Chapter 7

Customer – Driven Marketing Strategy

Principles of Marketing _ Lai Vinh Phuc, MBA

 Learning Outcomes
• Define the major steps in designing a customer-driven marketing
strategy
• List and discuss major bases for segmenting consumer and business
market
• Explain how companies identify attractive market segments
• Discuss how companies differentiable and position their products for
maximum competitive advantage

Principles of Marketing _ Lai Vinh Phuc, MBA

 Content:
I. Customer-Driven Marketing Strategy
II. Market Segmentation
Consumer Market
Business Market
International Market
III. Market Targeting
IV. Differentiation and Positioning

Principles of Marketing _ Lai Vinh Phuc, MBA

I. Customer – Driven Marketing Strategy

Figure 7.1: Designing Customer-Driven Marketing Strategy

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
1. Definition
• Dividing a market into smaller segments with distinct needs,
characteristics, or behavior that might require separate marketing
strategies or mixes.
E.g: adult consumers, elderly consumers, teenagers etc.

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
2. Segmenting Consumer Markets:

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
2. Segmenting Consumer Markets:
a. Geographic segmentation:
• Geographic segmentation divides the market into different geographical
units such as nations, regions, states, counties, or cities & population
density
• E.g: McDonald’s in different countries

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
2. Segmenting Consumer Markets:
b. Demographic 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
• E.g: Age and life cycle: Lush for children & Cosmetics for Women
Gender: Gillette razor for male, Barbie doll for girls
Income: Clothing Brands
https://www.youtube.com/watch?v=RiDuddtXtBw

Principles of Marketing _ Lai Vinh Phuc, MBA

Principles of Marketing _ Lai Vinh Phuc, MBA
II. Market Segmentation
2. Segmenting Consumer Markets:
c. Psychographic Segmentation:
• Psychographic segmentation divides buyers into different groups based on
social class, lifestyle, or personality traits.
• E.g: -Mountain Dew: youthful, rebellious, adventurous, start-your-own-way
personality. https://www.youtube.com/watch?v=wMoKcocpXh4
-Coca Cola Zero: more mature, practical, and cerebral but good-humored
personality types. https://www.youtube.com/watch?v=rDeu0IxTRl8
-Whisky Sour Drink: Very mature, not taking things seriously, chill.
https://www.youtube.com/watch?v=0MDzhCQDzYQ

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
2. Segmenting Consumer Markets:
d. 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

Principles of Marketing _ Lai Vinh Phuc, MBA

 2. Segmenting Consumer Markets:
d. Behavioral segmentation:
• Occasions:
- Buyers can be grouped according to occasions when they get the idea to buy,
actually make their purchase, or use the purchased item.
Þ Can help firm to build up product usage

E.g: M&M’s runs ads through year, but prepare special ads and packaging for
special holidays such as Christmas and Easter
https://www.youtube.com/watch?v=utAw2j0khNk (holiday)
https://www.youtube.com/watch?v=I5dSgjy37zA (normal)
https://www.youtube.com/watch?v=c1_jPveBfxg

Principles of Marketing _ Lai Vinh Phuc, MBA

 2. Segmenting Consumer Markets:
d. Behavioral segmentation:
• Benefits Sought: A powerful form of segmentation is grouping buyers
according to the different benefits that they seek from a product.
• E.g: Gillette creates a product called Venus which has distinct benefit
segments of women.
- perfect shave seekers
- EZ seekers (easy on skin)
- Skin pamperes (fast and convenient)
- pragmatic functionalists (basic and affordable)

Principles of Marketing _ Lai Vinh Phuc, MBA

 2. Segmenting Consumer Markets:
d. Behavioral segmentation:
• User status: Markets can be segmented into nonusers, ex-users, potential
users, first-time users, and regular users of a product.
Þ reinforce and retain regular users
Þ attract targeted nonusers & potential users
Þ and reinvigorate relationships with ex-users
E.g: Apple is the “king” of reinforcement.

Principles of Marketing _ Lai Vinh Phuc, MBA

 2. Segmenting Consumer Markets:
d. Behavioral segmentation:
• User Rate: Markets can also be segmented into light, medium, and heavy
product users
• E.g: Seafood products. Heavy product user => Small % on market => High % in
seafood consumption.

Principles of Marketing _ Lai Vinh Phuc, MBA

 2. Segmenting Consumer Markets:
d. Behavioral segmentation:
• Loyalty Status: Buyers can be divided into groups according to their degree of
loyalty.
• Completely loyal consumer: +1
• Somewhat loyal consumer: +2 +3
• “No loyalty at all”: +0
E.g: Apple Products

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
2. Segmenting Consumer Markets:
e. Multiple Segmentation:
• Used to identify smaller, detail, better-defined target groups.

Discussion Question
Discuss about any company or brand that using multiple consumer
segmentation

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
3. Segmenting Business Market:
• Similar to consumer market but required additional variables such as
customer operating characteristics, purchasing approaches, situational
factors, and personal characteristics

Principles of Marketing _ Lai Vinh Phuc, MBA

II. Market Segmentation
4. Segmenting International Market
• Geographic location: grouping by region. E.g: Western Europe, Africa,
Middle East, Asia.
• Economic factors: population income level & development level
• Political & legal factors: stability of government, regulation, amount of
bureaucracy
• Cultural factors: grouping by common language, religion, values,
attitude, behavioral patterns
=> Intermarket (cross-market) segmentation: consumers who have
similar needs and buying behaviors even though they are located in
different countries.
Principles of Marketing _ Lai Vinh Phuc, MBA
II. Market Segmentation
5. Requirement for Effective Segmentation

