Chapter #7.ppt
- 1. Chapter 7- slide 1 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Chapter Seven Customer-Driven Marketing Strategy Creating Value for Target Customers
- 2. Chapter 7- slide 2 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer-Driven Marketing Strategy: Creating Value for Target Customers • Customer-Driven Marketing Strategy • Market Segmentation • Market Targeting • Differentiation and Positioning Topic Outline
- 3. Chapter 7- slide 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Best Buy: Embracing the Angles and Ditching the Demons • Six years ago, to better differentiate itself in a crowded, fiercely competitive marketplace, Best Buy needed to segment its market, narrow its targeting, and sharpen its positioning. So, Best Buy embarked on a “customer centric” segmentation strategy by which it set out to identify its best customers and win their loyalty by serving them better. It also identified less attractive customers and began to send them packing. Through research, Best Buy learned that it had two basic types of customers: angels and demons. Whereas angel customers are profitable, demon customers may actually cost a company more to serve than it makes from them. Best Buy further segmented the angels into different groups, from “Barrys” (high- income men) to “Jills” (suburban moms) to “Buzzes” (male technology enthusiasts).
- 4. Chapter 7- slide 4 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall • To attract the angels, the retailer began stocking more merchandise and offering better service to them. It organized customer-centric stores around the demographics of a given geographic area, catering to specific types of angles. To discourage the demons, Best Buy removed them from its marketing lists, reduced the promotions and other sales tactics that tended to attract them, and installed a 15 percent restocking fee. How is Best Buy’s customer-centricity strategy working? Very well. Since rolling out the new strategy six years ago, Best Buy’s overall sales (and profits) have more than doubled. And because Best Buy shoppers are having their specific needs met, customer satisfaction far outpaces that of closest competitor Walmart.
- 5. Chapter 7- slide 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Designing a Customer-Driven Marketing Strategy Select customers to serve Segmentation Divide the total market into smaller segments. Targeting Select the segment or segments to enter. Decide on a value proposition Differentiation Differentiate the market offering to create superior customer value. Positioning Position the market offering in minds of target customers. Create value for targeted customers
- 6. Chapter 7- slide 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market segmentation is the process that companies use to divide large, heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs Market Segmentation
- 7. Chapter 7- slide 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall • Segmenting consumer markets • Segmenting business markets • Segmenting international markets • Requirements for effective segmentation Market Segmentation
- 8. Chapter 7- slide 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation Segmenting Consumer Markets
- 9. Chapter 7- slide 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities Segmenting Consumer Markets
- 10. Chapter 7- slide 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 11. Chapter 7- slide 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation 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 Segmenting Consumer Markets
- 12. Chapter 7- slide 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 13. Chapter 7- slide 13 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 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)
- 14. Chapter 7- slide 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 15. Chapter 7- slide 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 16. Chapter 7- slide 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Judge Yourself
- 17. Chapter 7- slide 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall And what about this?
- 18. Chapter 7- slide 18 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Income segmentation divides the market into affluent or low-income consumers Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits Segmenting Consumer Markets
- 19. Chapter 7- slide 19 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 20. Chapter 7- slide 20 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 21. Chapter 7- slide 21 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation 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 Segmenting Consumer Markets
- 22. Chapter 7- slide 22 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 23. Chapter 7- slide 23 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 24. Chapter 7- slide 24 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Multiple segmentation is used to identify smaller, better-defined target groups Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns Using Multiple Segmentation Bases
- 25. Chapter 7- slide 25 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation • PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups • These groups segment people and locations into marketable groups of like- minded consumers that exhibit unique characteristics and buying behavior based on a host of demographic factors Using Multiple Segmentation Bases
- 26. Chapter 7- slide 26 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic location Economic factors Political- legal factors Cultural factors Segmenting International markets
- 27. Chapter 7- slide 27 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries Segmenting Business Markets
- 28. Chapter 7- slide 28 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Segmentation International Markets • Intermarket segmentation Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries. • Coca-Cola: World’s teen • IKEA: global middle class • Lexus: global elite
- 29. Chapter 7- slide 29 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation To be useful, market segments must be: Requirements for Effective Segmentation Measurable Accessible Substantial Differentiable Actionable
- 30. Chapter 7- slide 30 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting • Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve Selecting Target Market Segments
- 31. Chapter 7- slide 31 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting • Segment size and growth • Segment structural attractiveness • Company objectives and resources Evaluating Market Segments .
- 32. Chapter 7- slide 32 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
- 33. Chapter 7- slide 33 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Undifferentiated marketing targets the whole market with one offer –Mass marketing –Focuses on common needs rather than what’s different Target Marketing Strategies
- 34. Chapter 7- slide 34 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting 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 Target Marketing Strategies
- 35. Chapter 7- slide 35 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall supplies premium denim and accessories sold in boutiques and high-end department stores
- 36. Chapter 7- slide 36 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall produce the highest-quality athletic wear and do it for every Major League Baseball club, the National Basketball Association, most major colleges and universities, and sports fans everywhere
- 37. Chapter 7- slide 37 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting • Concentrated (Niche) marketing targets a small share of a large market • Limited company resources • Knowledge of the market • More effective and efficient Target Market Strategies
- 38. Chapter 7- slide 38 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall • Whole Foods Market offers organic, natural, and gourmet foods where Wal- Marts can’t serve well.
- 39. Chapter 7- slide 39 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketing Targeting Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations • Local marketing • Individual marketing Target Market Strategies
- 40. Chapter 7- slide 40 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Local marketing involves tailoring brands and promotion to the needs and wants of local customer groups • Cities • Neighborhoods • Stores Target Market Strategies
- 41. Chapter 7- slide 41 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting 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 Target Market Strategies
- 42. Chapter 7- slide 42 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Depends on: • Company resources • Product variability • Product life-cycle stage • Market variability • Competitor’s marketing strategies Choosing a Targeting Strategy
- 43. Chapter 7- slide 43 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting • Benefits customers with specific needs • Concern for vulnerable segments • Children – Alcohol – Cigarettes – Internet abuses Socially Responsible Target Marketing
- 44. Chapter 7- slide 44 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 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 Differentiation and Positioning
- 45. Chapter 7- slide 45 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall • Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions Differentiation and Positioning
- 46. Chapter 7- slide 46 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning • Identifying a set of possible competitive advantages to build a position • Choosing the right competitive advantages • Selecting an overall positioning strategy • Developing a positioning statement Choosing a Differentiation and Positioning Strategy
- 47. Chapter 7- slide 47 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning 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 Identifying Possible Value Differences and Competitive Advantages
- 48. Chapter 7- slide 48 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Identifying a set of possible competitive advantages to build a position by providing superior value from: Choosing a Differentiation and Positioning Strategy Product differentiation Services differentiation Channel differentiation People differentiation Image differentiation
- 49. Chapter 7- slide 49 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Difference to promote should be: Choosing the Right Competitive Advantage Important Distinctive Superior Communicable Preemptive Affordable Profitable
- 50. Chapter 7- slide 50 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning • Value proposition is the full mix of benefits upon which a brand is positioned Selecting an Overall Positioning Strategy
- 51. Chapter 7- slide 51 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning • To (target segment and need) our (brand) is (concept) that (point of difference) Developing a Positioning Statement
- 52. Chapter 7- slide 52 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall • Choosing the positioning is often easier than implementing the position. Communication and Delivering the Chosen Position