Customer-Driven Marketing Strategy

Customer-Driven Marketing Strategy

FIGURE | 7.1

Designing a Customer-Driven Market Strategy

how it will create value for target customers

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.

Benefits of Market Segmentation

1. Better Customer Targeting – Helps businesses reach the right audience with tailored messaging.
2. Increased Marketing Efficiency – Reduces wasted resources by focusing on the most relevant customer groups.
3. Higher Customer Satisfaction – Personalized marketing leads to better engagement and loyalty.
4. Improved Product Development – Insights from segmentation guide innovation and customization.

Examples

A luxury skincare brand targets women aged 30-50 with high disposable income instead of marketing to the general public.

Better Customer Targeting

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A fitness app personalizes workout plans based on user preferences, leading to higher engagement and retention.

Higher Customer Satisfaction –

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Examples of Benefits

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NUMOU app personalizes workout plans based on user preferences, leading to higher engagement and retention.

Higher Customer Satisfaction

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Market Segmentation Topics

• Segmenting consumer markets
• Segmenting international markets
• Requirements for effective segmentation

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Segmenting Consumer Markets

1. Geographic: regions, countries
2. Demographic: facts
3. Psychographic: personality
4. Behavioral: occasion, knowledge

1) Geographic segmentation

divides the market into different geographical units such as nations, regions, states, counties, cities, or even neighborhoods.

2) Demographic segmentation

divides the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation.

Age and life-cycle stage segmentation divides a market into different age and life-cycle groups.

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Gender segmentation divides a market into different segments based on gender.

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Income segmentation divides a market into different income segments.

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• Aga and Life Cycle

Gender

Income

• exclusively offered to the Private Banking – Al Awlawiya clients.

Age Segmentation

3) Psychographic segmentation

• divides a market into different segments based on social class, lifestyle, hobbies, or personality characteristics.

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Psychographic vs. Demographic Segmentation

• Demographic data is the dry data, the hard facts like age and gender.

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• Psychographic forms the personality of the consumer, their likes, interests, and habits.
• It is the study of personality, values, opinions, attitudes, interests, and lifestyles.

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4) Behavioral segmentation

divides a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product.

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• Occasions
• Benefits sought
• Usage rate/Loyalty

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Benefit Sought

Car industry:

• Some customers seek safety ( Volvo)
• Others seek performance ( BMW)
• Others seek fuel efficiency ( Toyota Hybrid)

�Airlines:

• Some value low cost ( Flynas, Air Arabia)
• Others value comfort and service ( Emirates, Qatar Airways)

�Beverages:

• Some buy for energy boost ( Red Bull)
• Others for taste ( Pepsi)
• Others for health ( Vitamin Water)

Loyalty Status

Occasions

Occasion

Which type of segmentation?

• geographic,
• demographic,
• behavioral,
• psychographic

How does this ad applies the 4 segmentation variables?

• Geographic: Kuwait, maybe Gulf countries
• demographic,
• job(students), age(kids), nationality(Kuwaitis)
• Behavioral:
• occasion(National Day)
• psychographic : people who want convenience( fast-food)

Exercise: Burger Aldeera

Requirements for Effective Segmentation

• To be useful, a market segment must be:
• Measurable: size, profile, purchasing power
• Substantial: large/profitable enough
• Differentiable: respond differently to different marketing mix elements and programs.
• Actionable: effective programs can be designed
• Accessible: can be reached

“College Coffee Shop Segments”

• Measurable: Can you measure the size or purchasing power of the segment?

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• You can measure how many iced coffees are sold between midterms and finals.
• You can easily measure how many students buy coffee before 9 a.m. at your campus coffee shop.

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• That makes this segment measurable — you have real data on their behavior.

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“ College Coffee Shop Segments”

• Substantial: Is the segment large and profitable enough to serve?

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• If only 10 students want organic Matcha lattes, that’s too small. But if 500 students ask for it, that’s substantial — worth marketing to.

“College Coffee Shop Segments”

• Differentiable: Does this group respond differently from other groups?

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• Students Sitting area, free Wi-Fi, affordable coffee and fast service.
• Teachers/Professors: want a quiet seating area, premium coffee and maybe they mostly drink it at their office.

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• They both drink coffee — but they have different needs and expectations.�
• But if both students and teachers want the same thing…. you might as well treat them the same. No need to segment!

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“Coffee Shop Segments”

• Actionable: Can you create a specific marketing plan for this group?
• You discover a segment of health-conscious students who want caffeine-free, sugar-free drinks and fast service.
• You can:
• Add a new decaf line
• Offer online orders pick-up lines

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• You can clearly “take action” by designing a strategy to meet their needs.

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• BUT, Targeting "people who like the smell of coffee but don’t drink it." What can you really sell them? Not actionable

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“Coffee Shop Segments”

• Accessible: Can you reach this segment effectively with marketing?

