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Chapter 8 – customer-driven marketing strategy – creating values for target customers
- Target marketing: indentifying market segments, selecting 1+ and developing products and
marketing programs tailored to each
o “shotgun approach” = scattering marketing efforts
o “rifle approach” = firms to focus on the buyers who have greater interest in the values
they create best
- Market segmentation: dividing a market into smaller groups w/ distinct needs, characteristics,
or behaviours that might require separate marketing strategies or mixes
- Market targeting (targeting): the process of evaluating each market segment’s attractiveness
and selecting 1+ segments to enter
- Differentiation: actually differentiating the market offering to create superior customer value
- Positioning: arranging for a market offering to occupy a clear, distinctive, and desirable place
relative to competing products in the minds of target consumers
Market segmentation
- Market segmentation to DIVIDE LARGE hetero markets into small segments (can better math to
unique needs)
Segmenting consumer markets
Geographic segmentation
- Geographic segmentation: dividing a market into different geographical units such as nations,
regions, provinces, counties, cities, or neighbourhoods
Demographic segmentation
- Demographic segmentation: dividing the market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation, education, religion, race, generation,
and nationality
o Most popular for segmenting customer groups
o Variables easier to measure in this fomr
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- Age and life-cycle stage
o Age and life-cycle segmentation: dividing a market into difference age and life-cycle
groups
o Be careful of stereotypes when using this type of segmentation
o Age = poor predictor of person’s life cycle, health, work, family status
- Gender
o Gender segmentation: dividing a market into different groups based on gender
o In clothing, cosmetics, toiletries, magazines
- Income
o Income segmentation: dividing a market into different income groups
o Targets the affluent often but not always (HQ hotels, vs dollarama)
Psychographic segmentation
- Psychographic segmentation: dividing a market into different groups based on social class,
lifestyle, or personality characteristics
- Personality variables to segements
o Ex cruise lines targeting adventure seekers
Behavioural segmentation
- Behavioural segmentation: dividing a market into groups based on consumer knowledge,
attitudes, uses, or responses to a product
o The best starting point in building market segments
- Occasions
o Occasion segmentation: dividing the market into groups according to occasions when
buyers get the idea to buy, actually make their purchase, or use the purchased item
Builds product usage
- Benefits sought
o Benefit segmentation: Dividing the market into groups according to the different
benefits that consumers seek from the product
- User status
o Reinforce & retain regular users
o Attract targeted NONusers
o Reinvigorate relationship w/ ex-users
o Potential user group are ppl that are facing life-stage changes -> ex newlyweds/parents
- Usage rate
o Heavy users -> small % of market but HIGh % of total consumption
- Loyalty status
o Loyal to brands, stores, companies
Using multiple segmentation bases
- To identify smaller, better-defined target groups