Transcript Understanding Customers - Personal World Wide Web Pages

Understanding Customers
Shantanu Dutta
• Objectives
– Customer Orientation
– Use differences in desired benefits by customers to segment
markets
• The example of Levi’s in the men’s wear market
– Was Levi’s customer oriented in this example
Customer Orientation: Perceived Benefits
• Customers buy products for the perceived benefits that the
product offers
• Perception: Process by which an individual selects,
organizes and interprets stimuli into a meaningful picture
of the world.
Customer Orientation: Perceived Benefits contd.
• Perception is a function of :
– The key salient dimensions that exist in the mind of the consumer
when they are making decisions about products/services
• Examples of stimuli that affect perceptions
– physical attributes (e.g, 6.5 pounds for lap top)
– intangible attributes like “brand image” (e.g, Calvin Klein)
– store image (e.g, Neiman Marcus versus T. J. Maxx)
Customer Orientation
• In order to understand customer benefits, it is important to
allow customers to describe the benefits they seek in their own
words
– Example: Portable P.C.
Customer Benefits In
Their Own Words
Engineering Characteristics/
or Solutions
Not heavy to carry in my briefcase
Easily usable on airplanes
Can use coast to coast
Easily carry running through airports
6.5 pounds
8” by 11.5”
5.5 hour battery life
Has a handle
Customer Orientation
• For new technologies it is not possible for customers to be
able to express what they want to see in the products
• Customers can express their feelings in terms of benefits
– e.g., customers never did ask for cellular phones
– However, if you ask them “whether they would like to be able to
call their children at home from their cars when stuck in traffic”
• When you get input from customers, ask them to articulate
benefits they seek for typical situations and allow
customer’s to describe their needs in their own words. Do
not try to impose your technical terms/engineering
attributes on to customers
Customer Orientation
• When you get input from customers also encourage them
to articulate benefits for “edges of the performance
envelope” i.e., what additional benefits would they ideally
like to have if there were no technological or cost
constraints
• What is critical is not only what question is asked but also
how the question is asked
– New Coke failed not because people lied about how much the
liked it, but because Coke’s marketing research did not place
people in the context of having the New Coke with the original
Coke pulled from the market.
Is A Marketing/Customer Orientation Important ?
• Ignore your customers ?
• Basic research such as microprocessor developed at the
Bell Lab or a better understanding of DNA pattern will be
researched often without concern about whether customers
see benefits or not
• Sales and Technology Driven Firms often
-
Focus is on the next product/technology
R&D develops and given to sales to sell
Marketing and sales are the same
Feel that customers do not understand products/ technologies
Is A Marketing/Customer Orientation Important ?
• However to develop the initial concept into actual products
that customers will buy is not possible without a marketing
orientation
• My research findings from the semiconductor industry
– Firms that have a strong interaction between marketing and R&D
tend to have higher profitability
– A strong marketing capability enhances the firm’s R&D capability
to come up with innovative technologies
– Firms with strong R&D get the biggest bang for the buck from a
strong marketing orientation
Levis: Segmentation
• Definition: Segmentation is the process of dividing
potential customer into distinct subsets of customers. Each
segment consists of people who desire similar benefits that
lead them to respond in a similar way to a particular
product/service offering.
– Levis interviewed 2000 men to arrive at a segmentation
scheme in the men’s wear market. This segmentation is
based on their perceived benefits.
• This perceived benefit is influenced by the physical attributes
they would like in the product, the image they want to convey,
where they like to shop, their preference for brand name, price
sensitivity etc.
Levis’ Focus on the Classic Independents In The
Mens Wear Market
• Levis has an initial hypothesis that the classic independents
are more likely to respond to their new concept and thus
commission a focus group study to understand these
buyers
• The objective of the focus group in the Levi study
– Understand the response of the “classics independent
segment” to the idea of Levis introducing separates
Levis’ Segmentation of the Mens Wear Market
• Utilitarian jeans customers:
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•
•
•
they do not care much about clothes
wear jeans for work and play
loyal jeans customers
they constitute 26% of the market
• Trendy casual:
•
•
•
•
buys high fashion brands
loves to be noticed
comes to life after dark
they constitute 19% of the market
• Price shoppers:
• buy primarily on price, look for bargains
• shop in department stores or discount stores
• constitute 6% of the market
Levis’ Segmentation of the Mens Wear Market
• Mainstream traditionalists:
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•
•
•
•
•
love polyester
over 45
conservative politically and in their tastes
love to shop with their wives and value their opinions
shop in department stores
constitute 28% of the market
• Classic Independent:
• they like the freedom to be able adjust clothes during purchase
to get a better fit, looking right is really important to them
• less price sensitive
• do not like the association of Levis name with suits
• though they constitute only 21% of this market they buy 46% of
wool and wool blended clothing
• shop at specialty stores
The Tailored Classic:Perceptual Map And Ideal Benefit
Desired By Segments
Segment Description
Q1
Q2
Q3
Q4
Q5
Mainstream traditional
Classic independent
Utilitarian
Trendy casual
Price shopper
Specialty stores
Q2 ideal
point
Rack
Polyester
(low price)
Q1 ideal
point
Q4 ideal
point
Q3 ideal
point
Q5 ideal
point
Discount stores
Tailored
Wool
(hi price)
Customer Orientation:Understanding And Listening
to Customers
– Was Levis customer focused in this example
• Important to incorporate customer input in the
product development decisions, not allow the
company tastes and biases to influence the decision
Levi’s since the Tailored Classic
Docker’s
slacks
- Market segment: 25-35 yr. old; yuppie, classic, traditional
Loose
jeans
- Market segment:
Slates
(1) 30 yr. olds (gaining weight)
(2) 15 yr. olds (prefer baggy style)
‘suits’
- Market segment: 30-40 yr. old; upper scale, like quality