Market Sensing Customer Analysis

What Do We Need to Know About Our Customers?  Everything!! How they make decisions… What influences how they make decisions... Who makes decisions… When they make decisions… Where do they make purchases… What benefits they seek...

Framework for Customer Analysis  Identify the relevant market Which customers or customer segments have needs/wants that can be satisfactorily met with the products or services offered? Tailor customer analysis to the relevant market.

How do we identify the relevant market?  Brainstorm?!  Use market definition to identify what level of demand is most relevant. Primary demand Selective demand

Primary Demand  Demand for product form or class. Broad definition of relevant market. Appropriate when: Top management concerned about long-run growth opportunities. Regulatory/technological changes are expected that may create new opportunities. Economic, demographic, social, or cultural changes are expected to influence product usage. Sales gains/losses are coming increasingly from alternative product forms and classes. Competitors do no exist at product-form level.

Analyzing primary demand involves...  Asking questions in two areas: Buyer identification Willingness-to-buy and ability-to-buy

Selective Demand  Demand for a specific brand or supplier within the relevant market.  Consistent with defining narrow relevant markets.  Associated with: Middle managers. Short-run planning focus. Significant brand or company competition. Stable environment.

Analyzing selective demand involves...  Understanding how customers make choices from among alternative brands within the relevant market. Focus on specific decision processes and determinant attributes.

Expanded 5-W Model for Customer Analysis  Who are our current and potential customers? What are the demographic, geographic, and psychographic characteristics? Who actually purchases our products? Do these purchases differ from the users? Who are the major influencers of the purchase decision? Who is financially responsible for making the purchase?

5-W Model, continued  What do our customers do with our products? In what quantities and in what combinations are products purchased? How do the heavy users of our products differ from the light users? What do customers do with products after consumption? Are customers recycling products or packaging?

5-W model, continued  Where do our customers purchase our products? From what types of intermediaries are products purchased? Does e-commerce have an effect on purchase? Are our customers increasing their purchasing from nonstore outlets such as catalogs, home shopping networks or the Internet?

5-W model, continued  When do our customers purchase our products? Are purchase and consumption seasonal? To what extent do promotional events affect purchase and consumption? Do purchase and consumption vary based on changes in physical/social surroundings, time perceptions, or the purchase task?

5-W model, continued  Why (and how) do our customers select our products? What are the basic features provided by our products relative to competitors’ products? What are the customer needs that are fulfilled by the benefits delivered by our products relative to competitors’ products? How well do our products meet the comprehensive needs of our customers relative to competitors’ products?

How are the needs of our customers expected to change in the future? What methods of payment do our customers use when making a purchase? Are our customers prone to developing close long-term relationships with us and our competitors, or do they buy in a transactional fashion (primarily based on price)?

5-W model, continued  Why do potential customers not purchase our products? What are the basic needs of noncustomers that are not being met by our products? What are the features, benefits, or advantages of competing products that cause noncustomers to choose them over our products?

Are there issues related to distribution, communications, and pricing that cause customers to not purchase our products? What is the potential for converting these noncustomers to our products?

How Do Firms Collect Data?  Qualitative research methods Focus groups Interviews Observation  Quantitative research methods Surveys Mail, phone, on-line, mall intercept Experimental design