PRINCIPLES OF

MARKETING
CHAPTER 7
Customer Value-Driven
Marketing Strategy: Creating
Value for Target Customers

Assoc. Prof. Tran Tien Khoa

Copyright © 2021, 2018, 2016 Pearson Education, Inc.

7.1 Define the major steps in designing a customer-driven marketing
strategy: market segmentation, targeting, differentiation, and positioning.
7.2 List and discuss the major bases for segmenting consumer and
business markets.
7.3 Explain how companies identify attractive market segments and
choose a market-targeting strategy.
7.4 Discuss how companies differentiate and position their products for
maximum competitive advantage.
LEARNING
OBJECTIVES
Define the major steps in designing a customer-driven
marketing strategy: market segmentation, targeting,
differentiation, and positioning.
 CUSTOMER-DRIVEN
MARKETING STRATEGY
 CUSTOMER-DRIVEN
MARKETING STRATEGY
Marketing = S.T.D.P. + 4Ps

1.Which customers will we serve ?

2.How will we serve them ?
LEARNING
OBJECTIVES
List and discuss the major bases for segmenting consumer
and business markets.
 Market Segmentation (1 of 16)

Market segmentation requires dividing a market into smaller

segments with distinct needs, characteristics, or behaviors that
might require separate marketing strategies or mixes.
Ex:
• adult consumers, elderly consumers, teenagers etc.
• HCMC consumers, Can Tho consumers etc.
• medium class, working class, lower class etc.
 Market Segmentation (2 of 16)

• Segmenting consumer markets

• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation
Market Segmentation (3 of 16)
Segmenting Consumer Markets

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation

Copyright ©2014 by Pearson Education

 Market Segmentation (4 of 16)
Segmenting Consumer Markets
Geographic segmentation divides the market into different geographical units
such as nations, regions, states, counties, cities, or even neighborhoods
(urban/suburban/rural area)
• Asian market, European market, Australian market etc.
• Vietnam market, Thailand market etc.
• Hochiminh city, Can Tho city, Ca Mau city etc.
• District 1, District 2, District 3 etc.
Marketers often use geographic segmentation to explore market potential in a given
area or to optimize distribution channels.
It's also handy for understanding regional trends and preferences, which can be
crucial for businesses looking to expand market into new territories.
 Market Segmentation (5 of 16)
Segmenting Consumer Markets
Demographic segmentation divides the market into segments based on
variables such as age, life-cycle stage, gender, income, occupation, education,
religion, ethnicity, and generation.
This segmentation helps organizations understand consumer
behavior accurately that in turn, helps them perform better.
 Market Segmentation (6 of 16)

Segmenting Consumer Markets

Age and life-cycle stage segmentation divides a market into different age
and life-cycle groups.
• Tastes in food, clothes, furniture, and recreation are often age-
related
• Life-cycle stages: there are four life-cycle stages in human
development, namely Fundamental, Forefront, Fostering, and Final
(each spans 20 years). When one grows into the next step, life goals
and priorities change significantly
 Market Segmentation (7 of 16)
Life-cycle stage segmentation
• Fundamental: the focus is learning. Exploring and adapting to environtment. Leaning (from
education/friendship/social relationships) and developing skills. Discovering identity and reason for
being (Gen. Z)
• Forefront: one starts to transition from learning to work. Starting to make a living and building a
career, one becomes more independent. As health is at its peak , one is more willing to take risks
an explore life to the fullest. One also starts to commit to a romantic relationship. (Gen. Y)
• Fostering: one begins to settle down and builds a family. At home, one focuses on parenthood and
family life. At work, one emphasizes on mentoring and coaching younger generations. Contributing
back to society also becomes a key life goal during this stage. (Gen X)
• Final: one tries to adapt to old age and stay happy. One manages declining health and social
relationships. One enjoys life by embarking on meaningful and fulfilling activities, imparting
wisdom to younger generations. Contributing back to society becomes a key life goal. (Baby
Boomer)
 Market Segmentation (8 of 16)
Gender segmentation divides a market into different segments based on
gender.
• Gender plays a big role in how people perceive products and make
purchasing decisions.
• Studies have found that women tend to place a greater emphasis on
emotions and personal connections when making a purchase, while men
are more likely to focus on logic and practicality.
• Women may be more likely to purchase products based on
recommendations from friends and family, while men are more likely to
rely on their own research and analysis.
 Market Segmentation (9 of 16)
Segmenting Consumer Markets
Income segmentation divides a market into different income segments.
• Income level segmentation is a process of dividing customers into different
groups based on their income level. It involves analyzing the financial
information of your customers to categorize them into different income
segments such as affluent, middle-income or low-income consumers
• It relates to purchasing power, and spending pattern of consumers
• Since luxury products are high priced, so there is no point in targeting it to all
the customers. Hence luxury products are offered to people who have an
income above a certain level, and vice versa.
 Market Segmentation (10 of 16)
Segmenting Consumer Markets
Psychographic segmentation divides a market into different segments based on
social class, lifestyle, or personality characteristics.

