What are the four steps in order to design a customer-driven marketing strategy?

Designing a customer-driven marketing strategy involves a systematic approach to understanding and serving target customers effectively. The four sequential steps crucial for this process are market segmentation, market targeting, market differentiation, and market positioning. These steps collectively enable a company to identify the best opportunities, serve chosen customers profitably, and establish a distinctive presence in the marketplace.

The Four Key Steps

The process of building a robust customer-driven marketing strategy can be broken down into the following stages:

Let's explore each step in more detail:

1. Market Segmentation

Market segmentation is the foundational step where a broad consumer market is divided into subsets of consumers who have common needs and priorities, and who would respond similarly to a specific marketing approach. This process helps companies understand their diverse customer base better and tailor their offerings.

• Key Segmentation Variables:
  • Geographic Segmentation: Dividing the market based on location, such as regions, cities, or even neighborhoods. (e.g., marketing winter clothing differently in cold versus warm climates).
  • Demographic Segmentation: Grouping consumers based on variables like age, gender, income, education, occupation, or family size. (e.g., toys for children vs. financial services for adults).
  • Psychographic Segmentation: Categorizing consumers based on lifestyle, personality traits, values, opinions, and interests. (e.g., active lifestyle products for adventurous individuals).
  • Behavioral Segmentation: Dividing consumers based on their knowledge, attitudes, uses, or responses to a product, including benefits sought, user status, usage rate, and loyalty status. (e.g., frequent flyer programs for loyal customers).

2. Market Targeting

Once segments are identified, market targeting involves evaluating each segment's attractiveness and selecting which one(s) the company will serve. The goal is to choose segments that align with the company's objectives and where it can effectively compete and generate profit.

• Evaluating Market Segments: Companies assess segments based on factors such as:
  • Segment Size and Growth: Larger and growing segments often offer more potential.
  • Segment Structural Attractiveness: Considering factors like the presence of strong competitors, substitutes, or powerful buyers/suppliers that might erode profitability.
  • Company Objectives and Resources: Ensuring the segment fits with the company's long-term goals and that the company has the necessary resources and skills to serve it.
• Targeting Strategies:
  • Undifferentiated Marketing (Mass Marketing): Ignoring segment differences and targeting the whole market with one offer (less common today).
  • Differentiated Marketing (Segmented Marketing): Targeting several market segments and designing separate offers for each (e.g., a car manufacturer offering different models for families, luxury seekers, and economy drivers).
  • Concentrated Marketing (Niche Marketing): Focusing on a large share of one or a few small segments or niches.
  • Micromarketing (Local or Individual Marketing): Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments.

3. Market Differentiation

Differentiation involves distinguishing the company's market offering from that of competitors to create superior customer value. This step is about identifying what makes the company's product or service unique and more appealing to the chosen target segments.

• Key Areas of Differentiation:
  • Product Differentiation: Based on features, performance, style, design, or quality. (e.g., Apple's iPhone known for its design and user experience).
  • Services Differentiation: Through speedy, convenient, or careful delivery, installation, repair services, or customer training. (e.g., Zappos known for exceptional customer service and free returns).
  • Channel Differentiation: Through the way channels are designed, their coverage, expertise, and performance. (e.g., Amazon's efficient delivery network).
  • People Differentiation: Hiring and training better people than competitors, focusing on friendliness, knowledge, and reliability. (e.g., Nordstrom's highly regarded sales associates).
  • Image Differentiation: Creating a distinctive image that conveys the product's benefits and positioning. (e.g., Nike's "Just Do It" slogan and athletic brand image).

4. Market Positioning

Market positioning is the final step, where the company works to create a clear, distinctive, and desirable place for its offering in the minds of target consumers relative to competing products. It's about communicating the unique value proposition to the market.

• Developing a Positioning Strategy: This involves:
  • Identifying Possible Competitive Advantages: Understanding what aspects of the company's offer are truly superior and valued by customers.
  • Choosing the Right Competitive Advantages: Selecting specific advantages that are important, distinctive, superior, communicable, preemptive, affordable, and profitable.
  • Selecting an Overall Positioning Strategy: Deciding whether to position on more for more, more for the same, the same for less, less for much less, or more for less.
  • Developing a Positioning Statement: A concise statement that summarizes the target segment, the brand's unique selling proposition, and its key differentiation. For example, "To [target segment and need] our [brand] is [concept] that [point of difference]."
• Communicating and Delivering the Chosen Position: Once a position is established, all marketing mix elements (product, price, place, promotion) must consistently support and communicate this position to the target market.