PART 1: Defining Marketing and the Marketing Process (Chapters 1–2) PART 2: Understanding the Marketplace and Consumer Value (Chapters 3–6) PART 3: Designing a Customer Value–Driven Strategy and Mix (Chapters 7–17) PART 4: Extending Marketing (Chapters 18–20) Customer Value–Driven Marketing Strategy: 7 Creating Value for Target Customers So far, you’ve learned what marketing is and about follow explore the tactical marketing tools—the four Ps—by which the importance of understanding consumers and the marketers bring these strategies to life. marketplace. With that as a background, we now To open our discussion of segmentation, targeting, differen- delve deeper into marketing strategy and tactics. This tiation, and positioning, let’s look at Henkel. For nearly 140 years, REVIEW CHAPTER P chapter looks further into key customer value–driven Henkel has wielded a leader’s influence with its varied offering of marketing strategy decisions—dividing up markets into meaning- products that address the specialized needs of global customers. ful customer groups (segmentation), choosing which customer Henkel’s brand Persil has revolutionized the Middle Eastern market groups to serve (targeting), creating market offerings that best through sophisticated segmentation and targeting, with each prod- serve targeted customers (differentiation), and positioning the of- uct line offering a unique value proposition to a distinct segment of ferings in the minds of consumers (positioning). The chapters that customers. HENKEL’s Persil: A “Glocal” Marketing Success enkel AG & Company, KGaA, a well-known Persil. For over 109 years, Persil has been regarded as the expert German multinational company active both in in sparkling clean laundry. Its name has stood for quality and the consumer and industrial sector, was founded trust, making it, for example, Germany’s most trusted laundry in September 1876 by Fritz Henkel in Aachen, detergent. The Persil product line has included many successful HGermany. The first product it launched was a silicate-based products since it was first introduced in the market back in 1907 universal detergent; ever since, the company has been suc- and revolutionized the laundry process. The product combined cessful through continuous innovation in new products that sodium silicate with sodium perborate, which releases fine satisfy a range of diverse customers and their different needs pearling oxygen when the laundry is boiled. The result is an and preferences across the globe. Today, Henkel—which is especially textile-friendly and odorless bleach, in contrast headquartered in Düsseldorf, Germany—is globally ranked to the chlorine used till then. It also reduces the strenuous among the Fortune Global 500 companies. In the fiscal year and time-consuming rubbing, swinging, and scrubbing of 2015, Henkel reported sales of $18.97 billion and an oper- laundry that had hitherto been the norm. The first self-acting ating profit of $3.06 billion. In Fortune’s recent “World’s detergent was born: Persil. Most Admired Companies” ranking, Henkel was confirmed Over its history, Henkel has wielded a leader’s influ- as one of the most reputable ence through different brands and companies in its industry cat- By focusing on generating insights to technology, enabling people to live egory, finishing in fourth place. understand market trends and customers’ easier and better lives. The com- In 2016, Henkel was again the pany has managed to successfully special needs in different regions, Henkel only German company in the capitalize on its customer-driven Top 50 of the world’s biggest found huge success with its brands. “glocal” marketing strategy, consumer-goods manufactur- blending global understanding ers worldwide according to consulting firm OC&C’s study with local implementation, as in Saudi Arabia, which is “Trends and Strategies on the Consumer-goods Market.” one of the Gulf Cooperation Council (GCC) countries. The Henkel’s force of around 50,000 employees worldwide other member states are Bahrain, Kuwait, Oman, Qatar, and is working hard to gain the trust of a customer base in more the United Arab Emirates. Each of these countries has very than 120 countries with several successful brands, particularly different needs based on its culture. Saudi Arabia offers an CHAPTER 7 | Customer Value–Driven Marketing Strategy 211 excellent example that illustrates Henkel’s marketing strat- egy in more depth. Since its foundation, Henkel Saudi Arabia has enjoyed tremendous growth, and its workforce is currently com- prised of more than 300 people, making the brand the no. 2 market player in the home-care category. As Amitabh Bose, the former Marketing Head of Henkel Saudi Arabia, notes, Henkel’s brand presence is epitomized by the success of its premium laundry detergent Persil, which has revolution- ized the Middle Eastern market with its focus on devel- oping strong brand equity, generating consumer insights, and evolving outstanding marketing campaigns. The Saudi Arabia region was targeted by Henkel a couple of years ago across two main segments—men and