Approaches To Customer Analysis

Approaches to customer Analysis
3rd Chapter
Strategic Marketing Management, MBA-2010, Mekelle University
Chapter-3 Approaches to Customer analysis Factors influencing consumer behavior, buyer behavior, The buying decision process The rise of new consumer and the implications for marketing planning Organizational buying behavior
Learning objectives

A) the factors that influence consumer behavior, B) the structure of the consumer buying decisions process, C) the nature of organizational buying D) How an understanding of buying process can be used in the development of marketing strategy, E) Why relationship marketing is becoming an increasingly important at strategic marketing tool and how a relationship marketing programmed can be developed.
Strategic Marketing Management, MBA-2010, Mekelle University 4
Introduction
Marketing planning is ultimately driven by the marketing planners perception of how and why customers behave as they do,
and how they are likely to respond to the various elements of the marketing mix
Customer Analysis
Customer Motivations
What elements of the product/service do customers value most?
What are the customers objectives? What are they really buying?
How do segments differ in their motivation priorities? What changes are occurring in customer motivation? In customer priorities? Are there any Hot Buttons whose salience and impact on the market are significant and growing?
External and Customer Analysis
Figure 3.2
PPT 3-6
Customer Analysis
Unmet Needs
Why are some customers dissatisfied? Why are some changing brands or suppliers?
What are the severity and incidence of consumer problems? What are the unmet needs that customers can identify? Are there some of which consumers are unaware?
Do these unmet needs represent leverage points for competitors?
Figure 3.2
PPT 3-7
Identifying Unmet Needs
Conduct Market Research Use The Ideal Experience Use Creative Thinking
1.
2.
3.
Separate ideas from evaluation. Approach the problem from different mental and physical perspectives. Have a mechanism to take the most promising ideas and improve them until they turn into potential winners worth trying.
PPT 3-8
Do you have clear understanding?
Numerous organizations fall in to the trap of believing that, Because they deal with their customers on a day to day basis, they have clear understanding of their needs and motivations.
The reality is,
Decline of major market sectors Loss of long standing accounts in the banking sector, 80% of new products launched failed.
10
Contd
Statistics shows that lack of understanding of customers expectations. Leads to failures.
11
What is needed
Regular customer satisfaction assessment. What customers really want, their current levels of satisfaction. And the scope that exists for development of new products and services. Do existing customers do buy new products?
Contd
customer satisfaction current levels of satisfaction. scope for new products and services.
existing customers
13
Sony success
One of the greatest success stories of 1980s was the Sony walkman. its development was brought about as the result of Sony's chairman, Akio Morita, observing that the quality of stereo in planes was poor.
14
Contd
The Sony walkman technology was therefore developed initially for global travelers. Once the technology was available, Sony recognized the products potential for younger and far larger market.
15
Saying
You think you know your customers?

Think again.
16
Dulux solid Emulsion paint
Dulux solid Emulsion paint, which over-came the perennial problem faced by the paint decorator, that of paint spattering over the floor. The advantages of the product were capitalized upon in an intensive advertising campaign and confirmed Duluxs position as the market leader.
17
Marketing strategy of unil
In the majority of markets,

Buyers differ enormously in terms of their buying dynamics/ Buyers differ in Age, income, educational levels, Geographical location
30
Fundamental deference's
Buyers personality,
Lifestyles Expectations
31
Organizational & industrial Makets
Differences are often exhibited in the goals being pursued,
The criteria employed by those involved in the buying process,
32
Contd
The formality of purchasing policies, The constraints that exists in the form of delivery dates and expected performance levels.
33
Coming to terms with buyer behaviour
Irrespective of whether the marketing planner is operating in a customer, industrial or organizational markets,
There are 8 questions on buyer behavior will arise.

