Fundamentals of Marketing

Creating
Differentiation and
Market Positioning

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 Customer-Driven Marketing Strategy

FIGURE | 7.1
Designing a Customer-Driven Market Strategy

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 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.

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 Market Segmentation
• Segmenting consumer markets
• Segmenting business markets
• Segmenting international markets
• Requirements for effective segmentation

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 Market Segmentation
Segmenting Consumer Markets

Geographic Demographic
segmentatio segmentatio
n n

Behavioral
Psychographic
segmentatio
segmentation
n

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Demographic Segmentation
•Demographic segmentation is one of the most popular and
commonly used types of market segmentation. It refers to
statistical data about a group of people.
• Age
• Gender
• Income
• Location
• Family Situation
• Annual Income
• Education
• Ethnicity
Psychographic Segmentation
Psychographic segmentation categorizes audiences and customers
by factors that relate to their personalities and characteristics.
• Personality traits
• Values
• Attitudes
• Interests
• Lifestyles
• Motivations
• Priorities
Behavioural Segmentation
While demographic and psychographic segmentation focus on who
a customer is, behavioural segmentation focuses on how the
customer acts.

• Purchasing habits
• Spending habits
• User status
• Brand interactions
• Occasion Segmentation
• Benefit Sought
Geographic Segmentation
It categorizes customers based on geographic borders.
• ZIP code
• City
• Country
• Climate
• Urban or rural
 Market Segmentation
Requirements for Effective Segmentation

Measurable Accessible Substantial

Differentiable Actionable

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 Market Targeting
Selecting Target Market Segments

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
Selecting Target Market Segments

FIGURE | 7.2
Market-Targeting Strategies

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 Market Targeting
Selecting Target Market Segments

Undifferentiated marketing targets the

whole market with one offer.
• Mass marketing
• Focuses on common needs rather than
what’s different

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 Market Targeting
Selecting Target Market Segments

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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 Market Targeting
Selecting Target Market Segments
Concentrated marketing targets a large of a
smaller market.

• Limited company resources

• Knowledge of the market

• More effective and efficient

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 Market Targeting
Selecting Target Market Segments

Micromarketing is the practice of tailoring

products and marketing programs to suit
the tastes of specific individuals and
locations.
• Local marketing
• Individual marketing

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 Market Targeting
Selecting Target Market Segments

Local marketing involves tailoring

brands and promotion to the needs
and wants of local customer
segments.
• Cities
• Neighborhoods
• Stores

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 Market Targeting
Selecting Target Market Segments

Individual marketing
involves tailoring products
and marketing programs
to the needs and
preferences of individual
customers.
• Also known as:
• One-to-one marketing
• Mass customization

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 Differentiation and Positioning

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

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 Differentiation and Positioning
Positioning Maps

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

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

• Identifying a set of possible competitive

advantages to build a position
• Choosing the right competitive advantages
• Selecting an overall positioning strategy
• Communicating and delivering the chosen
position to the market

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

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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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive advantages

to differentiate along the lines of:

Product
Services
Channels
People
Image

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Choosing the Right Competitive Advantage
A difference to promote should be:

Important Distinctive Superior

Communicable Preemptive Affordable

Profitable

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Selecting an Overall Positioning Strategy

Value proposition
is the full mix of
benefits upon
which a brand is
positioned.

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

More for More. “More-for-more” positioning involves

providing the most upscale product or service and charging a
higher price to cover the higher costs.

More for the Same. Companies can attack a competitor’s

more-for-more positioning by introducing a brand offering
comparable quality at a lower price.

The Same for Less. Offering “the same for less” can be a
powerful value proposition— everyone likes a good deal.
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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Less for Much Less. A market almost always exists for

products that offer less and therefore cost less. Few
people need, want, or can afford “the very best” in
everything they buy.

More for Less. Of course, the winning value proposition

would be to offer “more for less.” Many companies claim
to do this. And, in the short run, some companies can
actually achieve such lofty positions

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Positioning statement summarizes company or brand

positioning using this form: To (target segment and need)
our (brand) is (concept) that (point of difference)

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 Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy

Positioning Statement Example for Evernote:

“To busy multitaskers who need help remembering things,
Evernote is a digital content management application that
makes it easy to capture and remember moments and
ideas from your everyday life using your computer, phone,
tablet, and the Web.”

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“For serious athletes, Nike gives confidence that provides the perfect shoe for
every sport”.

“To bringing the best user experience to its customers through its innovative
hardware, software, and services,”

“to add vitality to life. We meet everyday needs for nutrition, hygiene and personal
care with brands that help people feel good, look good and get more out of life.” 
 Differentiation and Positioning
Communicating and Delivering the Chosen Position

Choosing the positioning is often easier than

implementing the position.

Establishing a position or changing one usually takes a

long time.

Maintaining the position requires consistent

performance and communication.

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 Fundamentals of Marketing
Terms to know

• Differentiation and Positioning

• Positioning Maps

• Competitive advantage

• Choosing a Differentiation and Positioning Strategy

• Value proposition

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