Wednesday, November 10, 2010

CUSTOMER ANALYSIS

The important question for a firm is "Who are our customers?"

* Existing
* Potential
 
Hence, the first logical step in strategic market planning is to analyse the customer, i.e., to understand customer motivation, their unmet needs and how they can be segmented.

>> Customer Segmentation
      * Who are the biggest customers?
      * Who are the most profitable customers?
      * Who are the potential customers?
       * How could we segment the customers into unique strategic business groups?

 
>> Customer Motivation
        * What benefit offered by the product/service do customers value most?
        * What are the customer's actual buying objectives, i.e., what needs do they want to satisfy?
        * What are the customer's motivational priorities?
        * What changes are taking place in the customer's taste and preferences? Why?

Customer motivation analysis starts with the task of identifying motivations for a given segment and then to determine the relative importance of the motivations. Ultimately we have to identify the motivations that will play a role in defining the strategy of the business.

 
>> Price Sensitivity of Customers
There is a well-defined breakdown between those customers who are first concerned about price and others who are willing to pay extra for higher quality, better features and superior performance. Automobiles span the spectrum from Maruti to Mercedes. Airline service is partitioned into first class, business class and economy class. In each case, the segment dictates the strategy.


>> Unmet Needs
An unmet need is a customer need that is not being met by the existing product offering. Unmet needs are strategically important because they represent opportunities for firms to increase their market share, break into a market, or create new markets. Sometimes customers may not be aware of their unmet needs because they are so accustomed to the implicit limitation of the existing equipment. 

Unmet needs that are not obvious may be more difficult to identify, but they can also represent a greater opportunity for an aggressive business because there will be little pressure on the established firms to be responsive. The key is to stretch the technology or apply new technologies in order to expose unmet needs. For example Palm-top computers, blood-less operation, and commercial space travel are some of the examples of once unmet needs that have been met.