Lifestyle bikes with variety of styles,

color, wide tires and aluminum frame,
are for the rider to cruise through the
town in style.

Trekking bikes/Sport bikes are for

people who want a sporty and
lightweight bike. These bikes come with
high-grade components, a sleekly
shaped aluminum frame and carbon
front fork. The light weight makes for
easy transport.
 Market Segmentation (11 of 16)
Segmenting Consumer Markets
Behavioral segmentation divides a market into segments based on consumer
knowledge, attitudes, uses of a product, or responses to a product.
 Market Segmentation (12 of 16)

Segmenting Consumer Markets Benefit segmentation: Schwinn

makes bikes for every benefit
Behavioral Segmentation
segment. For example, its e-bikes
• Occasions (traditional, non-traditional) “help make the morning commute or
• Benefits sought ride around town a little bit easier.”
• User status (nonuser, ex-users,
potential, first time, regular users
• Usage rate (light, medium, and heavy
product users)
• Loyalty status (short-term, long-term)
 Market Segmentation (13 of 16)
Segmenting International Markets

Intermarket segmentation
divides consumers into
groups with similar needs
and buying behaviors even
though they are located in
different countries

Copyright ©2014 by Pearson Education

 Market Segmentation (14 of 16)
Segmenting Consumer Markets
Multiple segmentation is used to identify smaller, better-defined target groups.
Experian’s Mosaic U S A system classifies U.S. households into one of 71 lifestyle segments and 19 levels
of affluence.

Using Acxiom’s Personicx segmentation system, marketers paint a surprisingly precise picture of who you
are and what you buy. Personicx clusters carry such colorful names as “Skyboxes and Suburbans,”
“Shooting Stars,” “Hard Chargers,” “Soccer and SUVs,” “Raisin’ Grandkids,” “Truckin’ and Stylin’,”
“Pennywise Mortgagees,” and “Cartoons and Carpools.”
 Market Segmentation (15 of 16)
Segmenting International markets

Geographic Economic
location factors

Political- Cultural
legal factors factors

Copyright ©2014 by Pearson Education

 Market Segmentation (16 of 16)
Requirements for Effective Segmentation
• 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 andrespond differently to
different marketing mix elements and programs.
• Actionable
• Effective programs can be designed for attracting and serving the segments.
LEARNING
OBJECTIVES
Explain how companies identify
attractive market segments and choose
a market-targeting strategy.
MARKET TARGETING (1 OF 10)
Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness
• Company objectives and resources
MARKET TARGETING (2 OF 10)

Selecting Target Market Segments

A target market is a set of buyers who share
common needs or characteristics that the
company decides to serve.
MARKET TARGETING (3 OF 10)

Figure 7.2 Market-Targeting Strategies

N
1 to N 1 to n 1 to n 1 to 1
MARKET TARGETING (4 OF 10)
Figure 7.2 Market-Targeting Strategies
MARKET TARGETING (6 OF 10)
Selecting Target Market Segments
Undifferentiated marketing
targets the whole market with one
offer.
• Mass marketing
• Focuses on common needs rather
than what’s different
MARKET TARGETING (7 OF 10)
Selecting Target Market Segments
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
• Differentiated marketing: With more than 30
differentiated hotel brands, Marriott International
dominates the hotel industry, capturing a much larger
share of the travel and hospitality market than it
could with any single brand alone.
P&G: Competing with
Itself—and Winning
By offering brands and sub-brands that target
specific segments of detergent preferences, here
Tide Free & Gentle, Tide offers a unique value
proposition to each distinct customer segment.
MARKET TARGETING (6 OF 10)

Selecting Target Markets Concentrated marketing: Nicher Harry’s

Concentrated marketing targets concentrates its resources on direct-to-
consumer sales of high-quality razors and
shaving products to a value- and
a large share of a smaller market. convenience-oriented segment of buyers
previously not well served by giant
• Limited company resources competitors like Gillette.

