This document outlines strategies for customer-driven marketing, including market segmentation, targeting, differentiation, and positioning. It discusses segmenting consumer and business markets based on variables like geography, demographics, behaviors, and psychographics. Effective segmentation requires segments to be measurable, accessible, substantial, and actionable. Targeting strategies include undifferentiated, differentiated, and concentrated approaches. Differentiation relies on identifying competitive advantages to build brand position. Strong branding involves developing a positioning statement and communicating the chosen position.

1. Customer-Driven Marketing
Strategy:
Creating Value for Target
Customers

2. Topic Outline
• Customer-Driven Marketing Strategy
• Market Segmentation
• Market Targeting
• Differentiation and Positioning

3. Market Segmentation
• Market segmentation is the process that companies use to divide large,
heterogeneous markets into small markets that can be reached more
efficiently and effectively with products and services that match their unique
needs
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation

4. Market Segmentation
Segmenting Consumer Markets
Geographic segmentation divides the market into different geographical
units such as nations, regions, states, counties, or cities
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
Age and life-cycle stage segmentation is the process of offering different
products or using different marketing approaches for different age and life-
cycle groups
Gender segmentation divides the market based on sex (male or female)

5. Market Segmentation
Income segmentation divides the market into affluent or low-income
consumers
Psychographic segmentation divides buyers into different groups based on
social class, lifestyle, or personality traits
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

6. Market Segmentation
Multiple segmentation is used to identify smaller, better-defined target
groups
Geodemographic segmentation is an example of multivariable
segmentation that divides groups into consumer lifestyle patterns
Using Multiple Segmentation Bases
• PRIZM NE classifies every American household into 66 unique segments
organized into 14 different social groups
• These groups segment people and locations into marketable groups of like-
minded consumers that exhibit unique characteristics and buying behavior
based on a host of demographic factors

7. Segmenting International markets
• Geographic location
• Economic factors
• Political-legal factors
• Cultural factors
Segmenting Business Markets
Intermarket segmentation divides consumers into groups with similar needs
and buying behaviors even though they are located in different countries

8. Requirements for Effective Segmentation
To be useful, market segments must be:
Measurable
Differentiable
Accessible
Actionable
Substantial

9. Market Targeting
Selecting Target Market Segments
• Target market consists of a set of buyers who share common needs or
characteristics that the company decides to serve
Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Company objectives and
resources

10. Target Marketing Strategies
Undifferentiated marketing targets the whole market with one offer
• Mass marketing
• Focuses on common needs rather than what’s different
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
• Concentrated marketing targets a small share of a large market
• Limited company resources
• Knowledge of the market
• More effective and efficient

11. Target Marketing Strategies
Micromarketing is the practice of tailoring products and marketing programs
to suit the tastes of specific individuals and locations
• Local marketing
• Individual marketing
Local marketing involves tailoring brands and promotion to the needs and
wants of local customer groups
• Cities
• Neighborhoods
• Stores
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
• Markets-of-one marketing

12. Choosing a Targeting Strategy
Depends on:
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies
Socially Responsible Target Marketing
• Benefits customers with specific needs
• Concern for vulnerable segments
• Children
• Alcohol
• Cigarettes
• Internet abuses

13. Differentiation and Positioning
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
• Perceptions
• Impressions
• Feelings
Positioning maps show consumer perceptions of their brands versus
competing products on important buying dimensions

14. 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
• Developing a positioning statement
Identifying Possible Value Differences and 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
Identifying a set of possible competitive advantages to build a position by
providing superior value from:
Product differentiation
Services differentiation
Channel differentiation
People differentiation
Image differentiation

15. Choosing the Right Competitive Advantage
Difference to promote should be:

16. Selecting an Overall Positioning
Strategy
• Value proposition is the full mix of benefits upon which a brand is
positioned
Developing a Positioning Statement
• To (target segment and need) our (brand) is (concept) that (point of
difference)
Communication and Delivering the Chosen Position
Choosing the positioning is often easier than implementing the position.

