To create value for customers:

1) Select customers to serve segmentation and targeting

2) Decide on a value proposition differentiation and positioning
Segmentation: dividing a market into smaller groups with distinct needs or characteristics that
might require separate marketing mixes
Targeting: evaluating each market segments attractiveness and selecting one or more segments
Differentiation: differentiating the market offering to create superior customer value
Positioning: arranging a market offering to occupy a clear and desirable place relative to
competing products in the minds of consumers
Market Segmentation
Geographic: world region or country (asia), country region, city size, density (urban, rural) and
climate
Demographic: Age, gender, family size, income, occupation, religion, education
Psychographic: social class, lifestyle or personality characteristics
Behavioral: consumer knowledge, attitudes, uses or responses to a product. Marketers believe
these variables are the best starting point for building segments. Buyers can also be grouped on
occasion segmentation (when they get the idea to buy, actually make the purchase or use the
item). Eg: mothers day promotions in stores. Benefit segmentation divides the market based on
the main benefits that consumers seek from the product. Eg: M&M store focuses on the idea
working mother can still produce a good meal
Companies often use multiple segmentation bases to identify smaller and better defined target
groups.
Intermarket segmentation (cross-market): forming segments of customer who have similar needs
and buying behavior even though they are in different countries. Coke wants to relate to world
teens and so they got this by using what teens like the most music it is the official sponsor of
American idol

Effective Segmentation -Market segments must be:

Measurable size and purchasing power can be measured (you have to be able to use data
Accessible segments can be reached and served. If a product is focused for single men and
women then these members should shop at particular malls or it is difficult to react out just to
them be able to get to those people
Substantial segments are large and profitable to serve; segment should be the largest
homogeneous group. It would not make sense for a manufacturer to develop cars for those only
abouve 7ft. should be a big enough deal and wont be good if only a few care about the good
Differentiable segments are differentiable and respond different to various marketing mix.
Married woman and single women cannot respond the same to a sale on perfume, this is not
separate segments
Actionable effective programs can be designed for attracting and serving the segments able
to serve the customers and get them interested
Targeting
When evaluating market segments affirm must look at:
1) Segment size & growth
2) Structural attractiveness: segment is less attractive if it has many competitors or many
substitute goods. Power of buyers also affects segmentation because strong power means
buyers will force prices down and this will cause fewer profits for the sellers. Powerful
suppliers have the power to control price and quantity
3) Company objectiveness and resources: the company lack the resources needed to
succeed in an attractive segment.
Selecting target market segments
Undifferentiated marketing (mass marketing): this is targeting broadly. A firm ignores market
segment differences and targets the whole market with one offer. Mass marketing focuses on
what is common in the needs of consumers. Disadvantage: cannot satisfy all customers, cannot
compete with more focused firms that satisfy specific needs

Differentiated marketing (segmented marketing): a firm decides to target several market

segments and designs separate offers for each. For eg: P&G offers 10 different laundry
detergents that compete with each other. Doing so increases the total profit the company will
earn as opposed to the profit of having one type and it improves the position However, this
increases the cost of production.
Concentrated marketing (niche marketing): coverage strategy in which a firm goes after a large
share of one or a few segments or niches. Allows to achieve a strong market position because of
its greater knowledge of consumer needs. It can market effectively (fine tuning its products to
the needs of segments) and market efficiently (targets consumers it knows it can serve best and
most profitably). This can be highly profitable since you are focused on one and you can meet
the needs well. This is also very risky because if the segment fails then the company fails. Or
larger competitors may choose to enter with greater resources
Micromarketing: practice of tailoring products and marketing programs to suit the tastes of
specific individuals and locations. This includes:
Local marketing tailoring brands to the needs of local customer groups (cities, specific
stores). Walmart customizes its items to meet the needs of local shoppers. It increases
costs because it reduces the economies of scale. Companies must try to meet the varied
requirements of different branches. A brands overall image may be unclear if the
product/message vary in different locations
Individual marketing: tailoring products to needs of individual customers. This is aka one
to one marketing, mass marketing and markets of one marketing. Mass customization is
the process through which firms interacts with masses of customers to make products
tailor-made to individual needs. Example: dell creates customer configured computers
Choosing a targeting strategy
1) Company resources: concentrated marketing when low resources available
2) Product variability: uniform undifferentiated; variety niche/differentiated
3) Products life cycle stage: introduction undifferentiated/concentration; mature differentiation
4) Market variability: same tastes undifferentiated
5) Competitors marketing strategies: when competitor uses concentrated/differentiated then
undifferentiated can greatly harm the company
Differentiation and positioning
Value proposition is deciding how it will create differentiated value for targeted segments
Product position is the way the product is defined by consumers on important attributes the
place it occupies in the mind of consumer relative to competing products
Positioning maps
Perceptual positioning maps: show consumer perceptions of their brands versus competing
products on important buying dimensions.
Steps in differentiation and position:
1) Identifying possible competitive advantages
Marketers must understand customer needs better than competitors do and deliver more
customer value.
A firm needs to differentiate and position itself to gain competitive advantage advantage over
competitors gained by offering greater customer value, through lower prices or providing
benefits that justify higher prices
Once a company positions its product as offering the best it must differentiate the product so
that it delivers the promise quality
To find points of differentiation, it must think through the customers entire experience with the
product or service
2) Choosing the right competitive advantages
Once the company identifies its differentiations that provide a competitive advantage, it must
decide how many differences to promote and which ones
Each company must select its USP (unique selling point) and stick to it like walmart: save more
live better.

3) Selecting an overall positioning strategy

Determine the value proposition [the answer to the question why should I buy your brand]. Eg:
Volvo and safety. Possible value propositions:
More for more: providing the upscale good and charging a high price to cover the high costs.
Eg: rolex watches
More for same: attack a competitors more for more statement by introducing a brand of similar
quality but lower prices. Eg: Toyota introduced lexus versus BMW
4) Developing a positioning statement
Statement that summarizes company positioning
5) Communicating and Delivering the chosen position
The company must take strong steps to deliver the desired position to target consumer
It is essential for companies to first deliver the position it is telling customers

Positioning (4Cs)
Clarity: you want a clear message [walmart: more for less]
Consistency: you want to keep saying the same message [the production mix used to deliver
message to consumers must be consistent]
Competitiveness: you want to compete, competitive edge (entering the market first such as
apple has app store]
Credibility: up market person should sell upper class items