The eight questions ?
1. who is in the market and what is the extent of their power with regard to the organization?
2.What do they buy? (product)

3.Why do they buy? (need) 4. Who is involved in the buying? (person)
Contd
5. how do they buy? (mode) 6. when do they buy? (time) 7. Where do they buy? (place) 8. What are the customers , hot and cold spots? (motivating and not motivating )
36
Hot= attracting, cold = not attracting
(Hot spots are those elements of the marketing offer that the customer sees to be particularly important in reassuring and on which the organization delivers. cold spots are those elements that alienate (push away) the customer. An example of this might be poor or inconsistent service.) Ex; Hot cakes
Answer to the 8 questions
the marketing planner should

understanding of the ways: in which buyers are most likely to respond to marketing stimuli.
38
A model of marketing stimuli
39
40
The emergency of new consumer
The development of new value systems Greater emphasis upon value for money
Higher levels of price awareness and price sensitivity. An increased demand for and a willingness to accept more and exciting new products.
Contd
Less technophobia Lower levels of brand and supplier loyalty and development of what might be referred to as customer and brand promiscuity. A greater willingness to experiment with new products, ideas and delivery systems.
42
Contd
A greater willingness to experiment with new products, ideas and delivery systems A generally far more questioning and sceptical attitude towards government, big business and brands.
43
Contd
Higher levels of environmental awarenss Fundamental changes in family structures and relationships The changed and changing roles of men and women
44
Contd
One can see the new consumer to be very different from consumers of the past. 1.Far more demanding 2.Far more discriminating 3.Much less brand loyal 4.Much more willing to complain than customers in the past.
45
Changing roles of men and women
A case study:
Its significance can perhaps be appreciated by the fact that more than 40% of new cars that are bought privately
are now bought by the women;
So manufactures must concentrate on Car designing, Advertising & promotional campaign focusing on women New Approaches to selling
The new consumer and the youth market
There are difference exist between old consumer and new consumer.
Old Vs young
Aged between 4- 19 years, (more apparent)
47
When compared with other customer groups
Far more media literate. Infinity more advertising literate. Much more brand literate, brand .sophisticated and brand discriminating. Far more technologically literate.
Media channels
Larger number of media channels

Larger variety of media than previous generation. i.e., 24 hours television, Satellite broadcasting Huge No of News papers Finely targeted magazines
49
Advertising literacy
More number of advertisements are targeted at consumer groups Brand literacy emerges from brands having been integral part of life styles Ex; youth jeans dress (logos) Information technology at very early age. ex; 4 years on wards children are playing computer games
Unpredictable patterns of buying
The combined effects of (print media +Electronic media ) this emergency of a very different type of young buyer who has very different and often much more unpredictable patterns of buying, Young buyers who is typically aware of the subtleties of brand differences.
51
Age of 4-19
vs
20-55
This age groups represents one of the biggest challenges for marketers, Since their expectations are deferent. Their demands are deferent from previous demands.
52
If marketer fails to plan
if marketers are failed to come to terms with this development, What will happened, (changing environment)
53
Factors influencing consumer behavior

Culture Sub-Culture Social Class
Reference Groups Family Roles and status
Age and life cycle stage Occupation Economic circumstance Life style and personality
Motivation Learning Perception Beliefs and attitudes

The Buyer
54
From the viewpoint of marketing planner
The mix of cultural, social, personal and psychological factors that influence behavior. Largely uncontrollable
They influence buying patterns How they interact and how they influence. ( purchase behavior)
Sight of deference
It is important not to lose sight of the differences that exist between customers and consumers, and implications of these differences for strategies.
56
The significance of culture
The most fundamental of the four influencing forces, This is the logical starting point of any analysis of behavior.
57
Cultural factors
Cultural- culture of the society Since human behavior is very largely the result of our socialization, initially within the family and schools, friendship groups, clubs, and so on
58
What we learn from these groups
Values Perceptions Preferences And behavior patterns
59
Influences on behavior

Achievement Success efficiency, Progress, Material comfort, Practicality. Individualism, Freedom humanitarianism, Youthfulness and practicality
60
Sub Cultures
This broad set of values is then influenced in turn by the subcultures in which we develop
EX; National Groups Religious Groups Racial Groups Geographical areas.