17. Product, Services, and Branding Strategy

18. Chapter Outline
1. What Is a Product?
2. Product and Service Decisions
3. Branding Strategy: Building
Strong Brands
4. Services Marketing

19. What Is a Product?
Products, Services, and Experiences
Product is anything that can be offered in a market for attention, acquisition, use, or
consumption that might satisfy a need or want
• Soap
• Toothpaste
Service is a form of product that consists of activities, benefits, or satisfactions offered
for sale that are essentially intangible and do not result in ownership
• Doctor’s exam
• Legal advice
Experiences represent what buying the product or service will do for the customer
• Disney
• American Girl

20. What Is a Product?
Levels of Product and Services
Core benefits represent what the buyer is really buying
Actual product represents the design, brand name, and packaging that
delivers the core benefit to the customer
Augmented product represents additional services or benefits of the
actual product

21. Product and Service Classifications
Consumer products are products and services for personal
consumption
• Classified by how consumers buy them
• Convenience product
• Shopping products
• Specialty products
• Unsought products

22. Consumer products
Unsought Products
> New innovations
> Products consumers don’t
want to think about
> Require much advertising &
personal selling
Convenience Products
> Buy frequently & immediately
> Low priced
> Many purchase locations
> Includes:
• Staple goods
• Impulse goods
• Emergency goods
Shopping Products
> Buy less frequently
> Gather product information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Specialty Products
> Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations

23. Product and Service Classifications
Industrial products are products purchased for further processing or for use in
conducting a business
Classified by the purpose for which the product is purchased
• Materials and parts
• Capital
• Raw materials
Materials and parts include raw materials and manufactured materials and parts
usually sold directly to industrial users
• Wheat
• Lumber
• Iron
• Cement
Capital items are industrial products that aid in the buyer’s production or operations
• Buildings
• Elevators
• Computers

24. What Is a Product?
Organizations, Persons, Places, and Ideas
Organization marketing consists of activities undertaken to create, maintain, or
change attitudes and behavior of target consumers toward an organization
Person marketing consists of activities undertaken to create, maintain, or change
attitudes and behavior of target consumers toward particular people
• Donald Trump
Place marketing consists of activities undertaken to create, maintain, or change
attitudes and behavior of target consumers toward particular places
• Tourism
Social marketing is the use of commercial marketing concepts and tools in programs
designed to influence individuals’ behavior to improve their well-being and that
of society
• Public health campaign
• Tourism

25. Product and Service
Decisions
Individual Product and Service Decisions
Product
attributes
Branding Packaging
Product
support
services
Labeling

26. Individual Product and Service Decisions
Product attributes are the benefits of the product or service
• Quality
• Features
• Style and design
Quality in terms of the product or service is the lack of defects
Quality in terms of the customer is the value and satisfaction provided by the
product or service
Product quality includes level and consistency
• Quality level is the level of quality that supports the product’s
positioning
• Performance quality is the ability of a product to perform its functions
Quality consistency is the freedom from defects and the delivering of a
targeted level of performance

27. Individual Product and Service Decisions
Product features are a competitive tool for differentiating a product from
competitors’ products
Product features are assessed based on the value to the customer versus the cost to the
company
Product style and design add value to customer value
Style describes the appearance of the product
Design contributes to a product’s usefulness as well as to its looks
Brand is the name, term, sign, or design, or a combination of these, that identifies
the maker or seller of a product or service

28. Individual Product and Service Decisions
Consumer benefits
• Quality
• Consistency
Seller benefits
• Segmentation
• Communicate product features
Packaging involves designing and producing the container or wrapper for a product
Label identifies the product or brand, describes attributes, and provides promotion
Product support services augment actual products
Companies must continually:
• Assess the value of current services to obtain ideas for new ones
• Assess the costs of providing these services
• Develop a package of services to satisfy customers and provide profit to the
company

29. Product Line Decisions
Product line is a group of products that are closely related because they function in
a similar manner, are sold to the same customer groups, are marketed through the
same types of outlets, or fall within given price ranges
Product line length is the number of items in the product line
• Line stretching
• Line filling
Product line stretching is when a company lengthens its product line beyond its
current range
• Downward
• Upward
• Combination of both

