Chapter 6 Notes
Chapter 6 Notes BUAD 332 001
Popular in CBM I: Demand Management
Popular in Business Administration
This 27 page Class Notes was uploaded by Morgan Notetaker on Monday October 19, 2015. The Class Notes belongs to BUAD 332 001 at University of Tennessee - Knoxville taught by Mark A Moon (P) in Summer 2015. Since its upload, it has received 36 views. For similar materials see CBM I: Demand Management in Business Administration at University of Tennessee - Knoxville.
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Date Created: 10/19/15
Chapter 6 Customer Driven Marketing Strategy Creating Value for Target Customers Who is our customer and what do we want our customer to think about when they think about us the most strategically important set of decisions a marketer has to think about Clicker question segmentation and targeting are different things with segmentation being done before targeting Clicker question positioning is perceptual it exist in the mind of the customer Designing a CustomerDriven Marketing Strategy Left side addresses the question quotwho is the customer Right side addresses the question quotwhat do our customers think about when they think about us Step 1 Market Segmentation Dividing a market into smaller groups with distinct needs characteristics or behaviors that might require separate marketing strategies or mixes heterogeneous and divide it groups that are more horn I L Markets consist of customers that are different in many ways different in how they respond to advertising pricing what marketers want to do is take that and divide it into smaller groups to make smaller more alike groups Examples Gender age ethnicity team fans beach vs mountain Clicker question The whole idea behind market segmentation is to select which customers we select false Market Segmentation 0 Key segmentation variables 0 Geographic 0 Demographic gender age ethnicity 0 Psychographic mountains vs beach team you like 0 Behavioral 0 No single way to segment is best Often combine more than one variable to define segments Market Segmentation 0 Geographic 0 World region country Region of country City or metro size Dens y Climate Market Segmentation 0 Demographic 0 Age gender family size family life cycle income occupation education race religion generation nationality 0 The most popular basis for segmenting customer markets 0 Easier to measure than most other types of variables Examples Cover girl all women designed to cater to different subsections of markets Rihanna Pink Ellen DeGeneres So a Vergera Katy Perry Market Segmentation 0 Gender 0 Segmenting on the basis of gender often requires different products variations for men and women 0 Income 0 Identifies and targets the affluent for luxury goods 0 People with low annual incomes can be lucrative market 0 Some manufacturers have different grades of Market Segmentation 0 Psychographic 0 Behavioral segmentation segmentation 0 Dividing a 0 Dividing buyers market into into groups different groups based on based on social consumer class lifestyle knowledge or personality attitudes uses characteristics or responses to a product s quot31 A little harder to measure but very effective ways to divide a market Psychographic segmentation example Pontiac Aztec car marketed to different hobbies voted one of the worst cars ever made Market Segmentation 0 Behavioral segmentation 0 User Status 0 Nonusers exusers potential users firsttime users regular users 0 Usage Rate 0 Light medium heavy 0 Loyalty Status 0 Brands stores companies Loyalty status as a segmentation variable example Pepsi Cola vs Coke taste test really successful caused revolution Bill Cosby commercial Coke changed recipe people were pissed loyal Cost CEO his job made Pepsi pretty happy Coke thought it was taste but it was actually loyalty to their brand Market Segmentation 0 Marketers will frequently use more than one segmentation variable 0 Use multiple segmentation bases in order to identify smaller betterdefined target groups 0 Start with a single base and then expand to other bases 0 The goal Create a heterogeneous customer group that might be a good target for marketing activity 10 Segmenting Business Markets 0 Consumer and business markets use many of the same variables for segmentation 0 Business marketers can also use 0 Operating characteristics 0 Purchasing approaches reverse auction used for businesses whoever submits lowest bid 0 Situational factors 0 Personal characteristics 11 Segmenting International Markets 0 FactorSIJsed 0 Geographic loca on 0 Econonncfackws 0 PoH caland legalfactors 0 Ch turalfactors 12 Requirements for Effective Segmentation 0 To be useful market segments must be 0 Measurable Accessible Substantial Differentiable Actionable 13 Step 2 Targeting Selecting the market segments that will become the chosen targets of opportunity The basic idea here From the segments that have been ident Step 1 pick those segments you plan to market your gaiuigiff services L 14 Targeting 0 You have to decide which segments are most attractive 0 This is done by evaluating market segments on the criteria of 0 Segment size and growth 0 Segment structural attractiveness 0 Company objectives and resources How big is the segment and how well is it growing 15 Evaluating Market Segments 0 Segment Size and Growth 0 Analyze current segment sales growth rates and expected profitability 0 Segment Structural Attractiveness 0 Consider competition existence of substitute products and the power of buyers and suppliers 0 Company Objectives and Resources 0 Examine company skills and resources needed to succeed in that segment 0 Offer superior value and gain advantages over