Customer-Driven Marketing Strategy: Creating Value for Target Customers - Market Targeting

17 important questions on Customer-Driven Marketing Strategy: Creating Value for Target Customers - Market Targeting

Structural factors that that affect long-run segment attractiveness?

Strong and aggressive competitors, new entrants, substitute products, power of buyers relative to sellers, and powerful suppliers who can control prices, quality, or quantity of ordered goods and services.

Choosing a segment, a firm must take into account three factors. Which three are that?

1. Segment size and growth
2. Segment attractiveness (using Porter's 5 forces)
3. Company objectives an resources

Why can some attractive market segments be dismissed quickly?

- They don't mesh with the company's long term objectives
- The company lacks the skills and resources to succeed in the segment.
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What's the difference between undifferentiated, differentiated, concentrated and micro marketing?

Undifferentiated (mass) marketing; you decide to serve the whole market, without identifying segments. E.g. Coca Cola

Differentiated marketing; you decide to target segments and serve  one or a few segments and adapt your approach offers to it. E.g. Tooth brushes.

Niche marketing; you decide to serve a large share of one or a few smaller segments, instead of a small share of a large market. E.g. Apple

Micro marketing; local or individual marketing. E.g. Machines that develop a custom made shoe for you.

What is the definition of a target market?

A set of buyers who share common characteristics and needs, that the company decides to serve.

Choosing a targeting strategy depends on the companies resources, product variability, product's life cycle, market variability, and competitor's strategy. Elaborate on this.

Company resources; when resources are limited, concentrated marketing makes more sense.

Product variability; product that can vary in design are more suited for differentiation.

Product life-cycle when a firm introduces a new product, most practical is undifferentiated or concentrated marketing. However, when the product is in a mature stage, differentiation makes more sense.

Market variability; if most buyers have common Taste, amount they buy etc, undifferentiated marketing is more suitable.

Competitors; consider those and don't do something controversial!

What is undifferentiated marketing?

The company designs products or programs that will appeal to the largest amount of buyers.

Why is niche targeting a stronger positioning for the firm? (4)

1. Easy to collect broader knowledge of customer needs
2. Effective to coordinate the programs on products and prices
3. Efficient to target consumers' channels
4. Communication programs for the specific segment

Characteristics of undifferentiated marketing:

- Targets the whole market with one offer
- Mass marketing
- Focuses on commons needs rather than what's different

What is differentiated marketing, and what are the characteristics?

Targets several different segments and designs separate offers for each.
- Goal is to achieve higher sales and a stronger position
- More expensive than undifferentiated marketing.

What is concentrated marketing?

Targeting a large share in a smaller market.
- Limited company resources
- Knowledge of the market
- More effective and efficient

What factors determine the targeting strategy? (4)

1. Resources available
2. Product variability
3. Market variability
4. Competitors' marketing strategy

What are the pros and cons of concentrated marketing?

It can be highly profitable but involves a higher than normal risk ratio.
Sensitive to large competitors, or if the segment turns sour you lose a lot of business.

Name the most suitable targeting marketing strategy for the below:
1. Limited resources
2. Product variability
3. Products that vary in design
4. New products

1. Concentrated marketing
2. Undifferentiating marketing
3. Differentiation or concentration
4. Undifferentiated or concentrated

What is micromarketing? (local or individual)

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

What is local marketing?

Tailoring brands and promotion to the needs and wants of local customer segments. Like:
- Cities
- Neighbourhoods
- Stores

Characteristics of individual marketing:

One-to-one marketing
Mass customization:  Like designing your own shoe

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