women—with three ex- ceptionally innovative and, later, extremely successful prod- ucts: Persil Abaya Shampoo for women, and Persil White liquid detergent and Persil Starch Spray for men. The introduction of both lines of products was based on extensive market research on regional consumer insights and preferences. Research by Henkel proved that nearly 75 per- cent of GCC consumers wash thobes (long white dresses tra- ditionally worn by men in the region) with a mix of detergent and bleach, which, in time, negatively affects the brightness of the garments’ white color. Research also revealed the lack of a suitable starch spray in the detergent market that would give thobes the right level of firmness preferred by local con- sumers. Persil White and Persil Starch Spray, the first range of laundry products aimed at GCC men, achieved an enormous market share and sales 90 percent above forecasts within only four months after its launch. This success as a new laundry product was predominantly based on a deep understanding Persil’s success in the Middle East is predominantly due to a deep of the regional consumers’ needs and preferences. understanding of the regional consumers’ needs and preferences. Newscast Online Limited/Alamy Stock Photo In addition, women traditionally wear abayas, loose robe- like garments that are typically black. As local men take pride in the brightness of their thobes’ white color and the fabric’s firmness, women exercise great care in maintain- The marketing strategy applied by Henkel serves as an ing the depth of their abayas’ black color and the richness excellent example of how the mix of common global tech- of the fabric. Amal Murad, a well-known fashion designer, nology and scale (economies of scale or low-cost produc- emphasizes that it is paramount that women take care of tion) can be combined with a local and regional marketing their abayas in order to maintain its look, feel, and color. strategy. The Persil brands have common product formula- As a result, Persil Abaya Shampoo (also known as Persil tions, but with regionally tailored product strategies in the Black) was developed to offer the perfect retention of the form of different packaging and marketing communication. black color by using the revolutionary Henkel technology Persil Abaya was launched in the Gulf States through a mix “black color lock.” The liquid detergent combines true clean- of TV commercials and a very successful online viral cam- ing power with special color protection for black and dark paign. An interactive website was set up and Henkel also garments—particularly important if these are washed fre- sponsored a reality TV designer competition in cooperation quently. Persil Abaya Shampoo also safeguards the fabric and with Swarovski Elements in order to show that the abaya has gives the abaya an enduring floral scent. Research on local transcended the traditional garment to become an individual consumers revealed that almost 50 percent of them adopt in- fashion and personality statement. By focusing on generating appropriate and damaging practices in cleaning their abayas, insights to understand market trends and customers’ special such as using powdered detergents, fabric softeners, or even needs in different regions, Henkel found huge success with its hair and body shampoo. That’s why Persil Abaya Shampoo brands. Its marketing strategy has been considered a successful was viewed as revolutionary in the regional world of laundry. example of a totally customer-driven strategy.1 212 PART 3 | Designing a Customer Value–Driven Strategy and Mix OBJECTIVES OUTLINE OBJECTIVE 7-1 Define the major steps in designing a customer value–driven marketing strategy: market segmentation, targeting, differentiation, and positioning. Marketing Strategy (pp 212–213) OBJECTIVE 7-2 List and discuss the major bases for segmenting consumer and business markets. Market Segmentation (pp 213–221) OBJECTIVE 7-3 Explain how companies identify attractive market segments and choose a market-targeting strategy. Market Targeting (pp 221–228) OBJECTIVE 7-4 Discuss how companies differentiate and position their products for maximum competitive advantage. Differentiation and Positioning (pp 228–236) COMPANIES TODAY RECOGNIZE THAT they cannot appeal to all buyers in the marketplace—or at least not to all buyers in the same way. Buyers are too numerous, widely scattered, and varied in their needs and buying practices. Moreover, companies themselves vary widely in their abilities to serve different market segments. Instead, like Henkel, companies must identify the parts of the market they can serve best and most Market segmentation profitably. They must design customer-driven marketing strategies that build the right Dividing a market into distinct groups relationships with the right customers. Thus, most companies have moved away from of buyers who have different needs, mass marketing and toward target marketing: identifying market segments, selecting one characteristics, or behaviors and who or more of them, and developing products and marketing programs tailored to each.