CH 8: Customer- Driven Marketing Strategy: Creating Value for Target Customers
Market Segmentation- Dividing a market into smaller groups with distinct needs, characteristics, or
behaviours that might require separate marketing strategies or mixes
Marketing Targeting (targeting)- The process of evaluating each market segment’s attractiveness and
selecting one or more 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 segmenting consumer markets, segmenting business markets, segmenting
international markets, and requirements for effective segmentation
Segmenting Consumer Markets
o Geographic Segmentation- dividing a market into different geographical units such as nations, regions,
provinces, counties, cities, or neighbourhoods.
o 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
Easier to measure than most other types of variables
o Age and life-cycle Segmentation- Dividing a market into different age and life-cycle groups.
Poor indicator of a person’s life cycle, health, work or family status, needs and buying power
o Gender Segmentation- Dividing a market into different groups based on gender.
o Income Segmentation- Dividing a market into different income groups.
o Psychographic Segmentation- Dividing a market into different groups based on social class, lifestyle,
or personality characteristics.
o Behavioural Segmentation- Dividing a market into groups based on consumer knowledge, attitudes,
uses, or responses to a product.
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.
o Benefit Segmentation- Dividing the market into groups according to the different benefits that
consumers seek from the products.
User Status: nonusers, ex-users, potential users, first-time users, and regular users
Usage Rate: light, medium, heavy product users.
Loyalty Status: segment a market based on consumer loyalty
By looking at customers who are shifting away from its brand, the company can learn
about its marketing weakness.
Business marketers also use variables customer operating characteristics, purchasing
approaches, situational factors, and personal characteristics
o World Market Segmentation: geographic segmentation, economic factors, cultural factors, political
and legal factors
o Intermarket Segmentation- Forming segments of consumers who have similar needs and buying
behaviour even though they are located in different countries.
Requirements for Effective Segmentation:
o Measurable: the size, purchasing power, and profiles
o Accessible: the market segments can be effectively reached and served o Substantial: the market segments are large or profitable enough to serve.
o Differentiable: the segments are conceptually distinguishable and respond differently to different
marketing mix elements and programs
o Actionable: Effective programs can be designed for attracting and serving the segments.
o Evaluating Market Segments 3 factors:
Segment Size: right size and growth. Not all companies can handle rapid growth.
Segment Structural Attractiveness: that affect long-run segment
Less attractive already have strong, and aggressive competitors, substitute products,
relative power of buyers, strong bargaining power relative to seller force price down,
powerful suppliers who can control prices or reduce the quality or quantity
Company Objectives and Resources
o Selecting Target Market Segments (Fig. 8.2)
Target Market- A set of buyers sharing common needs or characteristics that the company
decides to serve.
Undifferentiated Marketing (mass marketing)- A market coverage strategy in which a firm
decides to ignore market segment differences and go after the whole market with one another.
Cons: harder to compete with more focused firms
Differentiated Marketing (or segmented marketing)- A market-coverage strategy in which a
firm decides to target several market segments and designs separate offers for each.
Hopes for higher sales and stronger position within each market segments
Cons: Increase costs for differentiation
Concentrated Marketing (niche marketing)- A market coverage strategy in which a firm goes
after a large share of one or a few segments or niches.
Instead of going for a small share of a large market, firm goes after a large share of one
or a few smaller segments or niches.
Lets smaller companies focus their limited resources on serving niches that may be
unimportant to or overlooked by larger competitors
Some mega marketers develop niche markets to create sales growths.
Cons: higher risk rely on one or a few segments
Micromarketing- The practice of tailoring products and marketing programs to the needs and