All of which exhibit degrees of differences in ethnic taste, cultural preferences and taboos, attitudes and lifestyle.
Social class
The influence of subculture is subsequently affected by third set of variables; That of social stratification and , In particular, social class
62
Characteristics of a social class
1. people within a particular social class are more similar than those from different social classes. 2. social class is determined by a series of variables, such as occupation, income, education and values, rather than by a single variable. 3.Individuals can move from one social class to another.
Significant degree of influence
The research in recent studies says:
Significant degree of influence in areas such as clothing, cars, leisure pursuits and media prefreces.
64
Social factors
The strategist needs to turn to an examination of the influence exerted by a series of social factors, including reference groups, family, social role and status.
65
Reference groups can be divided into four types.
1.primary membership groups
Which are generally informal and to which individuals belong and within which they interact.
66
Contd
Family, Neighbors, Colleagues Friends
67
nd 2 .
Membership Groups
Which tend more formal than primary groups and within which less interaction typically takes place. Ex: Trade unions Religious groups Professional societies.
68
Contd
Aspirational groups : To which an individual would like to belong.
Dissociative groups: Whose values and behaviour the individual rejects.
69
The types of buying behavior (adopted from Assael. 1987)
70
A sequential model of the buying process
71
A sequential model of the buying process
1.personal sources, such as family, friends, colleagues and neighbors. 2.Public sources, Such as the mass media and consumer organizations- a typical example would be consumers association which? magazine.
72
Cont..d 3. commercial sources, such as advertising, sales staff and brochures 4. Experimental sources, such as handling or trying the product.
73
News papers & Advertisements
The relative importance of each of these varies from person to person and product to product.
The might gain the greatest amount of information from commercial sources such News papers & Advertisements.
Contd
However, the information that is most likely to influence behavior comes from personal sources such as friends.
Each type of source plays a different role in influencing the buying decision.
75
The move from the customers total set to the choice set
76
Contd
By gathering information in this way in this way, consumers develop an awareness, knowledge and understanding. Of the various brands in the market.
77
An obvious task then faced by the marketing STRATEGISTS.
Is how best to ensure that their brand stands out from the others available and is subsequently purchased.
However, strategists need to have a clear understanding of the criteria used by consumers in comparing the products.
several interesting factors
1. the product's attributes, such as its price, performance, quality and styling 2. their relative importance to the consumer 3.the consumer's perception of each brand's image 4. the consumer's utility function for each of the attributes.
79
Contd
1. changing the physical product by, for example, adding features (real real repositioning) 2. Changing beliefs about the product by giving greater emphasis to particular attributes (psychological repositioning ) 3. changing beliefs about competitors' products by comparative advertising and ' knocking copy' ( competitive repositioning).
Cont.d
4. Changing the relative importance of particular attributes - as a product moves through the product life cycle, for example, and consumers become more familiar with the concept and the technology, the emphasis in the advertising can be shifted from say, reassuring consumers about reliability and services backup, to a range of additional uses.
Contd
5. Emphasizing particular product features that previously have been largely ignored 6, Changing buyers' expectations.
82
The shift from the old to the new consumer
*
The traditional consumer, who was deferential and trusted mass marketing and brands
The new consumer who is free-thinking, individualistic, skeptical of figures of authority, including government, politicians, big businesses and brands, and who believes in the narcissism of small differences.
83
Cont.d
in a hypercompetitive world of fragmented markets and independently-minded, well informed individuals, companies that fail to understand and attend to the needs of new consumers are doomed to extinction.
84
Contd
Currently, the average life of major company only rarely exceeds 40 years. In the coming decade, and business that is less than highly successful will find that lifespan reduced by a factor of at least 10.
85
To be prepared is half the victory. - Miguel Cervantes
PPT 3-86
Customer Analysis
Segmentation
Who are the biggest customers? The most profitable? The most attractive potential customers? Do the customers fall into any logical groups based on needs, motivations, or characteristics?
How could the market be segmented into groups that would require a unique business strategy?
Figure 3.2
PPT 3-87
How Should Segments be Defined?
Customer Characteristics Geographic Type of organization Size of firm Lifestyle Sex Age Occupation
Figure 3.3
PPT 3-88
89
Age life cycle
90
91
92
93
Contd
94
95
96
97
98
99
Geographic Segmentation
Geographical segmentation divides markets into different geographical areas. Marketers use geographic segmentation because consumers in different areas may display certain characteristics and behaviors in that particular region,
100
Mcdonalds globally,
sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on.
101
Nokia geographical segmentation
102
103
for example, in London UK certain parts of the West End of London are more affluent then the East End and you will find particular products sold in these regions based on their affluence
104
An area can be divided by the town, the region or the country. If you are an organization working on a global scale you may divide by global regions such as Europe, North America, South America, Asia and Africa.
105
106
107
108
Judging a Segmentation Strategy

