Chap 5 focusing on the customer

CHAPTER 5: Focusing on the Customer 209 Chapter Focusing on the Customer A Identify Markets to Serve (TM 5-1) B Concept of Need (TM 5-2) C Market Emergence Meaning of Market Emergence (TM 5-3) Market Potential (TM 5-4) Method of Measuring Market Potential (TM 5-5) D Market Boundary Dimentions of Market Boundary (TM 5-6) Determining Market Boundaries: An Example (TM 5-7) Market Evolution in Three Dimensions (TM 5-8) E Served Market Factors Influencing Served Market Decision (TM 5-9) Approaches for Choosing Served Market (TM 5-10) Defining Served Market: An example (TM 5-11) Served Market Alternatives (TM 5-12) F Segmentation Bases for Customer Segmention (TM 5-13) Choosing Segmentation Criterion (TM 5-14) Conditions for Judging Selected Segments (TM 5-15) Micromarketing (TM 5-16) 210 CHAPTER 5: Focusing on the Customer 5-1 IDENTIFYING MARKETS TO SERVE CHAPTER 5: Focusing on the Customer 211 5-2 CONCEPT OF NEED • Physiological • Safety • Belongingness • Self-esteem • Self-actualization 212 CHAPTER 5: Focusing on the Customer 5-3 MEANING OF MARKET EMERGENCE Customer need gives rise to a market opportunity, and a market emerges To judge the worth of this, market potential becomes important CHAPTER 5: Focusing on the Customer 213 5-4 MARKET POTENTIAL Market potential is the total demand for a product in a given environment 214 CHAPTER 5: Focusing on the Customer 5-5 METHODS OF MEASURING MARKET POTENTIAL • Break-down methods • Build-up methods CHAPTER 5: Focusing on the Customer 215 5-6 DIMENSIONS OF MARKET BOUNDARY • Technology • Customer function • Customer segment • Level of production/distribution 216 CHAPTER 5: Focusing on the Customer 5-7 DETERMINING MARKET BOUNDARIES: AN EXAMPLE PERSONAL FINANCIAL TRANSACTIONS 5-8 CHAPTER 5: Focusing on the Customer 217 MARKET EVOLUTION IN THREE DIMENSIONS Customer Functions Customer Functions Customer Groups Alternative Technologies Customer Groups Alternative Technologies Adoption and Diffusion Extension to New Customer Groups Systematization – Extension to New Customer Functions Customer Functions Customer Groups Alternative Technologies Technological Substitution Extension to New Technologies 218 CHAPTER 5: Focusing on the Customer 5-9 FACTORS INFLUENCING SERVED MARKET DECISION • Perceptions of which product function and technology groupings can best be protected and dominated • Internal resource limitations that force a narrow focus • Cumulative trial-and-error experience in reacting to threats and opportunities • Unusual competencies stemming from access to scarce resources or protected markets CHAPTER 5: Focusing on the Customer 219 5-10 APPROACHES FOR CHOOSING SERVED MARKET I Breadth of Product Line A Specialized in terms of technology, broad range of product uses B Specialized in terms of product uses, multiple technologies C Specialized in a single technology and a narrow range of product uses D Broad range of (related) technologies and uses E Broad vs narrow range of quality/price levels II Types of Customers A Single customer segment B Multiple customer segments Undifferentiated treatment Differentiated treatment III Geographic Scope A Local or regional B National C Multinational IV Level of Production/Distribution A Raw or semi-finished materials or components B Finished products C Wholesale or retail distribution 220 CHAPTER 5: Focusing on the Customer 5-11 DEFINING SERVED MARKET: AN EXAMPLE Consumer Market Industrial Military Gas-driven Snowmobiles Technology Diesel-driven Snowmobiles Electric-driven snowmobiles (a) Technology / Market Matrix Consumer Customer Use Industrial Military Large Customer Size Medium Small (b) Customer Use / Customer Size Matrix Source: Philip Kotler, “Strategic Planning and the Marketing Process,” Business, May-June 1980, pp 6-7 Reprinted by permission of the author CHAPTER 5: Focusing on the Customer 221 5-12 SERVED MARKET ALTERNATIVES • Product/market concentration • Product specialization • Market specialization • Selective specialization • Full coverage 222 CHAPTER 5: Focusing on the Customer 5-13 BASES FOR CUSTOMER SEGMENTATION A Consumer Markets Demographic factors (age, income, sex, etc.) Socioeconomic factors (social class, stage in the family life cycle) Geographic factors Psychological factors (lifestyle, personality traits) Consumption patterns (heavy, moderate, and light users) Perceptual factors (benefit segmentation, perceptual mapping) Brand-loyalty patterns B Industrial Markets End-use segments (identified by SIC code) Product segments (based on technological differences or production economics) Geographic segments (defined by boundaries between countries or by regional differences within them) Common buying factor segments (cut across product/market and geographic segments) Customer size segments CHAPTER 5: Focusing on the Customer 223 5-14 CHOOSING SEGMENTATION CRITERION • Identify potential customers and the nature of their needs • Segment all customers into groups having: – Common requirements – The same value system with respect to the importance of these requirements • Determine the theoretically