Chapter 5: Customer Analysis

It is critical to know your customer!

Advanced Marketing

BiMBA 2006

What we need to know

Who buys and uses the product / service What customers buy and how they use it Where customers buy When customers buy How customers choose Why they prefer a product How they respond to marketing programs Will they buy it (again)?
Advanced Marketing BiMBA 2006

Who buys and uses product / service

Initiator (identifies need for product / service) Influencer (provides info or preference) Decider (decides on spending the money) Purchaser (makes the purchase) User

Advanced Marketing

BiMBA 2006

Example: hospital food service

Initiator: dietitian wants better nutrition Influencer: doctors want happy patients Decider: administrator wants low cost Purchaser: agent wants good contract User: patients want edible food

Advanced Marketing

BiMBA 2006

Example: summer vacation

Initiator: child wants fun Influencer: cousin wants place he has found Decider: father wants low cost Purchaser: mother wants happy family User: whole family wants to enjoy themselves

Advanced Marketing

BiMBA 2006

Consumer segments

Geographic Demographic Psychographic Behavioral

Advanced Marketing

BiMBA 2006

Geographic Segments

Region of country: western, central or eastern City, town or village Climate: northern, southern

Advanced Marketing

BiMBA 2006

Demographic Segments

Age category: cohort? Gender: male, female Family life cycle: single, married, young child, older child, empty nest, elderly Income category: lower, middle, upper Occupation: professional, managerial, etc. Education? Religion? Ethnic group? Nationality?
Advanced Marketing BiMBA 2006

Psychographic Segments

AIOs (attitudes, interests and opinions) Lifestyle: swingers, physical fitness buffs, techies, etc. Personality: gregarious, communal, ambitious (not a good predictor of purchase behavior) Social class?

Advanced Marketing

BiMBA 2006

Behavioral

Occasions: regular (e.g., breakfast), special Benefits: quality, service, economy, speed User status: user, non-user, first-time, regular Usage rate: none, medium, heavy Readiness stage: unaware, awareready Attitude toward product: positive, neutral, negative
Advanced Marketing BiMBA 2006

Business segments

Demographics Operating variables Purchasing approaches Situational factors Personal characteristics

Advanced Marketing

BiMBA 2006

Demographics

Type of industry Size of industry Location

Advanced Marketing

BiMBA 2006

Operating Variables

Operating technologies User status: non-users, light, medium, heavy Need for services: few or many

Advanced Marketing

BiMBA 2006

Purchasing variables

Centralized or decentralized purchasing Structure: e.g., financially or engineering driven Relationships: quanxi? Purchase policies: leasing, renting, bids, etc. Criteria: quality, service, price

Advanced Marketing

BiMBA 2006

Situational factors

Urgency: quick, flexible delivery Applications: specific or comprehensive Size of order: small, large, or any

Advanced Marketing

BiMBA 2006

Personal characteristics

Similarity Attitude toward risk Loyalty (relationship management)

Advanced Marketing

BiMBA 2006

What customers buy and how use

Customers buy benefits not features

Hole not drill Delivery not trucking

but dont ignore features

Customers buy unique assortment Customers vary in how products are used

Home, office, picnic Breakfast, snack, dinner Dental floss for sewing up turkeys Coffee, tea or wine with meal T-shirt with jeans
Advanced Marketing BiMBA 2006

Customers vary in how products are combined

Where customers buy

Personal computers

Specialty retailer to discounter Green grocer to super-super market Small bookstore to Amazon Travel agent to Internet
Advanced Marketing BiMBA 2006

Fresh vegetables

Books

Airline tickets

Where customers buy

In France

Pick up wine and bread on way home Get pastry from bakery on Sunday Select vegetables from carts Buy lunch from vendors on street corners
Advanced Marketing BiMBA 2006

In Germany

In India

In US

When customers buy

80% of Dunkin Donut sales in morning 80% of retailers sales before Christmas Outdoor grills bought in May Snow shovels bought in October

Advanced Marketing

BiMBA 2006

How customers choose

Consideration set

Short-term memory: 7 chunks Evaluation of attribute X importance Combined by some decision rule

Multi-attribute model
Compensatory: sum of products Lexicographic: selects only those high on most important Conjunctive: sets minimum cut-offs on each dimension

Perceptual mapping

(Dis)Similarity mapped and axes labeled

Conjoint analysis (trade-off analysis)

Advanced Marketing BiMBA 2006

Why customers prefer a product

Value: benefits compared to costs

Importance of usage situation Effectiveness of product category in situation Relative effectiveness of brand in situation

Based on perceptions not necessarily reality

Advanced Marketing

BiMBA 2006

Sources of customer value

Economic (particularly in B2B) Functional

Service: before, during and after sale Image and feel and status brand equity (later)

Psychological

Advanced Marketing

BiMBA 2006

Signs (benefits!) of Customer Value

Price Price Sensitivity Satisfaction Complaints Word-of-mouth Profit Sales Competitive Activity Repeat purchase
Advanced Marketing BiMBA 2006

Category Value of Yoghurt

Use Importance Competition Relative Category Value Effectiveness REL) Fast Breakfast some fairly high Healthy Snack high very high L0-cal lunch high very high Dinner dessert fairly low
Advanced Marketing some

(IMP X

cereal chips sandwich

BiMBA 2006 ice cream

good very good very good OK

Repurchase intent

Satisfaction

Expectations Perceived performance Gap between Would you buy? How much will you buy of ?
Advanced Marketing BiMBA 2006

Intentions to purchase

Market segments

Basis for selection

Size Identifiable Reachable Respond differently Homogenous Stable

Advanced Marketing BiMBA 2006

Summarize Segments
DESCRIPTORS Who they are What they buy Where they buy When they buy How they buy How they respond to marketing Will they buy in the future? CUSTOMER RELATIONSHIP STAGE Unaware Aware Accepting (considering) Attracted (like it) Active (current customer) Advocating (recommend) Advanced Marketing A B SEGMENT C D

BiMBA 2006