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 © 2009 Pearson Education, Inc. Publishing as Prentice Hall A company must identify the parts of the market it can serve best and most profitably. It must design customer driven marketing strategies that build the right relationships

3. Chapter 7- slide 3 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Customer-Driven Marketing Strategy: Creating Value for Target Customers Market Segmentation Market Targeting Differentiation and Positioning Topic Outline

4. Chapter 7- slide 4 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

5. Chapter 7- slide 5 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation

6. Chapter 7- slide 6 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation Market Segmentation

7. Chapter 7- slide 7 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation Segmenting Consumer Markets

8. Chapter 7- slide 8 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation I- Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities Segmenting Consumer Markets

9. Chapter 7- slide 9 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation II-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 Most popular, often used before other markets being segmented on other basis. Segmenting Consumer Markets

10. Chapter 7- slide 10 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation A-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 B-Gender segmentation divides the market based on sex (male or female)

11. Chapter 7- slide 11 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation C-Income segmentation divides the market into affluent or low- income consumers III-Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits Marketers use personality variables to segment markets. Segmenting Consumer Markets

12. Chapter 7- slide 12 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation IV-Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product Occasions Benefits sought User status( non-users, ex- users,potential, 1 st time or regular users) Usage rate ( light, medium & heavy users ) Loyalty status Segmenting Consumer Markets

13. Chapter 7- slide 13 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

14. Chapter 7- slide 14 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation 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 Such segments provide a powerful tool for marketers of all kinds. It can help companies identify and better understand key customer segments, target them more efficiently and tailor market offerings and messages to their specific needs. Using Multiple Segmentation Bases

15. Chapter 7- slide 15 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a way to segment consumer markets? 1.Geographic 2.Psychographic 3.Demographic 4.Derived demand

16. Chapter 7- slide 16 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following is not a way to segment consumer markets? 1.Geographic 2.Psychographic 3.Demographic 4.Derived demand

17. Chapter 7- slide 17 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Dividing a market based on consumer attitude, use, or response to a product is called ________ segmentation. 1.occasion 2.psychographic 3.behavioral 4.market

18. Chapter 7- slide 18 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Dividing a market based on consumer attitude, use, or response to a product is called ________ segmentation. 1.occasion 2.psychographic 3.behavioral 4.market

19. Chapter 7- slide 19 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall A marketer selling different offerings in different communities would be using ________ segmentation. 1.geographic 2.psychographic 3.demographic 4.behavioral

20. Chapter 7- slide 20 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall A marketer selling different offerings in different communities would be using ________ segmentation. 1.geographic 2.psychographic 3.demographic 4.behavioral

21. Chapter 7- slide 21 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketers selling luxury cars often use income as a segmenting variable. Income is one component of ________ segmentation. 1.geographic 2.psychographic 3.demographic 4.behavioral

22. Chapter 7- slide 22 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Marketers selling luxury cars often use income as a segmenting variable. Income is one component of ________ segmentation. 1.geographic 2.psychographic 3.demographic 4.behavioral

23. Chapter 7- slide 23 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Many marketers believe that ________ variables are the best starting point for building market segments. 1.geographic 2.psychographic 3.demographic 4.behavioral

24. Chapter 7- slide 24 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Many marketers believe that ________ variables are the best starting point for building market segments. 1.geographic 2.psychographic 3.demographic 4.behavioral

25. Chapter 7- slide 25 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Geographic location Economic factors Political- legal factors Cultural factors Segmenting International markets

26. Chapter 7- slide 26 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation Segmenting Business Markets Consumer and business markets use many of the same variables to segment their markets. Business marketers can use additional variables; customer operating characteristics, purchasing approaches, situational factors, and personal characteristics.

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 Mercedes Benz targets the world’s well-to-do and IKEA targets the aspiring global middle class. These companies are involved with ________ segmentation. 1.positioning 2.differentiation 3.intermarket 4.lifecycle

29. Chapter 7- slide 29 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Mercedes Benz targets the world’s well-to-do and IKEA targets the aspiring global middle class. These companies are involved with ________ segmentation. 1.positioning 2.differentiation 3.intermarket 4.lifecycle

30. Chapter 7- slide 30 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Segmentation To be useful, market segments must be: Requirements for Effective Segmentation MeasurableAccessible SubstantialDifferentiable Actionable

31. Chapter 7- slide 31 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall In order to be useful, market segments need to be which of the following? 1.Differentiable 2.Accessible 3.Substantial 4.All of the above

32. Chapter 7- slide 32 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall In order to be useful, market segments need to be which of the following? 1.Differentiable 2.Accessible 3.Substantial 4.All of the above

33. Chapter 7- slide 33 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

34. Chapter 7- slide 34 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Segment size and growth right size and growth is a relative matter. Segment structural attractiveness Competitors, substitute products,power of buyers,powerful suppliers Company objectives and resources Evaluating Market Segments Factors affecting attractiveness of market segments :

35. Chapter 7- slide 35 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following structural factors is not related to a segment’s attractiveness? 1.The presence of strong competitors in the segment. 2.The existence of potential substitute products. 3.The lack of raw materials. 4.A number of powerful suppliers.

