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Author I Now that we've set the Comment | context ¡n terms of companywide strategy, it's time to talk about customer-driven marketing strategy and programs!

Marketing strategy

The marketing logic by which the business unit hopes to create customer value and achieve profitable customer relationships.

Competitors

Marketing intermediaries

At its core, marketing is ail about creating customer value and profitable customer relationships.

Marketing strategy involves two key questions: Which customers will we serve (segmentation and targeting)? and How will we create value for them (differentiation and positioning)? Then, the company designs a marketing program-the four Ps—that delivers the intended value to targeted consumers.

Suppliers

Publics

At its core, marketing is ail about creating customer value and profitable customer relationships.

Marketing strategy involves two key questions: Which customers will we serve (segmentation and targeting)? and How will we create value for them (differentiation and positioning)? Then, the company designs a marketing program-the four Ps—that delivers the intended value to targeted consumers.

♦ FIGURE I 2.4 Managing Marketing Strategies and the Marketing Mix

Suppliers

Publics

Competitors

Marketing intermediaries

Market segmentation

Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs.

Market segment

A group of consumers who respond in a similar way to a given set of marketing efforts.

Market targeting

The process of evaluating each market segment's attractiveness and selecting one or more segments to enter.

company must first understand their needs and wants. Thus, sound marketing requires a careful customer analysis.

Companies know that they cannot profitably serve all consumers in a given market— at least not all consumers in the same way. There are too many different kinds of consumers with too many different kinds of needs. And most companies are in a position to serve some segments better than others. Thus, each company must divide up the total market, choose the best segments, and design strategies for profitably serving chosen segments. This process involves market segmentation, market targeting, differentiation, and positioning.

Market Segmentation

The market consists of many types of customers, products, and needs. The marketer has to determine which segments offer the best opportunities. Consumers can be grouped and served in various ways based on geographic, demographic, psychographic, and behavioral factors. The process of dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programs is called market segmentation.

Every market has segments, but not all ways of segmenting a market are equally useful. For example, Tylenol would gain little by distinguishing between low-income and high-income pain reliever users if both respond the same way to marketing efforts. A market segment consists of consumers who respond in a similar way to a given set of marketing efforts. In the car market, for example, consumers who want the biggest, most comfortable car regardless of price make up one market segment. Consumers who care mainly about price and operating economy make up another segment. It would be difficult to make one car model that was the first choice of consumers in both segments. Companies are wise to focus their efforts on meeting the distinct needs of individual market segments.

Market Targeting

After a company has defined market segments, it can enter one or many of these segments. Market targeting involves evaluating each market segment's attractiveness and selecting one or more segments to enter. A company should target segments in which it can profitably generate the greatest customer value and sustain it over time.

A company with limited resources might decide to serve only one or a few special segments or "market niches." Such "nichers" specialize in serving customer segments that major competitors overlook or ignore. For example, Ferrari sells only 5,700 of its very high-performance cars around the world each year, but at very high prices—from an

Positioning

Arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

eye-opening $190,000 for its Ferrari F430 model to an astonishing $2 million for its FXX super sports car, which can be driven only on race tracks. Most nichers aren't quite so exotic. White Wave, the maker of Silk Soymilk, has found its niche as the largest soymilk producer in the United States. And Veterinary Pet Insurance is tiny compared with the insurance industry giants, but it captures a profitable 60 percent share of all health insurance policies for our furry—or feathery—friends (see Real Marketing 2.2).

Alternatively, a company might choose to serve several related segments—perhaps those with different kinds of customers but with the same basic wants. Abercrombie & Fitch, for example, targets college students, teens, and kids with the same upscale, casual clothes and accessories in three different outlets: the original Abercrombie & Fitch, Hollister, and Abercrombie. Or a large company might decide to offer a complete range of products to serve all market segments.

Most companies enter a new market by serving a single segment, and if this proves successful, they add more segments. Large companies eventually seek full market coverage. They want to be the General Motors of their industry. GM says that it makes a car for every "person, purse, and personality." The leading company normally has different products designed to meet the special needs of each segment.

Positioning: VISA has designed its entire integrated marketing campaign around the deceptively simple "Life Takes VISA" slogan. Ads like this one take you to lifetakesvisa.com microsites with articles, tips, and special offers tailored to specific interests and lifestyles—here the world of food and restaurants.

Differentiation

Actually differentiating the market offering to create superior customer value.

Market Differentiation and Positioning

After a company has decided which market segments to enter, it must decide how it will differentiate its market offering for each targeted segment and what positions it wants to occupy in those segments. A product's position is the place the product occupies relative to competitors' products in consumers' minds. Marketers want to develop unique market positions for their products. If a product is perceived to be exactly like others on the market, consumers would have no reason to buy it.

Positioning is arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. As one positioning expert puts it, positioning is "why a shopper will pay a little more for your brand."15 Thus, marketers plan positions that distinguish their products from competing brands and give them the greatest advantage in their target markets.

Thus, Tesco tells consumers "Every Little Helps."; The home-improvement chain B&Q encourages customers to "Let's Do It."; MasterCard gives you "priceless" experiences; and whether it's an everyday moment or the moment of a lifetime, "Life Takes VISA." Similarly, Epicurious.com is a site "for people who love to eat." Its ads tell you to "get closer to your food." Such deceptively simple statements form the backbone of a product's marketing strategy. For example, A VISA has designed its entire integrated marketing campaign around the "Life Takes VISA" slogan.

In positioning its product, the company first identifies possible customer value differences that provide competitive advantages upon which to build the position. The company can offer greater customer value either by charging lower prices than competitors, or by offering more benefits to justify higher prices. But if the company promises greater value, it must then deliver that greater value. Thus, effective positioning begins with differentiation—actually differentiating the company's market offering so that it gives consumers more value. Once the company has chosen a desired position, it must take strong steps to deliver and communicate that position to target consumers. The company's entire marketing program should support the chosen positioning strategy.

Positioning: VISA has designed its entire integrated marketing campaign around the deceptively simple "Life Takes VISA" slogan. Ads like this one take you to lifetakesvisa.com microsites with articles, tips, and special offers tailored to specific interests and lifestyles—here the world of food and restaurants.

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