Customer Value-Driven Marketing Strategy

Market Targeting

Once the segments are identified, the company must decide which ones to enter. This is known as market targeting. A "target market" is the specific set of buyers sharing common needs that the company decides to serve.

Companies evaluate segments based on their size, growth potential, and structural attractiveness, as well as the company's own objectives and resources. There are four primary targeting strategies:

1. Undifferentiated (Mass) Marketing: Ignoring segment differences and going after the whole market with one offer.
2. Differentiated Marketing: Targeting several segments and designing separate offers for each. For example, Marriott International uses over 30 different hotel brands to capture various parts of the travel market.
3. Concentrated (Niche) Marketing: Going after a large share of one or a few smaller segments. An example is American Giant, which focuses on a "made-in-America" niche.
4. Micromarketing: Tailoring products and programs to suit the tastes of specific individuals or local locations.

Differentiation and Positioning: Creating the Value Proposition

After choosing a target, the company must decide how it will actually create value. This involves differentiation—distinguishing the market offering to create superior customer value—and positioning—arranging for a product to occupy a clear, distinctive, and desirable place in the minds of target consumers.

Differentiation

To gain a competitive advantage, a firm must offer greater customer value than its rivals. This can be achieved by having lower prices or by providing more benefits that justify higher prices. Companies can differentiate themselves through:

• Product: Features, performance, or style.
• Services: Speed, convenience, or customer support.
• Channels: The way the product is distributed.
• People: Better-trained or more professional staff.
• Image: The brand's reputation and identity.

The Value Proposition

A company's full positioning is expressed through its value proposition—the set of benefits or values it promises to deliver to consumers to satisfy their needs.

Common value proposition strategies include:

• More for More: Providing the most upscale product or service.
• More for the Same: Offering high quality at a lower price than upscale competitors.
• More for Less: Providing the best possible products at the lowest possible prices.
• Less for Much Less: Meeting basic requirements at a very low price.

Positioning

Product position is the way consumers define a product based on its important attributes. To communicate this, companies often develop a positioning statement, which summarizes the brand's position.

For example, the retailer Public Goods uses a positioning statement to define itself for "value-, health-, and convenience-seeking buyers," describing itself as an online retailer that makes healthy, sustainable essentials accessible at a fair price.

Strategic Note: Once a position is established, it must be maintained through consistent performance and communication across all marketing mix efforts. However, companies must also monitor and adapt their position over time to remain relevant.

Summary of the Strategy Process

Designing a customer value-driven marketing strategy is a cohesive process of selection and distinction:

1. Segment the market into groups.
2. Target the most attractive segments.
3. Differentiate the offering to create a competitive advantage.
4. Position the brand in the minds of the target customers.

By following these steps, companies ensure they are not just selling products, but are delivering specific, meaningful value to the right people.