30. Product Line Decisions
Downward product line stretching is used by companies at the upper end of the
market to plug a market hole or respond to a competitor’s attack
Upward product line stretching is by companies at the lower end of the market to
add prestige to their current products
 Combination line stretching is used by companies in the middle range of the
market to achieve both goals of upward and downward line stretching
Product line filling occurs when companies add more items within the present range
of the line
• More profits
• Satisfying dealers
• Excess capacity
• Plugging holes to fend off competitors

31. Product Mix Decisions
Product mix consists of all the products and items that a particular seller offers for
sale
• Width
• Length
• Depth
• Consistency
Product mix width is the number of different product lines the company carries
Product mix length is the total number of items the company carries within its
product lines
Product line depth is the number of versions offered of each product in the line
Consistency is how closely the various product lines are in end use, production
requirements, or distribution channels

32. Branding Strategy: Building Strong Brands
Brand represents the consumer’s perceptions and feelings about a product and its
performance. It is the company’s promise to deliver a specific set of features, benefits,
services, and experiences consistently to the buyers
Brand equity is the positive differential effect that knowing the brand name has on
customer response to the product or service
Brand equity provides competitive advantage
• Consumer awareness and loyalty
• Benefits
• Beliefs and value
Customer equity is the value of the customer relationships that the brand creates
Brand valuation is the process of estimating the total financial value of the brand
Brand strategy decisions include:
• Brand positioning
• Brand name selection
• Brand sponsorship
• Brand development

33. Brand Positioning and Name Selection
Brand strategy decisions include:
• Product attributes
• Product benefits
• Product beliefs and values
Desirable qualities
• Suggests benefits and qualities
• Easy to pronounce, recognize, and remember
• Distinctive
• Extendable
• Translatable for the global economy

34. Brand Sponsorship
• Manufacturer’s brand
• Private brand
• Licensed brand
• Co-brand
Private brands provide retailers with advantages
• Product mix control
• Slotting fees for manufacturers’ brands
• Higher margins
• Exclusivity
• Managing Brands
Requires:
• Continuous brand communication
• Customer-centered training
• Brand audits

35. Brand Development
Line extensions occur when a company extends existing brand names
to new forms, colors, sizes, ingredients, or flavors of an existing
product category
Brand extensions extend a brand name to a new or modified product
in a new category
Multibrands are additional brands in the same category
New brands are used when existing brands are inappropriate for new
products in new product categories or markets

36. Services Marketing
Types of Service Industries
• Government
• Private not-for-profit organizations
• Business services

37. Nature and Characteristics of a Service
Intangibility refers to the fact that services cannot be seen, tasted, felt,
heard, or smelled before they are purchased
Inseparability refers to the fact that services cannot be separated from
their providers
Variability refers to the fact that service quality depends on who
provides it as well as when, where, and how it is provided
Perishability refers to the fact that services cannot be stored for later
sale or use

38. Marketing Strategies for Service Firms
In addition to traditional marketing strategies, service firms often require additional
strategies
• Service-profit chain
• Internal marketing
• Interactive marketing
Service-profit chain links service firm profits with employee and customer
satisfaction
• Internal service quality
• Satisfied and productive service employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth

39. Marketing Strategies for Service Firms
Internal marketing means that the service firm must orient and motivate its
customer contact employees and supporting service people to work as a team to
provide customer satisfaction
Internal marketing must precede external marketing
Interactive marketing means that service quality depends heavily on the quality of
the buyer-seller interaction during the service encounter
• Service differentiation
• Service quality
• Service productivity

40. Marketing Strategies for Service Firms
Managing service differentiation creates a competitive advantage from the offer,
delivery, and image of the service
• Offer can include distinctive features
• Delivery can include more able and reliable customer contact people,
environment, or process
• Image can include symbols and branding
Managing service quality provides a competitive advantage by delivering
consistently higher quality than its competitors
Service quality always varies depending on interactions between employees and
customers

41. Marketing Strategies for Service Firms
Service recovery can turn disappointed customers into loyal customers
• Empower employees
• Responsibility
• Authority
• Incentive
Managing service productivity refers to the cost side of marketing strategies for
service firms
• Employee recruiting, hiring, and training strategies
• Service quantity and quality strategies