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Customer-Driven Marketing Strategy

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Beatriz Torrinha

on 28 October 2014

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Transcript of Customer-Driven Marketing Strategy

Customer-Driven Marketing Strategy
Companies recognize they
cannot appeal to all buyers
They must
the parts of the market they can
serve best and most profitably
They must
design customer-driven marketing strategies
that build the right relationships with the right customers.

Market Segmentation
It is the process companies use to divide large heterogeneous markets into small markets which can be reached more efficiently and effectively with products and services that respond to their particular needs.
Demographic segmentation
Demographic factors are the most popular amongst all factors, since consumer needs, wants and usage rates vary closely with demographic variables.
Customer-Driven Marketing Strategy

Mass Marketing
Target Marketing
Market Segmentation
Total Marketing
Target Marketing
Market Segmentation
Demographic segmentation
Geographic segmentation
Psychographic segmentation
Behavioural segmentation
Market Segmentation
Market Segmentation
This type of segmentation divides the market into smaller groups (segments) based on shared characteristics, such as:

Family size
Market Segmentation
Demographic segmentation
Age and Life-Cycle Stage Segmentation
Consumer needs and wants change with age.
Companies offer different products and use different marketing approaches depending on the age and life-cycle groups.
McDonald's offers their younger customers the
Happy Meal
Geographic Segmentation
However, marketers must be careful when stereotyping.
Gender Segmentation
Mostly used in:
Income Segmentation
Affluent customers
are targeted with luxury goods and services.

Geographic Segmentation
Low and middle-income groups
are targeted by companies selling more inexpensive products.
Behavioral Segmentation
Behavioral Segmentation
Divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.

Psycographic segmentation
User status
Usage rate
Loyalty Status
Behavioral Segmentation
Groups according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item
User status
Markets can be segmented into nonusers, ex-users, potential users, first-time users, and regular users of a product. Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate relationships with ex-users.
It requires finding the major benefits people look for in a product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit.
Behavioral Segmentation
Benefit Sough
Behavioral Segmentation
Usage Rate
Loyalty Status
Heavy users are often a small percentage of the market but account for a high percentage of total consumption
Behavioral Segmentation
Loyalty Status
Market Segmentation
Psychographic Segmentation
This type of segmentation divides buyers into different segments based on social class, lifestyle or personality characteristics.
Inside the same demographic group, people may have very different psychographic characteristics.
Loyalty Ladder
Behavioral Segmentation
Products people buy reflect their lifestyles. (Chapter 5)
Market Segmentation
Psychographic Segmentation
Type of firm
Therefore, marketers:
Segment the market by consumers lifestyles
Base their marketing strategies on lifestyle appeals
Market Segmentation
Psychographic Segmentation
Social classes:
Certain products have been found to be strongly influenced by social class and background.
Products like cosmetics, cigarettes, insurance and alcoholic drinks have been proven to have their sales be greatly affected by buyer's personality.
This is a more recent method of identifying aspect's of people's lives that affect their buying behaviour. It involves classifying people according to their values, beliefs, opinions and interests.
How would your purchase differ...
Possible market segments
Mobile phone carriers
Young couples, young families, older families, pre-retirement, retired
Highly social, work-oriented, safety contact, status symbol
Teeth whitening, sensitive teeth, fresh breath, cavity protection, tartar control
Regulars, special occasion, business lunch, quick spot
Behavioral Segmentation
Possible market segments
Type of firm
Frozen food manufacturers

Demographic; Psycographic; Behavioral
Single households, diet-conscious, family dining, parties, budget-conscious, variety seekers
Cosmetics and perfumes firms (eg.: L'Oreal)
Demographic (gender, age)
Skin repair, remove wrinkles, glowing skin, acne reduction, attractive look, social status, celebrity identification
Best Buy: No more mass marketing

Customer centricity strategy
Who’s the customer?
What’s the value proposition?
How are you going to make money?

Best Buy: Embracing the Angels and Ditching the Demons

Identify its best customers and win their loyalty by serving them better
Identified less attractive customers and sent them packing—off to Walmart (or other competitor)

The company should see itself as a portfolio of customers, not product lines.

Some customers can be wrong for the company: unprofitable.

Trying to serve any and all customers can mean serving none of them well.
Serve the
Serve them in the
Companies need to make sure:
Types of customers
Angels: profitable
Demons: unprofitable. It may cost the company more to serve them than what it makes from them
Best Buy: Segmentation
Male technology enthusiasts
“Jills,” suburban moms
“Barrys,” high- income men
“Rays,” young family men on a budget
“Charlies and Helens,” empty nesters with money to spend
It looks at the way people shop for things, not just what they buy.
Attract the angels:
Stocking more merchandise and offering better servive
Discourage the demons:
Reduce the promotions and other sales tactics that tended to attract them
Sales clerks receive hours of training in identifying desirable customers according to their shopping preferences and behavior
Best Buy: Customer-centricity
“listening to understand how customers are going to deploy the stuff they buy from us and use it to enrich their lives, . . . rather than worrying about selling the product.”
—to become “that trusted advisor capable of helping customers use technology the way they dreamed,”

Marketers can identify consumers who have needs that are not being met and can reveal the size and profitability of each segment.

segment managers
maximize targeting marketing
Collect information and data about the different segments
Understand how to describe their products in a way that will be most compelling for a particular segment
The creative team uses these profiles to produce ads targeting relevant segments