• Knowledge of the market

• More effective and efficient
MARKET TARGETING (7 OF 10)
Selecting Target Market Segments
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 (8 OF 10)
Selecting Target Market Segments
Local marketing involves tailoring brands and
promotion to the needs and wants of local customer
segments.
• Cities
• Neighborhoods
• Stores
Example:
- VOD streaming: Netflix/HBO/YouTube
- Where is the nearest gas station/ATM/bank?
MARKET TARGETING (9 OF 10)
Selecting Target Markets
Individual marketing involves tailoring Individual marketing: The Rolls-Royce Bespoke
design team works closely with individual
products and marketing programs to the
customers to help them create their own unique
needs and preferences of individual Rolls-Royces.
customers.
Also known as:
• One-to-one marketing
• Mass customization
Example: Amazon.com
MARKET TARGETING (10 OF 10)
Selecting Target Market Segments
Choosing a targeting strategy depends on
• Company resources: number of selected segment
• Product variability: variations of product
• Product life-cycle stage:
• Market variability: variations of product
• Competitor’s marketing strategies
 Segmentation and
Target of Starbucks
LEARNING
OBJECTIVES
Discuss how companies differentiate and
position their products for maximum
competitive advantage.
 Differentiation and
Positioning (1 of 9)

Product position is the way the

product is defined by consumers on
important attributes.

Positioning: Sonos does more than just

sell speakers; it unleashes “All the
music on earth, in every room of your
house, wirelessly.”
 Differentiation and
Positioning (2 of 9)
Positioning maps show consumer perceptions of marketer’s brands
versus competing products on important buying dimensions.
 Differentiation and
Positioning (3 of 9)
Choosing a Differentiation and
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
 Differentiation and
Positioning (4 of 9)
Choosing a Differentiation and
Positioning Strategy
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.
 Differentiation and
Positioning (5 of 9)
Choosing a Differentiation and Services differentiation: Quicken Loans’
Positioning Strategy Rocket Mortgage doesn’t just offer mortgage
Identifying a set of possible loans; its online-only interface lets users get
competitive advantages to a loan decision in only minutes.
differentiate along the lines of:
• Product
• Services
• Channels
• People
• Image
 Differentiation and
Positioning (6 of 9)
Choosing a Differentiation and Positioning Strategy
A competitive advantage should be:
• Important
• Distinctive
• Superior
• Communicable
• Preemptive
• Affordable
• Profitable
 Differentiation and
Positioning (7 of 9)
Choosing a Differentiation and Positioning Strategy
Value proposition is the full mix of benefits upon which a brand is positioned.
Figure 7.4 Possible Value Propositions
 Differentiation and
Positioning (8 of 9)

Choosing a Differentiation
and Positioning Strategy
Positioning statement
summarizes company or brand
positioning using this form: To
(target segment and need) our
(brand) is (concept) that (point
of difference)
 Differentiation and
Positioning (9 of 9)

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.
 Positioning strategy
of Starbucks (1 of 2)
The company's positioning strategy is
customer-based, giving more than
what the customer needs.
• Every coffee chain has free Wi-Fi
services and a comfortable place
where customers can rest or study.
• Besides producing great coffee, it
promotes a good reputation to its
target market through excellent
store ambiance, environmental
protection, and social commitment.
 Positioning strategy
of Starbucks
The company also goes out of its way to promote
social responsibility as it focuses on the
community.
• Starbucks provides opportunities to hire various
people, including military commitment by hiring
military and veteran spouses, hiring refugees,
and giving career and education for the youth.
• In terms of environment protection, Starbucks
positions its brand by adapting the LEED
(Leadership in Energy and Environmental
Design) approach to structure buildings.
• Starbucks utilizes recycled coffee grounds on
their tables and materials low in harmful
chemicals for adhesives, paints, coating, and
sealants.
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