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Module 5

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MKT 100
Paul Finlayson

MODULE 5 CUSTOMER FOCUS AND POSITIONING • Market segmentation: dividing the market into groups of customers by their profitability and preferences, then determining what drives each group’s profitability and preferences • Positioning: designing features/functions of your offering to satisfy a customer segment that you have selected to target, called quality function deployment (QFD) • Targeting (or product/service positioning): how to focus efforts to serve customers • Best way to segment markets using criteria’s such as sustainability (segment size) , accessibility (segment can be reached efficiently) and fit (with company capabilities) • Segmentation variables for consumer markets: 1. Geographic – world region, climate zone, weather, country, state, province 2. Demographic – age, life-stage, income, family size, generation, occupation 3. Psychographic – lifestyle, interest, hobbies, personality, social class 4. Behavioural – product consumption, channel usage, brand loyalty, product benefits • First step in customer focus is to identify direct determinants (drivers) of customer profitability: 1. Customer purchases of high margin products and services 2. Sheer quantity of purchases made per year (size of the customer) 3. Low selling costs to the customer, low delivery costs and low after-sales service costs 4. Satisfied customer brings to the company through referrals, recommendations and casual and explicit endorsements of products and services • Second step in customer focus is positioning; invests resources into key drivers of customer profitability to develop profitable competence and competitive advantage BENEFIT-FEATURE SEGMENTATION • Behaviour is motivated by desire (need or want) to move from our current perceived situation to a new physical/intellectual/emotional/spiritual state • Path from current to desired situation not often straight but has to be negotiated around situational realities (lack of time or income, other obligations, moral constraints) • Utility or quality of a product or service is the sum of all benefits it delivers in moving us along paths to our goal • Maslow’s priority of needs theory: physical needs (food, shelter, medical care) as our first priority, emotional (love, affection), and self-actualization (different for everyone) MODULE 5 POSITIONING: FITTING FEATURES TO BENEFITS DESIRED • Customer focus means product positioning and design focus on product quality/benefits desired by target segment • Juran quality planning road map identifies customer needs, what qualities the product or service must have to meet and exceed customer needs, and then deliver such quality • Quality function deployment (QFD): developed by Yoji Akao, is the deployment of quality, technology and resources of the firm to ensure product or service is competitively positioned to target and deliver desired customer function, benefits and satisfaction • Matrix visually represent connection (correlation) between customer needs/benefits and measured product specifications of product/service • Quality function deployment process involves: 1. Identify benefits desired by target segment and measure their importance 2. Obtain segment perceptions of each of the alternatives’ performance on each benefit 3. Weight each segment’s average perception rating of each benefit delivered by its important rating; sum of each alternative 4. Lost product specifications/features and alternatives’ engineering rating on each specification/feature 5. Connect product engineering specification/features to benefits in benefit specification matrix 6. Develop and design new product with new specifications and features that have strong correlation with most important benefits that you can most profitably add 7. Measure and compare the new product’s quality/utility score CHANNEL/CONTACT SEGMENTATION • Customer focus and segmentation around customers’ distribution/communication channel usage is common, efficient and effective • These segments further sub-segmented into different product benefit/feature usage segments to which various products or models in product line are targeted • Channel segmentation innovative in communication and distribution to customers occurring around the global marketplace • Such innovation is changing traditional ways of doing business, distributing products and how to best segment markets by contact/channel • Caters to greater range of customer preferences and demand 3D CUSTOMER FOCUS • Common sense goal of customer segmentation: 1. To design products and services that fit their features and price to the usage situation MODULE 5 2. Identify how customer prefers to interact with the company • Customer relationship services and selling/marketing/service campaigns designed around customer’s contact and channel preferences • Contact and channel preference segmentation crucial in encouraging customers to adopt less costly ways of doing business and/or marketing redesigned services and cross-selling campaigns to unprofitable customers • Three
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