Using consumers insights:

Each segment team creates a positioning profile for every product
Increased understanding of customer wants and needs

Different products for different groups

Better match between customer wants and product benefits

Maximize the use of available resources

Focused marketing expenditures

Competitive advantage
Why segmentation
Multiple Segmentation Bases

Merging geographic, demographic, lifestyle, and behavioral data
help companies segment their markets down to zip codes, neighborhoods, and even households

Help companies identify and better understand key customer segments, target them more efficiently, and tailor market offerings and messages to their specific needs.

powerful tool for marketers
Segmenting Business Markets

customer operating characteristics
purchasing approaches
situational factors
personal characteristics

Small businesses
convincing new merchants to accept the card
Distinctive marketing programs
Corporate card program, with extensive employee expense and travel management services + wide range of asset management, retirement planning, and financial education services

OPEN: The Small Business Network - small business cards and financial services with credit cards and lines of credit, special usage rewards, financial monitoring and spending report features, 24/7 customized financial support services

Segmenting International Markets

Population income levels or overall level of economic development. A country’s economic structure shapes its population’s product and service needs, so, the marketing opportunities it offers.

Economic factors
Assumes that nations close to one another will have many common traits and behaviors

Common languages, religions, values and attitudes, customs, and behavioral patterns

Political and legal factors
Cultural Factors
Type and stability of government, receptivity to foreign firms, monetary regulations, and amount of bureaucracy
Segmenting International Markets
Segments of consumers who have similar needs and buying behaviors even though they are located in different countries

New technologies are connecting consumers around the world, marketers can define and reach segments of like-minded consumers no matter where in the world they are
Intermarket segmentation
cross-market segmentation
Special programs to target teens, core consumers of its soft drinks the world over.
Targets the aspiring global middle class selling good-quality furniture that ordinary people worldwide can afford
Requirements for effective segmentation
It has to be possible to determine the values of the variables used for segmentation.
The size and potential profit of a market segment have to be large enough to economically justify separate marketing activities for this segment.
Effective programs can be designed for attracting and serving the segments.
It has to be effectively reachable and servable for the organization
The market segments have to be that diverse that they show different reactions to different marketing mixes. Men vs. Women
Differentiation and Positioning
"Products are created in the factory, but brands are created in the mind"
product's positioning
is the complex set of
that consumers have for the product compared with other competing products
It's the way consumers
the product regarding important attributes and differences
Nothing is left to chance, products are positioned with plans that will give a product an advantage in a selected target market
Positioning Maps
Positions maps like these show what consumers think of certain products. It depicts their
on important aspects when buying regarding different brands
The H1 was built around one central philosophy: function - the most functional off-road vehicle ever made available to the civilean market. The H1 Alphanot only sets you apart, but truly sets you free
Differentiation and Positioning Strategy
Identifying Possible Value Differences and Competitive Advantages
What is
competitive advantage
? It is advantage over competitors gained by giving consumers a greater value, either through lower prices or by offering more benefits that justify higher prices
Choosing a Differentiation and Positioning Strategy
Physical Product Differentiation
Services Differentiation
Channel Differentiation
People Differentiation
Image Differentiation
What competitive advantages can you get to build higher position towards other brands to give your customer superior value?
Choosing the Right Competitive Advantages
How many differences you should promote
Which differences to promote:

This task consists on 3 steps:

Identifying a set of possible customer value differences that provide competitive advantages upon which to build a position

Choosing the right competitive advantages

Selecting overall positioning strategy
Difference gives highly valued benefit
Competitors do not offer the difference
Difference is superior - same benefit
Difference is communicable and visible
Difference not easy to copy
Buyers can afford to pay the difference
Difference can be introduced profitably
Selecting an Overall Positioning Strategy
Evaluating Market Segments
Segment size and growth

Segment structural attractiveness

Company objectives and resources
target market
Set of buyers who share common needs or characteristics that the company decides to serve
Mass marketing
Differentiated marketing
Concentrated marketing
Targeting broadly
Targeting narrowly
Selecting a Targeting Strategy
Depends on:

Company resources
Product variability
Product life-cycle stage
Market variably
Competitors marketing strategy

To be useful, market segments need to be:
This table shows us the
Value Proposition
which mixes different benefits
More For More
"More-for-more positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs"
More for the Same
"Companies can attack a competitor's more-for-more positioning by introducing a brand offering comparable quality but at a lower price"
"Perhaps the first time in history that trading a 72,000$ car for a 36,000$ car could be considered trading up."
Same For Less
local marketing
Who doesn't like a good deal? It is a very powerful value proposition, it is literally the same but for less money
"AMD makes less expensive versions of Intel's market-leading microprocessor chips."
individual marketing
Less For Much Less
There is always a market for products that offer less and consequently cost less
More For Less
This is without a doubt the winning value proposition. Who wouldn't buy more for less?
Achievable on the short run, just like when Home Depot first opened for business.

Best product, best service AND lowest prices
Developing a Positioning Statement
To (target segment and need) our (brand) is (concept) that (point of difference)
This is the form that summarizes a company or brand positioning
Best Buy: Embracing the Angels and Ditching the Demons

"To busy, mobile professionals who need to always be in the loop, BlackBerry is a wireless connectivity solution that allows you to stay connected to data, people and resources while on the go, easily and reliably"
Greeting cards
Full transcript