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• You can send app promotions to students' clubs, flyers on campus, social etc.

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• You want to target remote workers who order coffee online for delivery. But if your shop doesn’t offer delivery or has no online ordering system, you can’t access this segment, even if it's large.

• A target market is a set of buyers who share common needs or characteristics that the company decides to serve.

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�Market Targeting

Evaluating Market Segments

• Segment size and growth

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• Segment structural attractiveness

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• Company objectives and resources

• Company objectives and resources:

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• A company should only enter segments in which it can create superior customer value and gain advantages over its competitors.

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Evaluating Market Segments

Market Targeting

Market Targeting Strategies

Undifferentiated (Mass) Marketing

• Focus: Entire market with one offer.
• Goal: Maximize reach and reduce cost through broad appeal.
• Example: Toothpaste, basic mobile data plans.

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2. Differentiated (Segmented) Marketing

• Focus: Targeting multiple segments with different offers.
• Goal: Increase market share by customizing to needs. achieve higher sales and stronger position
• Example: Nike markets differently to runners, basketball players, and gym-goers.

Market Targeting Strategies

3. Concentrated (Niche) Marketing

• Focus: One specific segment.
• Goal: Build strong loyalty and expertise in a small market.
• Example: A vegan protein brand that only targets plant-based athletes.

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4. Micromarketing (Local or Individual Marketing)

• Focus: Tailoring products and marketing to specific individuals or locations.
• Goal: Personalization.
• Example: Starbucks customizing drinks for individual tastes; local restaurants using geotargeted ads. 

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1) Undifferentiated marketing targets the whole market with one offer.

• Mass marketing
• Focuses on common needs rather than what’s different

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Selecting Target Market Segments

The First IPad – Mass Market

• 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

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Selecting Target Market Segments

Selecting Target Market Segments

Concentrated marketing

targets a large part of a

smaller market.

• Limited company resources
• More effective and efficient

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Trolley's target market primarily includes busy individuals who are looking for convenient, quick shopping solutions for snacks, drinks, and other essential items.

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Their stores are strategically placed in high-traffic locations such as gas stations, malls, universities, and other areas frequented by people who need to grab items on the go.

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Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

• Local marketing (local cities)
• Individual marketing (individualized)

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• Individual(micro) marketing involves tailoring products and marketing programs to the needs and preferences of individual customers.
• Also known as:
• One-to-one marketing
• Micromarketing

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Selecting Target Market Segments

Starbucks. Netflix. Social Media apps.��What type of strategy?

Summary: Comparison Table

Alqabas Newspaper

Pet Barn

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Tailor Express

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Targeting strategies for a new restaurant

Example for a new restaurant

• Undifferentiated:
• Grand opening celebration.
• Differentiated:
• Discount specials for students.
• kid-friendly meals for families. (nuggets, fries, grilled cheese… not only steak)
• Early-bird specials for the seniors (come early and save)
• Concentrated Marketing:
• Market its convenient location to people within 10 km. (delivery)
• Micromarketing:
• Offer catering that are made to order.

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Fitness App Exercise

Differentiation and Positioning

Product position is the way the product is defined by consumers on important attributes.

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Positioning maps show consumer perceptions of marketer’s brands versus competing products on important buying dimensions.

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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.

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Positioning

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• A strategy that aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer.

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1) Identifying a set of possible competitive advantages to differentiate along the lines of:

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• Product differentiation: features
• Burger King (quality) vs. Subway (Healthy)
• Service differentiation
• McDonalds (“We deliver Fast”)
• Channels differentiation
• Online vs. physical stores.
• People differentiation:
• company’s employees (languages spoken by Emirates, Qatar, and Kuwait airlines staff)
• Image differentiation: brand image (Porsche vs Jeep)
• Socially responsible, environment friendly

Positioning

• Must answer these two questions:

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• What is unique about you (service, quality, location, price, etc)?

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• What sets you apart and is VALUED by your customer?

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Elements of Positioning

• Never completely fixed

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Differentiation and Positioning

Choosing the Right Competitive Advantages

• A difference is worth establishing to the extent that it satisfies the following criteria:

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• Important: has value to customers (Airlines languages)
• Distinctive: unique offer compared to competitors. (repair phones/cars at home instead of the store)
• Superior: better in features/quality (Samsung’s Nokia camera)
• Preemptive: cannot be easily copied. (KFC secret sauce)
• Affordable: buyers can afford it. (OEM vs Chinese products)

Communicating and Delivering the Chosen Position

Choosing the positioning is often easier than implementing the position.

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Establishing a position or changing one usually takes a long time.

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Maintaining the position requires consistent performance and communication.

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Marketing mix must support the positioning.