Steps of Designing a Customer-Driven Marketing Strategy

Marketing Strategy is a process of making the products and/or services available to the customers. In recent times, as there is so much competition in the market and a larger customer market, businesses must develop a proper Customer-Driven Marketing Strategy which is an important aspect of selling the products, generating revenue, building long-term relationships with customers, etc. A generalised Customer-Driven Marketing Strategy includes the steps of Market Segmentation, Targeting, Positioning, and Differentiation.

Steps of Designing a Customer-Driven Marketing Strategy

The steps of a customer-driven marketing strategy include: 

Step 1 – Market Segmentation

Under market segmentation, the whole customer market is divided into various segments on the basis of gender, age, geographic location, preferences, etc. Each company when starts with designing the marketing strategy, undertakes this step very first. Every company must divide the total market into various segments, and then move further to build a profitable marketing strategy. Market segmentation requires thorough market research about the customers’ needs, wants, tastes, preferences, etc., Market segmentation can be done on the basis of:

• Psychographic Attributes (lifestyle preferences)
• Geographic Attributes (location)
• Behavioural attributes (habits)
• Demographics (age, gender, etc.)

Once the company is done with the market segmentation process, it can focus on choosing the best segment for its products and/or services. A market segment is basically a portion of the whole market that is expected to respond similarly to a given situation. For example, Volkswagen. Volkswagen Group is responsible for producing brands like Audi, Porsche, Lamborghini, and Ducati. Even after being so expensive brands still generate a handsome revenue. Volkswagen depicts the importance of perfect market segmentation.

Step 2 – Market Targeting

The process of evaluation of market segments and choosing the best to target comes under Market Targeting. Market Targeting undertakes the decision of choosing the best target audience and the degree to which the target market should be targeted. In simple terms, it is a process of choosing the best target audience for the product/service and declaring the other segments to be useless for a particular kind of product/service. A business must determine the target audience after thorough research, otherwise, the business is going to end up wasting time and resources with no return on investment. Generally, a new product/service is first made available to a single target, and if it remains optimal, the business takes up other segments as well. Market targeting also depends on the size of the company. Besides, the more the target markets, the more will the cost of targeting. For example, Nike’s target market includes those people who are interested in getting fitter.

Step 3 – Positioning

The activity of positioning involves placing the product/service in the minds of the target customers and making the image of the product/service superior as compared to other similar products. Various factors affect the process of positioning such as:

• The larger the size of the target market, the more it will be difficult to position the product/service.
• If there is no competition in the market, then the business can create a completely different and new market positioning strategy.
• If the product has already a good brand value, then it will be of advantage to the business to position any new product/service.
• If the company decides to offer less prices for its product/services than the rival firms, then the business can have an advantage in market positioning.

For example, Starbucks. Starbucks wanted to make itself ‘The Third Home’ between home and work so that people can come and relax whenever they are tired. They decided to target customers with medium and high-level income. Starbucks uses the following taglines to strengthen its positioning in the market:

• 100% recycled paper use
• The finest milk use
• The best coffee
• Rich & Smooth flavours
• Natural & clean

Step 4 – Differentiation

Differentiation is the process of differentiating the market in order to have superior customer value. The idea that the customers have of the product is the most important thing. A better image of the product in the minds of the customers helps in better sales and revenue. Differentiation offers the business a competitive advantage. Differentiation can be direct (i.e., improves quality) and indirect (improved positioning strategy). Differentiation is the most important activity, generally for those products/services which have a lot of competitors, like in the automobile industry or food industry, etc. Companies must differentiate their products from rival firms to gain a competitive edge. Differentiation of product is not always based on the quality, but sometimes on the money value. For example, Tesco sells groceries at very affordable and reasonable rates, to acquire customers’ confidence which makes their brand differentiated from other rival brands.