1.
2.
3.
Can a competitive offering be developed and implemented that will be appealing to the target segment? Can the appeal of the offering and the subsequent relationship with the target segment be maintained over time despite competitive responses? Is the resulting business from the target segment worthwhile, given the investment required to develop and market an offering tailored to it?
PPT 3-109
How Should Segments be Defined?
Product-Related Approaches User type Usage Benefits sought Price sensitivity Competitor Application Brand loyalty
Figure 3.3
PPT 3-110
The Loyalty Matrix: Priorities

Low Loyalty
Medium Low to Medium
Moderate Loyalty
High
Loyal
Customer
Highest
Non-customer
High
Zero
PPT 3-111
Figure 3.4
Customer Motivation Analysis
Identify Motivations Group and Structure Motivations Assess Motivation Importance Assign Strategic Roles to Motivations
PPT 3-112
Figure 3.6
113
114
115
116
The Customer as Active Partner
Encourage Active Dialogue Mobilize Customer Communities Manage Customer Diversity Co-creating Personalized Experiences
PPT 3-117
Key Learnings
External analysis should influence strategy by identifying opportunities, threats, trends, and strategic uncertainties. The ultimate goal is to improve strategic choices decisions as to where and how to compete. Segmentation (identifying customer groups that can support different competitive strategies) can be based on a variety of customer characteristics, such as benefits sought, customer loyalty, and applications. Customer motivation analysis can provide insights into what assets and competencies are needed to compete, as well as indicate possible SCAs. Unmet needs that represent opportunities (or threats) can be identified by projecting technologies, by accessing lead users, and by systematic creative thinking.
PPT 3-118

Approaches To Customer Analysis

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Approaches to customer Analysis

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

What elements of the product/service do customers value most?

External and Customer Analysis

External and Customer Analysis

Identifying Unmet Needs

External and Customer Analysis

Do you have clear understanding?

Strategic Marketing Management, MBA-2010, Mekelle University

The reality is,

Strategic Marketing Management, MBA-2010, Mekelle University

Statistics shows that lack of understanding of customers expectations. Leads to failures.

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

You think you know your customers?

Strategic Marketing Management, MBA-2010, Mekelle University

Dulux solid Emulsion paint

Marketing strategy of unil

In the majority of markets,

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Organizational & industrial Makets

Differences are often exhibited in the goals being pursued,

The criteria employed by those involved in the buying process,

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Coming to terms with buyer behaviour

There are 8 questions on buyer behavior will arise.

The eight questions ?

2.What do they buy? (product)

Strategic Marketing Management, MBA-2010, Mekelle University

Hot= attracting, cold = not attracting

Answer to the 8 questions

the marketing planner should

Strategic Marketing Management, MBA-2010, Mekelle University

A model of marketing stimuli

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

The emergency of new consumer

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

Changing roles of men and women

The new consumer and the youth market

Aged between 4- 19 years, (more apparent)

Strategic Marketing Management, MBA-2010, Mekelle University

When compared with other customer groups

Larger number of media channels

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University 50

Unpredictable patterns of buying

Strategic Marketing Management, MBA-2010, Mekelle University

Strategic Marketing Management, MBA-2010, Mekelle University

If marketer fails to plan

Strategic Marketing Management, MBA-2010, Mekelle University

Factors influencing consumer behavior

Reference Groups Family Roles and status

Motivation Learning Perception Beliefs and attitudes

From the viewpoint of marketing planner