MP&PCh3

MP&PCh3 - Welcome to Customer Focus Copyright 2007...

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Welcome to Customer Focus Copyright 2007 Peter R. Dickson
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Profit Customer : Product: Ch4 Price: Ch8 Market Environment Economic Legal/Regulation Technology Socio-Cultural Nature Political Marketing Mix
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http://globaledge.msu.edu/ibrd/marketpot.asp Is a great site to learn about global markets
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In this lecture you will learn to think about customers in three dimensions, their profitability, their product usage and service needs (benefits and features sought) and their distribution channel use. A step-by-step method of segmenting customers is presented. You will learn how to increase customer profitability and how to organize to best manage customer segments.
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Birds of a feather flock together. So do customers. This is an important customer focus principle but not the most important. The most important principle in customer focus is that a large pile of money is always preferred to a small pile of money: so focus on your most profitable customers! The challenge in customer focus is to identify the most profitable flocks/segments, their needs and where the flock is heading. The traditional segment criteria on the next slide do not meet this challenge.
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The conventional approach to market segmentation is to choose a criteria presented below for segmenting the market (e.g., age, life-style/life-stage) and then name the segments (e.g., 20-30 year olds, soccer mums) and profile them. Age/life-stage – music, education, medical care Income – luxury goods, financial services Gender – deodorants, Location – bottled water
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Segment Variables for Consumer Markets Geographic: World region, climate zone, trading block, country, country region, state, province, county, city, suburb, city block, town, village Demographic: Age, cohort generation, gender, family size, life- stage, education, income, occupation, nationality, ethnicity, tribal identity, family identity, religion, political party membership. Psychographic: Life-style, passions, interests, hobbies, personality, sociability, social class, values Behavioral: Product usage rate, technology innovator, brand loyalty, channel usage, channel loyalty, product benefits sought, features used, usage occasion characteristics.
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Note that in this traditional approach, the primary criteria for segmenting customers may not be present or future profitability. Instead, profitability competes with other variables as a secondary criteria in focusing on the customer. Customer profitability is an important thought but it is a second thought. This is not good enough.
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D1 . Customer profitability or potential profitability. What are its drivers? D2 . Customer choice drivers and desired features. How do they use the product? What are the features that most determine choice and, hence, are the most important features for a firm to focus on and differentiate its products and models on?
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MP&PCh3 - Welcome to Customer Focus Copyright 2007...

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