Customer-Driven Marketing Strategy
, to succeed in today’s competitive marketplace, companies must be customer centered. They must win customers from competitors and then keep and grow them by delivering greater value. But before it can satisfy customers, a company must first understand customer needs and wants. Thus, sound marketing requires 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. 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.
, to succeed in today’s competitive marketplace, companies must be customer centered. They must win customers from competitors and then keep and grow them by delivering greater value. But before it can satisfy customers, a company must first understand customer needs and wants. Thus, sound marketing requires 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. 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 must 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 highincome 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 its 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. Acompany 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 1,500 of its very high-performance cars in the United States each year but at very high prices—from an eye-opening $229,500 for its Ferrari F430 F1 Spider convertible to an astonishing more than $2 million for its FXX super sports car, which can be driven only on race tracks (it usually sells 10 in the United States each year). Most nichers aren’t quite so exotic. White Wave, the maker of Silk Soymilk, has found its niche as the nation’s largest soymilk producer. And although Logitech is only a fraction the size of giant Microsoft, through skillful niching, it dominates the PC mouse market, with Microsoft as its runner up
The market consists of many types of customers, products, and needs. The marketer must 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 highincome 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 its 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. Acompany 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 1,500 of its very high-performance cars in the United States each year but at very high prices—from an eye-opening $229,500 for its Ferrari F430 F1 Spider convertible to an astonishing more than $2 million for its FXX super sports car, which can be driven only on race tracks (it usually sells 10 in the United States each year). Most nichers aren’t quite so exotic. White Wave, the maker of Silk Soymilk, has found its niche as the nation’s largest soymilk producer. And although Logitech is only a fraction the size of giant Microsoft, through skillful niching, it dominates the PC mouse market, with Microsoft as its runner up
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. Large car companies such as Honda and Ford do this. Most companies enter a new market by serving a single segment, and, if this proves successful, they add more segments. For example, Nike started with innovative running shoes for serious runners. Large companies eventually seek full market coverage. Nike now makes and sells a broad range of sports products for just about anyone and everyone, with the goal of “helping athletes at every level of ability reach their potential. It has different
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. Aproduct’s position is the place it 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. Marketers plan positions that distinguish their products from competing brands and give them the greatest advantage in their target markets products designed to meet the special needs of each segment it serves.
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. Aproduct’s position is the place it 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. Marketers plan positions that distinguish their products from competing brands and give them the greatest advantage in their target markets products designed to meet the special needs of each segment it serves.
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