outlet
Segmenting International Markets
• Geographic Location
• Economic Factors
• Cultural Factors
• Political and Legal
Factors
Requirements for Effective
Segmentation
• Measurable: The size, purchasing power, and profiles of
the segment can be measured.
• Accessible: Segments can be effectively reached and
served.
• Substantial: Segments are large or profitable enough to
serve.
• Differentiable: Segments are conceptually
distinguishable
• Actionable: Effective programs can be designed to
Market Targeting: Evaluating Market
Segments
The process of evaluating each market segment’s
attractiveness and selecting one or more segments to
enter.
Size
Size and
and Structural
Structural
Growth
Growth Attractiveness
Attractiveness
Company
Company
Objectives
Objectives and
and
Resources
Resources
Selecting Target Market Segments
Targeting
Broadly
Undifferentiate -Ignore market segment differences and go
d after the whole market with one offer.
(mass)
marketing
Differentiated -Target several market segments and designs
(segmented) separate offers for each.
marketing
Concentrated -Goes after a large share of one or a few
(niche) segments or niches.
marketing
Micromarketing -Tailor products and marketing programs to
(local or the needs and wants of specific individuals and
individual segments.
Targeting marketing)
Narrowly
Choosing a Targeting Strategy
Competitors’ Company
Strategies Resources
Factors
Factors
Affecting
Affecting
Market Strategy
Strategy Product
Variability Decisions
Decisions Variability
Stage in
Life Cycle
Differentiation and Positioning
The company must decide on a value proposition—
• How it will create differentiated value for targeted
segments
• What positions it wants to occupy in those segments.
Positioning: the place the product occupies in consumers’
minds relative to competing products.
“Products are made in factories, but brands happen in the
minds of consumers.”
Choosing a Differentiation and Positioning
Strategy
The differentiation and positioning task consists of
three steps:
• Identifying a set of differentiating competitive
advantages on which to build a position.
• Choosing the right competitive advantages.
• Selecting an overall positioning strategy.
Identifying Possible Value Differences and
Competitive Advantages
Competitive advantage: An advantage over competitors
gained by offering greater customer value-
• by having lower prices or
• By providing more benefits that justify higher prices.
Ways of differentiation:
Product Services Channels
People Image
Choosing the Right Competitive Advantages
-How Many Differences to Promote
• Unique Selling Proposition (USP)
• Multiple Differentiator
-Which Differences to Promote: A difference is
worth establishing if-
Communicabl
Important Distinctive Superior
e
Preemptive Affordable Profitable
Selecting an Overall Positioning Strategy
Value proposition: The full positioning of a brand
Possible value propositions:
• More for More
• More for the Same
• More for Less
• The Same for Less
• Less for Much Less