competitors 16 Targeting Strategies Undifferentiated Ligt Cigt Corgcmted mass marketing marketing Targeting broadly Approaches that companies may take to targeting Undifferentiated treat entire market as whole segment go after it as one big market Micromarketing local or individual marketing Targeting narrowly 17 Targeting Strategies 0 Undifferentiated mass marketing 0 Ignores segmentation opportunities 0 Such products rarely succeed for long in the American marketplace 0 Differentiated segmented marketing 0 Targets several segments and designs separate offers for each 0 Coke Procter amp Gamble soaps and detergents Toyota are a few examples Example in difference between undifferentiated and segmented marketing Ford Model T only made one model of car and perfectedexcelled in making it low cost quotYou can have it in any color you want as long as it s black no differentiation Ford Motor Company one product sold to anyone and everyone ruled for a number of years Along came another company General Motors 1925 Chevrolet Buick and Cadillac different products to appeal to different market segments Alfred P Sloan was head over them came up with strategy of marketing to different segments By 1925 who do you think was winning GM offered much more differentiated product to users with different needswants that s why undifferentiated products rarely win differentiated companies do a betterjob of satisfying customers needs 18 Target Marketing Strategies 0 Concentrated niche marketing 0 Targets one or a couple of small segments 0 Niches have very specialized interests Example for niche marketing Apple got poor during time period when Steve Jobs wasn t there they decided to take a niche strategy and focus on 2 segments k 12 education amp high graphic intensity applications graphic design interior design main reason they did that was because they had to conserve resources and wanted to be successful in those 2 markets then go further Clicker question a company is likely to choose a concentrated or niche targeting strategy when the company has minimal nancial and human resources 19 Micromarketing 0 Tailoring products and marketing programs to suit the tastes of specific individuals and locations 0 Local Marketing Tailoring brands and promotions to the needs and wants of local customer groups cities neighborhoods specific stores retailing 0 Individual Marketing Tailoring products and marketing programs to the needs and preferences of individual customers All the way at other end of spectrum from undifferentiated marketing Local marketing Winn Dixie grocery stores had resort stores Hispanic stores Jewish stores responding to local conditions and being conscious of what would satisfy people in individual regions Individual marketing Amazon get different emails from amazon 20 Choosing a Targeting Strategy 0 Factors to consider 0 Company resources limited Niche prob 0 Product variability 0 Product s lifecycle stage 0 Market variability 0 Competitors marketing strategies GM reacted to competitive opportunity 21 Socially Responsible Targeting 0 Marketing sometimes generates controversy and concern when targeting 0 Vulnerable minority or disadvantaged populations 0 Children and teens Camel cigarettes ned and sued for advertising quotJoe Camel charged for advertising and targeting children Lucky Charms products that are inherently unhealthy and targeting and advertising them to children Malt Liquor targeting minority or disadvantaged populations Socially responsible are you targeting people who may not have the ability to make good choices 22 Positioning A product 5 position is the way a product is defined by consumers on important attributes the place the product occupies in consumers minds relative to competing products Segmentation and targeting who is our customerwho are we going to market to Last part positioning what do customers think about our brand Example Volvo safety 18 20 year old male thinks its boring Volva doesn t rly care they aren t the target market Positioning word association BMW performance Differentiation and Positioning C Choosing a differentiation and positioning strategy involves 0 Identifying a set of possible value differences and competitive advantages on which to build a position 0 Choosing the right competitive advantage 0 Selecting an overall positioning strategy 0 Key to winning target customers is to understand their needs better than competitors do and to deliver more value What s really important to her 24 Differentiation and Positioning 0 How does one brand differentiate itself from another brand Product differentiation product is inherently differentsuperior 0 Services differentiation 0 Channels differentiation a way to get products services to customers that is differentbetter 0 People differentiation 0 Image Product example Panasonic quotToughbook stories Service example British Airways superior service Image example Abercrombie and Fitch not the quality but the image Rolex image 25 Differentiation and Positioning 0 Differences that could possibly be promoted should be Important Preemptive Distinctive Affordabe Superior Profitable Communicable 26 Here s Why All Of This Is So Important Segmentation amp targeting Differentiation Who Is Our Customer I I amp positioning What do we want our customers to think about when they think about us Distribution Pricing Strategy Integrated Strategy amp amp Tactics Comm TquotquotFiir 39 LquotFur r is TL39ZTE 391 r w 7w sf 77 k y 7 0 Nothing else happens until you know who your customer is 0 4 P s of Marketing strategy cant do this until we know who customer is 0 Need to be sure of rst 2 questions because it affects everything later in the chain