Measurable Accessible

Substantial Differentiable

Actionable

Principles of Marketing _ Lai Vinh Phuc, MBA

III. Market Targeting
1. Target Market Segments
• Definition: A set of buyers sharing common needs or characteristics that the
company decides to serve.
2. Evaluating Market Segments:
• Segment size and growth
• Segment structural attractiveness
• Company objectives and resources

Principles of Marketing _ Lai Vinh Phuc, MBA

III. Market Targeting
3. Selecting Target Market Segments:
• Undifferentiated: marketing targets the whole market with one offer
- Mass marketing
- Focuses on common needs rather than what’s different
- Difficulties in satisfying all consumers
• Differentiated marketing: targets several different market segments and
designs separate offers for each.
- Segmenting Marketing
- Goal is to achieve higher sales and stronger position
- More expensive than undifferentiated marketing

Principles of Marketing _ Lai Vinh Phuc, MBA

 Discussion Question
What are the main reasons causing the increasing in cost of doing
business in Differentiated Marketing?

ANSWER:
• Quantity (10 units in 10 types > 100 units in 1 type)
• Developing separate marketing plans for separate segments requires
extra marketing research, forecasting, sales analysis, promotion
planning, and channel management.
• With different advertising campaigns increases promotion costs
=> Sales increased vs Cost
Principles of Marketing _ Lai Vinh Phuc, MBA
III. Market Targeting
3. Selecting Target Market Segments:
• Concentrated Marketing: targets a small share of a large market.
- Limited company resources
- Knowledge of the market
- More effective and efficient
• Micromarketing: is the practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations.
- Local Marketing
- Individual Marketing

Principles of Marketing _ Lai Vinh Phuc, MBA

 3. Micromarketing
a. Local marketing:
• Involves tailoring brands and promotion to the needs and wants of local
customer groups
• Cities, neighborhoods & stores
Þ High manufacturing and marketing cost, brand’s image is easy to be
diluted
b. 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

Principles of Marketing _ Lai Vinh Phuc, MBA

 Discussion Question
If you acquire a restaurant selling food and drinks; and prepare to run it
in the new market. Which target segments would you select? Why?

Principles of Marketing _ Lai Vinh Phuc, MBA

 Figure 7.2: Market Targeting Strategy
Principles of Marketing _ Lai Vinh Phuc, MBA
III. Market Targeting
4. Choosing a Targeting Strategy:
₪ Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies

Principles of Marketing _ Lai Vinh Phuc, MBA

III. Market Targeting
5. Socially Responsible Target Marketing:
• Benefits customers with specific needs
• Concern for vulnerable segment to “Children”
- Alcohol
- Cigarettes
- Internet abuses
• E.g: McDonald’s creates powerful connection between children and often-fat meals by
“Happy meal”
Vitoria’s Secret collaborate with Barbie dolls production causing provocative products

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
1. Product Proposition:
• 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.
• A set of perceptions, impressions & feelings
=> Purchasing decision go through the product position instead of buying
decision process.

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
2. Positioning Map:
• Positioning maps show consumer perceptions of their brands versus
competing products on important buying dimensions.

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
3. Choosing a Differentiation & Positioning Strategy
a. Identifying a set of possible competitive advantages to build a position
b. Choosing the right competitive advantages
c. Selecting an overall positioning strategy
d. Communicating and delivering the chosen position to the market

Principles of Marketing _ Lai Vinh Phuc, MBA

 3. Choosing a Differentiation & Positioning Strategy
a. Identifying Possible value differences & Competitive Advantages
• 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
=> Don’t give “empty promises”, Differentiating products and delivering the
promised quality products and services.

Principles of Marketing _ Lai Vinh Phuc, MBA

 3. Choosing a Differentiation & Positioning Strategy
a. Identifying a set of possible competitive advantages to build a position by
providing superior value from

Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
3. Choosing a Differentiation & Positioning Strategy
b. Choosing the Right Competitive Advantages
• Important: The difference delivers a highly valued benefit to target buyers.
• Distinctive: Competitors do not offer the difference, or the company can offer
it in a more distinctive way.
• Superior: The difference is superior to other ways that customers might
obtain the same benefit.
• Communicable: The difference is communicable and visible to buyers.
• Preemptive: Competitors cannot easily copy the difference.
• Affordable: Buyers can afford to pay for the difference.
• Profitable: The company can introduce the difference profitably.

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
3. Choosing a Differentiation & Positioning Strategy
c. Selecting an Overall Positioning Strategy
• Value proposition is the full mix of benefits upon which a brand is positioned

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
3. Choosing a Differentiation & Positioning Strategy
d. Developing a Positioning Statement
• To (target segment and need) our (brand) is (concept) that (point of
difference)

Principles of Marketing _ Lai Vinh Phuc, MBA

IV. Differentiation & Positioning
4. Communication and Delivering the Chosen Position
• Strong steps are required to deliver and communicate the desired
position to its target consumers.
• Designing the marketing mix—product, price, place, and promotion—
involves working out the tactical details of the positioning strategy.
=> Choosing the positioning is often easier than implementing the position.

Principles of Marketing _ Lai Vinh Phuc, MBA

 Recap
I. Customer-Driven Marketing Strategy
II. Market Segmentation
Consumer Market
Business Market
International Market
III. Market Targeting
IV. Differentiation and Positioning

Principles of Marketing _ Lai Vinh Phuc, MBA

 Next Week
Chapter 8: Products, Services & Brands: Building Customer Value

Principles of Marketing _ Lai Vinh Phuc, MBA