CUSTOMER ANALYSIS

STRATEGIC MARKET SEGMENTATION

WHY MUST WE ANALYZE OUR CUSTOMERS?

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So that we can understand their behavior. We can identify their needs and wants. We can identify their purchasing motives and what

their value most in their purchase. We can scan and indentify their unmet needs and

wants. From all of the above we can identify and execute

market driven strategy which lead to customer satisfaction which later on lead to our firm’s performance.

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Customer Behavior,

Needs&

Wants

Customersatisfaction

Firm’s performance

Our offering/Market driven

strategy

CUSTOMER SATISFACTION MODEL/FRAMEWORK

Customer Expectation:

QualityPerformanceZero DefectDurabilityWarranty

ValueTaste

CleanlinessGood Service

FriendlyEtc.

OurOffering

== CustomerSatisfaction

RepeatPurchase

TellOthers

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Thus, we have to perform customer analysis in order to be able to match our offerings or strategies or our capabilities with the customer requirements/value/needs and wants.

HOW DO WE PERFORM CUSTOMER ANALYSIS?

Craven & Piercy (2009) suggest 6 steps approach.

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SegmentThe market

Valueopportunity

New market space

Matching valueOpportunities and

capabilities

Market targeting

StrategicPositioning

strategy

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Aaker (2003) suggests three (3) steps to do customer analysis:

1) Do market segmentation.

2) Find the motivation (factors that affect the segment’s purchase).

3) Analyze the unmet needs.

SEGMENTING THE MARKET

Segmenting the market is where we break up larger market or customers to smaller groups which share same characteristics.

This smaller group is known as market segment.

WHY MUST WE SEGMENT THE MARKET?

Easy to understand each segment, because each segment will behave in the same manner and respond differently to different strategies.

For example kids needs toys and more attracted to bright colors. Meantime older people prefer peaceful environments and buy vitamins and supplements to maintain their health.

HOW DO WE SEGMENT THE MARKET?

SEGMENTASI PASARAN

Asas segmentasi bagi pengguna individu:

UmurPendapatan

Tahap pendidikanJantina

Status perkahwinanFaedah yang dicari

(economic, taste, performance, dll)Occasions

(Business, leisure)Kadar penggunaan

SEGMENTASI PASARAN

Asas segmentasi bagi pengguna organisasi:

Jenis perniagaanSaiz syarikat

Lokasi(geografi)

Size of order(major or small)

Kriteria pembelian(quality, service, price)

WHAT TOOLS CAN WE USED TO PERFORM MARKET SEGMENTAION?

We can use our own experience to segment our current customers.

We also can use computer database program to data mining our current customers.

For potential customers we can look at published data/information such as industrial report.

CUSTOMER MOTIVATION OR VALUE OPPORTUNITY

After we segment our market then we can actually identify many opportunities such as:

- Shopping motives or benefits of purchase.

- Types of product that they buy.

- Their purchase behavior or decision.

- Who influence them in the purchase.

- What are unmet needs that are still not fulfilled.

- Etc.

MARKET TARGETING

When we break up the market into segments we know that we have several segments to serve.

Once we evaluate the value opportunities and our capabilities we should be able to decide how many segments we can serve.

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The process of choosing how many segments to serve is known as market targeting.

There are criteria that we can use to choose the segments.

CRITERIA FOR CHOOSING MARKET SEGMENTS.

Cost/Benefits (Financially attractive). Actions can be taken to satisfy the segments

(accessible). Each segment quite different from each other

and it response differently to different marketing programs/strategy.

Stability over time.

THE UNMET NEEDS

An unmet needs is where the customer need that is not being met by the existing product offerings (Aaker, 2003).

In short, there is no product in the market yet that can satisfy the customer need or the existing products still cannot satisfy the need of the customers.

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Unmet needs are strategically important because they represent opportunities to the firms to increase market share, break into market, or create a new market.

Firms also can get a pioneer advantages such as establish brand awareness and brand loyalty, can control supplies or distribution and can get strategic location.

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How do we identify the unmet needs???

- We can get it from our customers by conducting customer survey or by observing them using the products.

- We can conduct market research by using individual or group interviews.

- We can ask questions such as:

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- what problems that they encounter when using the products ?

- What is frustrating about it?

- How does it compare with other product experience?

- How can the product be improved?

- etc….

SUMMARY OF THE CHAPTER

Ability to identify customers’ needs and wants and matching it with our offerings is the main focus of customer analysis.

Usually customer analysis start with market segmentation, value opportunity, target marketing and executing strategies.

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