Transcript Principles of MKTG - Auburn University

Principles of
Marketing
Chapter 6:
Creating Value for
Target Customers
Designing a Customer-Driven
Marketing Strategy
• Designing a true customer-driven marketing
strategy involves:
 Segmentation
 Targeting
 Differentiation
 Positioning
Dr. James Carver – Auburn University
Market Segmentation
• Segmentation:

The process of dividing a market into distinct
groups of buyers who have different needs,
characteristics, or behaviors and who might require
separate products or marketing programs.
 Key
•
•
•
•
variables:
Geographic
Demographic
Psychographic
Behavioral
Dr. James Carver – Auburn University
Market Segmentation (cont.)
• Geographic:
 Nations
 Region
of country
 States
 Counties
 Cities
 Neighborhoods
Dr. James Carver – Auburn University
Market Segmentation (cont.)
• Demographic:
 Age,
gender, family size, family life cycle, income,
occupation, education, race, religion, generation,
nationality.
 The
most popular bases for segmenting customer
groups as needs, wants, and usage often vary by
demographics.
 Easier
to measure than most other types of
variables.
Dr. James Carver – Auburn University
Market Segmentation (cont.)
• Age and life-cycle stage
 Addresses
the fact that consumer needs and wants
change with age.
 Avoid
•
stereotypes in promotions based on age.
e.g., Boomers don’t act like those of previous
generations
 Promote
positive messages & avoid “talking
down” when marketing to mature consumers.
Dr. James Carver – Auburn University
Market Segmentation (cont.)
• Gender:
 Neglected
gender segments can offer new
opportunities (Harley Davidson & women).
• Income:
 Identifies
and targets the affluent for luxury goods.
 People with low annual incomes can be a lucrative
market (Walmart vs. Target)
 Troubled economy makes marketing to all income
groups a challenge.
Dr. James Carver – Auburn University
Market Segmentation (cont.)
• Psychographic segmentation:
 Dividing
a market into different groups based on
social class, lifestyle, or personality
characteristics.
• Behavioral segmentation:
 Dividing
buyers into groups based on consumer
knowledge, attitudes, uses, or responses to a
product.
Dr. James Carver – Auburn University
Behavioral Segmentation
• Behavioral segmentation:
 Occasion
•
•
Special promotions and labels for holidays.
Special products for special occasions.
 Benefits
•
sought:
Different segments desire different benefits from
products.
 User
•
segmentation:
status:
Nonusers, ex-users, potential users, first-time users,
regular users.
Dr. James Carver – Auburn University
Market Segmentation (cont.)
• Use of multiple segmentation bases provides:
 Ability
to identify smaller, better-defined target
groups.
• Start with a single base and then expand to
other bases.
• Multivariable segmentation systems such as
PRIZM NE are becoming more common.
Dr. James Carver – Auburn University
PRIZM NE
• PRIZM NE:
 Multivariable
segmentation systems developed by
Claritas, Inc.
 Potential Rating Index for Markets (PRIZM NE)
 Based
on U.S. census data.
 Classifies U.S. households into 66 clusters or
segments within 14 different social groups.
http://www.srds.com/frontMatter/ips/lifestyle/reports/prizm.html
Dr. James Carver – Auburn University
Requirements for Effective
Segmentation
• To be useful, market segments must be:
 Measurable
 Accessible
 Substantial
 Differentiable
 Actionable
Dr. James Carver – Auburn University
Market Targeting
• Market targeting involves:
1.
Evaluating marketing segments.
2.
Selecting target market segments.
3.
Being socially responsible.
Dr. James Carver – Auburn University
Selecting Target Market Segments
• Targeting strategies include:
 Undifferentiated
•
Ignores segmentation opportunities.
 Differentiated
•
(segmented) marketing:
Target several segments & make separate offers to each
 Concentrated
•
(mass) marketing:
(niche) marketing:
Targets one or a couple small segments.
 Micromarketing
Dr. James Carver – Auburn University
(local or individual marketing)
Micromarketing
• Tailoring products and marketing programs to
suit the tastes of specific individuals and
locations.
 Local
marketing: Tailoring brands and promotions
to the needs and wants of local customer groups—
cities, neighborhoods, specific stores.
 Individual
marketing: Tailoring products and
marketing programs to the needs and preferences
of individual customers.
Dr. James Carver – Auburn University
Socially Responsible Targeting
• Smart targeting helps both companies and
consumers.
 Marketing
sometimes generates controversy and
concern when targeting:
•
•
Vulnerable, minority or disadvantaged populations
Children and teens
 Controversy
arises when an attempt is made to
profit at the expense of segments.
Dr. James Carver – Auburn University
Differentiation and Positioning
• A product’s 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
 Perceptual
positioning maps can help define a
brand’s position relative to competitors.
Dr. James Carver – Auburn University
Differentiation and Positioning
• Choosing a differentiation and positioning
strategy involves:
1.
Identifying a set of differentiating competitive
advantages on which to build a position.
2.
Choosing the right competitive advantages.
3.
Selecting an overall positioning strategy.
Dr. James Carver – Auburn University
Differentiation and Positioning
• Competitive advantage:
 An
advantage over competitors gained by offering
greater customer value, either through lower prices
or by providing more benefits that justify higher
prices.
Dr. James Carver – Auburn University
Differentiation and Positioning
• Identifying possible value differences and
competitive advantages:
 Key
to winning target customers is to understand
their needs better than competitors do and to
deliver more value.
 Finding
points of differentiation requires
examining the entire customer experience
Dr. James Carver – Auburn University
Differentiation and Positioning
• Types of differentiation:
 Product
differentiation
 Services
differentiation
 Channels
differentiation
 People
differentiation
 Image
differentiation
Dr. James Carver – Auburn University
Differentiation and Positioning
• Choosing the right competitive advantage
requires selecting how many and which
differences to promote.
 Unique
selling proposition is often preferred.
 Promoting
multiple differences is possible.
Dr. James Carver – Auburn University
Differentiation and Positioning
• Worthwhile differences that could be
promoted are:
•
•
•
•
•
•
•
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
Dr. James Carver – Auburn University
Differentiation and Positioning
• Overall or full positioning of the brand is
called the brand’s value proposition.
 Potential
•
•
•
•
•
value propositions include:
More for more: More benefits for higher price.
More for same: More benefits for the same price.
More for less: More benefits for a lower price.
Same for less: Same benefits for a lower price.
Less for much less: Fewer benefits for much lower
price.
Dr. James Carver – Auburn University
Developing a
Positioning Statement
• Format:
 “To
(target segment and need) our (brand) is (a
concept) that (point of difference).”
• Example:
 “To
busy mobile professionals who need to always
be in the loop, BlackBerry is a wireless
connectivity solution that gives you an easier,
more reliable way to stay connected to data,
people, and resources while on the go.”
Dr. James Carver – Auburn University
Communicating and Delivering
the Chosen Position
• Company must take strong steps to deliver
and communicate the desired position to
target consumers.
 The
marketing mix efforts must deliver the
positioning strategy.
 Firm
must also monitor and adapt the position
over time to match changes in consumer needs
and competitors’ strategies.
Dr. James Carver – Auburn University