most efficient means of serving each market segment, making sure that the distribution system selected will differ-entiate each segment from all others with respect to cost and price • Adjust this ideal system to the constraints of the real world: existing commitments, legal restric-tions, practicality, and so forth 224 CHAPTER 5: Focusing on the Customer 5-15 CONDITIONS FOR JUDGING SELECTED SEGMENT • Should be one in which the maximum differential in competitive strategy can be developed • Must be capable of being isolated so that the competitive advantage can be preserved • Must be valid, even though imitated CHAPTER 5: Focusing on the Customer 225 5-16 MICROMARKETING Micromarketing or segment-of-one marketing refers to trimming down the segment to smaller subsegments, even to an individual Micromarketing combines information retrieval and service delivery It requires: • Knowing the customers • Making what they want • Using targeted and new media • Using non-media • Reaching customers in the store • Sharpening promotions • Working with retailers [...]... author CHAPTER 5: Focusing on the Customer 221 5- 12 SERVED MARKET ALTERNATIVES • Product/market concentration • Product specialization • Market specialization • Selective specialization • Full coverage 222 CHAPTER 5: Focusing on the Customer 5- 13 BASES FOR CUSTOMER SEGMENTATION A Consumer Markets 1 2 3 4 5 6 7 Demographic factors (age, income, sex, etc.) Socioeconomic factors (social class, stage in the. .. differences within them) Common buying factor segments (cut across product/market and geographic segments) Customer size segments CHAPTER 5: Focusing on the Customer 223 5- 14 CHOOSING SEGMENTATION CRITERION • Identify potential customers and the nature of their needs • Segment all customers into groups having: – Common requirements – The same value system with respect to the importance of these requirements... Determine the theoretically most efficient means of serving each market segment, making sure that the distribution system selected will differ-entiate each segment from all others with respect to cost and price • Adjust this ideal system to the constraints of the real world: existing commitments, legal restric-tions, practicality, and so forth 224 CHAPTER 5: Focusing on the Customer 5- 15 CONDITIONS FOR... levels II Types of Customers A Single customer segment B Multiple customer segments 1 Undifferentiated treatment 2 Differentiated treatment III Geographic Scope A Local or regional B National C Multinational IV Level of Production/Distribution A Raw or semi-finished materials or components B Finished products C Wholesale or retail distribution 220 CHAPTER 5: Focusing on the Customer 5- 11 DEFINING SERVED... JUDGING SELECTED SEGMENT • Should be one in which the maximum differential in competitive strategy can be developed • Must be capable of being isolated so that the competitive advantage can be preserved • Must be valid, even though imitated CHAPTER 5: Focusing on the Customer 2 25 5-16 MICROMARKETING Micromarketing or segment-of-one marketing refers to trimming down the segment to smaller subsegments,... (lifestyle, personality traits) Consumption patterns (heavy, moderate, and light users) Perceptual factors (benefit segmentation, perceptual mapping) Brand-loyalty patterns B Industrial Markets 1 2 3 4 5 End-use segments (identified by SIC code) Product segments (based on technological differences or production economics) Geographic segments (defined by boundaries between countries or by regional differences... Consumer Market Industrial Military Gas-driven Snowmobiles Technology Diesel-driven Snowmobiles Electric-driven snowmobiles (a) Technology / Market Matrix Consumer Customer Use Industrial Military Large Customer Size Medium Small (b) Customer Use / Customer Size Matrix Source: Philip Kotler, “Strategic Planning and the Marketing Process,” Business, May-June 1980, pp 6-7 Reprinted by permission of the. .. trimming down the segment to smaller subsegments, even to an individual Micromarketing combines information retrieval and service delivery It requires: • Knowing the customers • Making what they want • Using targeted and new media • Using non-media • Reaching customers in the store • Sharpening promotions • Working with retailers ...CHAPTER 5: Focusing on the Customer 219 5- 10 APPROACHES FOR CHOOSING SERVED MARKET I Breadth of Product Line A Specialized in terms of technology, broad range of product uses B Specialized in terms of product uses, multiple ... methods CHAPTER 5: Focusing on the Customer 2 15 5-6 DIMENSIONS OF MARKET BOUNDARY • Technology • Customer function • Customer segment • Level of production/distribution 216 CHAPTER 5: Focusing on the. .. important CHAPTER 5: Focusing on the Customer 213 5- 4 MARKET POTENTIAL Market potential is the total demand for a product in a given environment 214 CHAPTER 5: Focusing on the Customer 5- 5 METHODS...210 CHAPTER 5: Focusing on the Customer 5- 1 IDENTIFYING MARKETS TO SERVE CHAPTER 5: Focusing on the Customer 211 5- 2 CONCEPT OF NEED • Physiological • Safety • Belongingness • Self-esteem