Chapter 8

Customer Driven Marketing Strategy

Customer-Driven Marketing Strategy

Segmentation
Targeting
Differentiation
Positioning

Market segmentation
Dividing a market into smaller
groups with distinct needs,
characteristics, or behaviors
who might require separate
products or marketing mixes

Why Segmentation?

Malcolm McDonald

Levels of Market Segmentation

Mass
Market

Segment
Niche

Micromarketing

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Continuum o
Standardized
Marketing
Mix

Segment Niche

Micromarketing

The
Individual

Personalization

Bases or Variables for segmentation

Geographic
Demographics
Psychographic Variables
Behavioral variables

Geographic Variables:

World region or country: Asia, Middle East, China, India, Canada, Mexico, Pakistan
Country region: Pacific, Mountain, West North Central, West South Central, East North Central,
East South Central,
South Atlantic, Middle Atlantic, New England
City or metro size Under 5,000; 5,00020,000; 20,00050,000; 50,000100,000; 100,000
250,000;250,000500,000; 500,0001,000,000; 1,000,0004,000,000; over 4,000,000
Density :Urban, suburban, rural
Climate: Northern, southern

Demographics of Customers:

Age :Under 6, 611, 1219, 2034, 3549, 5064, 65

Gender :Male, female
Family size :12, 34, 5
Family life cycle: Young, single; young, married, no children; young, married with children;
older, married with children; older, married, no children; under 18; older, single; other
Income :Under $10,000; $10,000$20,000; $20,000$30,000; $30,000$50,000; $50,000
$100,000; $100,000 and over
Occupation : Professional and technical; managers, officials, and proprietors; clerical; sales;
craftspeople; supervisors; operatives; farmers; retired; students; homemakers; unemployed
Education: Grade school or less; some high school; high school graduate; some college;
college graduate
Religion: Catholic, Protestant, Jewish, Muslim, Hindu, other
Race: Asian, Hispanic, Black, White
Generation: Baby boomer, Generation X, Generation Y
Nationality North American, South American, British, French, German, Italian, Japanese

Psychographic Segmentation

VALS2
Groupings

Consumer Motivation
Actualizers
Posses both high income and

self-esteem
Successful, Sophisticated
Take charge

VALS2
Groupings

Niche oriented products and

services

Psychographic Segmentation

Thinkers/Fulfillers
Mature, home oriented, well
educated professionals

VALS2
Groupings

Motivated by ideals
High incomes
Open to new ideas

Psychographic Segmentation

Experiencers
Main component of actionoriented segment

Youngest in VALS2, median age

is 25 years

VALS2
Groupings

Active in both physical and

social activities

Psychographic Segmentation

Believers
Family and community oriented
people

VALS2
Groupings

Modest means

Brand loyal

Favor American-made products

Psychographic Segmentation

Strivers

VALS2
Groupings

Lower-income people

Values similar to achievers

Style is important in lifestyle.

Consumer Motivation
Makers
Main component of actionoriented segment along with
experiencers

VALS2
Groupings

Self-sufficient group

Practical with little interest in

most material possessions

Consumer Motivation
Strugglers

Have few resources

Do not fit into the regular

VALS2 categories

Brand loyal to the extent

possible

VALS2
Groupings

Behavioral variables
Occasions: Regular occasion; special occasion
Benefits :Quality, service, economy, convenience, speed
User status: Nonuser, ex-user, potential user, first-time user,
regular user
User rates: Light user, medium user, heavy user
Loyalty status: None, medium, strong, absolute
Readiness stage :Unaware, aware, informed, interested, desirous,
intending to buy

Requirements for Effective Segmentation

Measureable
Accessible
sustainable
Differentiable
Actionable

Target market
A set of buyers sharing
common needs or
characteristics that the
company decides to serve.

DIFFERENTIATION

POSITIONING