36. Chapter 7- slide 36 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following structural factors is not related to a segment’s attractiveness? 1.The presence of strong competitors in the segment. 2.The existence of potential substitute products. 3.The lack of raw materials. 4.A number of powerful suppliers.

37. Chapter 7- slide 37 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Target Marketing Strategies

38. Chapter 7- slide 38 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 –Difficulties arise and mass marketers have trouble competing with more focused firms. Target Marketing Strategies

39. Chapter 7- slide 39 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 within each market segment. More expensive than undifferentiated marketing Target Marketing Strategies

40. Chapter 7- slide 40 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall When using a(n) ________ marketing (mass- marketing) strategy, a firm decides to ignore market segment differences and target the whole market with one offer. 1.differentiated 2.undifferentiated 3.positioning 4.segmentation

41. Chapter 7- slide 41 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall When using a(n) _____ marketing (mass- marketing) strategy, a firm decides to ignore market segment differences and target the whole market with one offer. 1.differentiated 2.undifferentiated 3.positioning 4.segmentation

42. Chapter 7- slide 42 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Market Targeting Concentrated marketing targets a small share of a large market Limited company resources Knowledge of the market More effective and efficient Highly profitable but involves higher than normal risks. Target Market Strategies

43. Chapter 7- slide 43 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 Individual in every customer. Local marketing Individual marketing Target Market Strategies

44. Chapter 7- slide 44 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

45. Chapter 7- slide 45 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

46. Chapter 7- slide 46 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall This type of micromarketing is also known as one- to-one marketing or mass customization. 1.Local marketing 2.Tailored marketing 3.Niche marketing 4.Individual marketing

47. Chapter 7- slide 47 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall This type of micromarketing is also known as one- to-one marketing or mass customization. 1.Local marketing 2.Tailored marketing 3.Niche marketing 4.Individual marketing

48. Chapter 7- slide 48 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 Target Market

49. Chapter 7- slide 49 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

50. Chapter 7- slide 50 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall If a beer manufacturer were to place a commercial on a TV show that was predominantly viewed by children, it could be considered using ________. 1.socially irresponsible targeting 2.socially responsible targeting 3.adult targeting 4.niche targeting

51. Chapter 7- slide 51 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall If a beer manufacturer were to place a commercial on a TV show that was predominantly viewed by children, it could be considered using ________. 1.socially irresponsible targeting 2.socially responsible targeting 3.adult targeting 4.niche targeting

52. Chapter 7- slide 52 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and 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

53. Chapter 7- slide 53 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Marketers must plan positions that will give their products the greatest advantage in selected target markets and design marketing mixes to create these planned positions. Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

54. Chapter 7- slide 54 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

55. Chapter 7- slide 55 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall A product’s ________ is the way the product is defined by consumers on important attributes relative to the competition. 1.image 2.equity 3.position 4.value

56. Chapter 7- slide 56 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall A product’s ________ is the way the product is defined by consumers on important attributes relative to the competition. 1.image 2.equity 3.position 4.value

57. Chapter 7- slide 57 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 Advantage

58. Chapter 7- slide 58 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 differentiationService differentiationChannel differentiationPeople differentiationImage differentiation

59. Chapter 7- slide 59 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall A firm that practices ________ differentiation gains competitive advantage by the way it designs its channel coverage. 1.services 2.product 3.people 4.channel

60. Chapter 7- slide 60 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall A firm that practices ________ differentiation gains competitive advantage by the way it designs its channel coverage. 1.services 2.product 3.people 4.channel

61. Chapter 7- slide 61 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Differentiation and Positioning Difference to promote should be: Choosing the Right Competitive Advantage ImportantDistinctiveSuperior CommunicablePreemptiveAffordable Profitable

62. Chapter 7- slide 62 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

63. Chapter 7- slide 63 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 Web link

64. Chapter 7- slide 64 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Communication and Delivering the Chosen Position Choosing the positioning is often easier than implementing the position.

65. Chapter 7- slide 65 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall What is the first step in target marketing? 1.Market positioning 2.Market segmentation 3.Target marketing 4.None of the above

66. Chapter 7- slide 66 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall What is the first step in target marketing? 1.Market positioning 2.Market segmentation 3.Target marketing 4.None of the above

67. Chapter 7- slide 67 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following steps of target marketing takes into account competitors’ offerings to the market? 1.Market positioning 2.Market segmentation 3.Market targeting 4.All of the above

68. Chapter 7- slide 68 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Which of the following steps of target marketing takes into account competitors’ offerings to the market? 1.Market positioning 2.Market segmentation 3.Market targeting 4.All of the above

69. Chapter 7- slide 69 Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall