Principles of Marketing Global Edition

Principles of Marketing Global Edition Kotler and Armstrong Chapter 7: Customer-Driven Marketing Strategy Creating Value for Target Customers Lecturer: Szilvia Bíró-Szigeti, PhD Department of Management and Corporate Economics Copyright 2016 Pearson Education, Inc. 1-1

Market Segmentation Market segmentation requires dividing a market into smaller segments with distinct needs, characteristics, or behaviors that might require separate marketing strategies or mixes. Copyright 2016 Pearson Education, Inc. 7-9

Bases for segmenting consumer markets Geographic segmentation nations, regions, states, counties, cities, etc. Psychographic segmentation social class, values, lifestyles, personality Demographic segmentation age, gender, generation, family size, family life cycle, income, occupation, education, religion, race, and nationality, etc. Behavioral segmentation knowledge, attitudes, uses, or responses to a product (occasions, benefits sought, user status, usage rate, loyalty status)

Market Segmentation Segmenting Consumer Markets Geographic segmentation divides the market into different geographical units such as nations, regions, states, countries, cities, or even neighborhoods. Copyright 2016 Pearson Education, Inc. 7-12

http://www.lamptech.co.uk/documents/fl%20colours.htm whole of Asia Southern Europe Continental Europe & North America UK Nordic countries People in northern regions prefer warm white light colors, whereas people in the south prefer colder light.

Market Segmentation Segmenting Consumer Markets Demographic segmentation divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. Copyright 2016 Pearson Education, Inc. 7-13

Market Segmentation Segmenting Consumer Markets Age and life-cycle stage segmentation divides a market into different age and life-cycle groups. Gender segmentation divides a market into different segments based on gender. Income segmentation divides a market into different income segments. Copyright 2016 Pearson Education, Inc. 7-14

Demographic segmentation Gender and age https://www.youtube.com/watch?v=q6iho8w7u5q https://www.youtube.com/watch?v=wnmxaazgk5k https://www.youtube.com/watch?v=laewnrwedlo

Asiana Happy Mom and PreMom* service Family life cycle * babymoons - exclusive check-in counter, free breast feeding nursing covers, baby slings, car seat-like baby seats in the air - exclusive check-in counter, electric cart service: transport to the departure gate, priority boarding, front row seat, sleeping socks, special priority tag (checked luggage) http://www.airlinetrends.com/2009/10/26/asiana-happy-mom-service/ http://www.airlinetrends.com/2010/11/04/asiana-premom-service/

Zipcar for University Occupation https://www.youtube.com/watch?v=umskunr6ty4

Market Segmentation Segmenting Consumer Markets Psychographic segmentation divides a market into different segments based on social class, lifestyle, or personality characteristics. DUNKIN Pic Copyright 2016 Pearson Education, Inc. 7-15

Psychographic segmentation Urban lifestyle green convenient, hassle free save money It s not about cars, it s about urban life. https://www.youtube.com/watch?v=onpj2liqdmo

Clubbing holiday for Party Animals Personality We are Party Hard Travel - the only online travel agency where you can book everything you need for the ultimate clubbing holiday!.

Anti-social in the Air 76 percent of travelers prefer to keep to themselves while inflight only 9 percent expressed interest in trying a "social seating" program that allows fliers to choose a seatmate based on social network profiles 40 percent would pay extra to sit in a designated "quiet" section of the plane Personality http://www.airlinetrends.com/2013/09/05/long-haul-low-cost-carrierscoot-takes-a-cue-from-airasia-x-with-new-quiet-zone/ http://www.airlinetrends.com/2012/09/02/airasiax-kids-free-quiet-zone/ http://www.tripadvisor.com/presscenter-i5162-c1-press_releases.html

Market Segmentation Segmenting Consumer Markets Behavioral segmentation divides a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. Copyright 2016 Pearson Education, Inc. 7-16

Behavioral segmentation Occasions Occasions refer to when consumers get the idea to buy, actually make their purchase, or use the purchased item. Coca-Cola s Good Morning campaign attempts to increase Diet Coke consumption by promoting the soft drink as an early morning pickme-up.

http://corporate.easyjet.com/~/media/files/e/easyjet-plc-v2/pdf/investors/presentations/easyjet_gb_airways_acquisition_update.pdf Uses

#DidYouKnow You can fit 33,000 IKEA meatballs in a MINI? https://www.zipcar.com/careers

Market Segmentation Segmenting Consumer Markets Using Multiple Segmentation Bases Multiple segmentation is used to identify smaller, better-defined target groups. Experian s Mosaic USA system classifies U.S. households into one of 71 lifestyle segments and 19 levels of affluence. Copyright 2016 Pearson Education, Inc. 7-18

Market Segmentation Segmenting Business Markets Consumer and business marketers use many of the same variables to segment their markets. Additional variables include: Customer operating characteristics Purchasing approaches Situational factors Personal characteristics Copyright 2016 Pearson Education, Inc. 7-19

Effectiveness of the Segmentation Measurable: The size, purchasing power, and profiles of the segments can be measured. Accessible: The market segments can be effectively reached and served. Substantial: The market segments are large or profitable enough to serve. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. If men and women respond similarly to marketing efforts for soft drinks, they do not constitute separate segments. Actionable: Effective programs can be designed for attracting and serving the segments.

Market Segmentation Segmenting International Markets Intermarket segmentation involves forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries. Copyright 2016 Pearson Education, Inc. 7-21

Market Targeting Selecting Target Market Segments A target market is a set of buyers who share common needs or characteristics that the company decides to serve. Copyright 2016 Pearson Education, Inc. 7-26

Market Targeting Selecting Target Market Segments Undifferentiated marketing targets the whole market with one offer. Mass marketing Focuses on common needs rather than what s different Company marketing mix Market Model T Ford, one size fits all 7-28

Market Targeting Selecting Target Market Segments 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 Company marketing mix 1 Company marketing mix 2 Company marketing mix 3 Segment 1 Segment 2 Segment 3 7-29

Market Targeting Selecting Target Market Segments Concentrated marketing targets a large of a smaller market. Limited company resources Knowledge of the market More effective and efficient Company marketing mix Segment 1 Segment 2 Segment 3 Copyright 2016 Pearson Education, Inc. 7-30

Market Targeting Selecting Target Market Segments Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Local marketing Individual marketing involves tailoring brands and promotion to the needs and wants of local customer groups. (cities, neighborhoods, stores) involves tailoring products and marketing programs to the needs and preferences of individual customers. Copyright 2016 Pearson Education, Inc. 7-31

Market Targeting Selecting Target Market Segments Choosing a targeting strategy depends on Company resources Product variability Product life-cycle stage Market variability Competitor s marketing strategies Copyright 2016 Pearson Education, Inc. 7-34

Market Targeting Selecting Target Market Segments Socially Responsible Target Marketing Benefits customers with specific needs Concern for vulnerable segments Copyright 2016 Pearson Education, Inc. 7-35

Positioning maps show consumer perceptions of marketer s brands versus competing products on important buying dimensions. Differentiation and Positioning Positioning Maps Copyright 2016 Pearson Education, Inc. 7-39

Differentiation and Positioning 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 Communicating and delivering the chosen position to the market Copyright 2016 Pearson Education, Inc. 7-40

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy 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. Copyright 2016 Pearson Education, Inc. 7-41

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Product Services Channels People Image Identifying a set of possible competitive advantages to differentiate along the lines of: Identifying a set of possible competitive advantages to build a position Choosing the right competitive advantages Selecting an overall positioning strategy Communicating and delivering the chosen position to the market 7-42

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Choosing the Right Competitive Advantage A difference to promote should be: Important Distinctive Superior Communicable Preemptive Affordable Profitable Copyright 2016 Pearson Education, Inc. 7-43

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Value proposition is the full mix of benefits upon which a brand is positioned.

More for more: This positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. Although more for more can be profitable, this strategy can also be vulnerable. It often invites imitators who claim the same quality but at a lower price. More for the same: Companies can attack a competitor s more for more positioning by introducing a brand offering comparable quality at a lower price. For example, Toyota introduced its Lexus line with a more for the same value proposition versus Mercedes and BMW. The same for less: Offering the same for less can be a powerful value proposition - everyone likes a good deal. Discount stores such as Walmart use this positioning. Less for much less: A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford the very best in everything they buy. In many cases, consumers will gladly settle for less than optimal performance or give up some of the bells and whistles in exchange for a lower price. More for less: Of course, the winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions. Offering more usually costs more, making it difficult to deliver on the for less promise in the long run.

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Positioning statement summarizes company or brand positioning using this form: To (target segment and need) our (brand) is (concept) that (point of difference) Copyright 2016 Pearson Education, Inc. 7-45

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Positioning Statement Example for Evernote: To busy multitaskers who need help remembering things, Evernote is a digital content management application that makes it easy to capture and remember moments and ideas from your everyday life using your computer, phone, tablet, and the Web. Copyright 2016 Pearson Education, Inc. 7-46

Differentiation and Positioning Communicating and Delivering the Chosen Position Choosing the positioning is often easier than implementing the position. Establishing a position or changing one usually takes a long time. Maintaining the position requires consistent performance and communication. Copyright 2016 Pearson Education, Inc. 7-47

Re-positioning Commerce bank: Most convenient bank of America Open: every day, newspaper, quick administration, caffee, small change automata

Re-positioning Jetblue No dining, no classes, no return ticket, High-tech entertainments, convient leather-armchair Different segments

Uprooted positioning 1. IKEA vs original furniture shops 2. Wide furniture offering: Furniture for ever disposable and exchangeable Other services: Staff Carriage Big and modern halls Kinder playing places Restaurant Supplementary products

Uprooted positioning

Undercover positioning

Customer-Driven Marketing Strategy AirAsia has developed a competitive advantage by targeting price-conscious, short haul travelers who don t mind a no-frills service if it means lower fares. Discussion Questions: - How would you describe AirAsia s approach to market segmentation? - Look at the price strategy of AirAsia. What are the negative aspects for a brand that offers cheaper services than its competitors? - How does the chapter-opening AirAsia story relate to the segmentation and positioning concepts?