Customer Analysis

Prepared by: Chona O. Bautista

Introduction Customers are the lifeblood of any business.

The Product Manager has to know who are his prospective and current customers as well as his competitors. This would help in creating a strategy for each customer segment.

What We Need to Know About Customers Who buys and uses the product What customers buy and how they use it Where customers buy When customers buy How customers choose Why customers choose a product

Who Buys the Product? Initiator (identifies the need) Influencer (has the informational and

preferential input into the decision) Decider (makes final decision through budget authorization) Buyer (makes the actual purchase) User

Who Buys the Product? contd. Consumer market can be divided into

following categories: demographic, socioeconomic, personality, psychographic, behavioral Business market can be segmented according to company size, industry, location and other factors such as operating variables, purchasing approaches, situational, and personal

Who Buys the Product? contd. Other methods for market segmentation

includes cluster, cross-tabular, regression analyses.

Who Buys the Product? contd. Cluster analysis examines the values of the

variables for each respondent and then groups respondents together based upon similarities of their values.

Who Buys the Product? contd. Mobil Corporation applied cluster analysis to

gasoline buyers to tailor different stations to neighborhoods with different profiles and needs. The company identified five segments of gasoline buyers namely the road warriors, true blues, generation F3, homebodies, and price shoppers

Who Buys the Product? contd. Road Warriors high income, middle aged men who

drive 25,000-50,000 miles per year, buy premium gas with a credit card, and buy sandwiches and drinks from the convenience store (16%) True Blues men and women with moderate to high incomes who are loyal to a brand and sometimes to a particular station (16%)

Who Buys the Product? contd. Generation F3 (fuel, food, and fast)

upwardly mobile men and women, half under 25 years old, who are constantly on the go; drive and snack a lot (27%)

Who Buys the Product? contd. Homebodies usually homemakers who

shuttle kids around during the day and buy gas from whatever station is along the way (21%) Price Shoppers not loyal to a brand or station, rarely buy premium (20%)

Who Buys the Product? contd. Most gas companies have targeted the last

group. However, Mobil has emphasized better service and amenities to customers in the first two segments and has been able to charge 2 cents more per gallon than competitors in some markets.

Who Buys the Product? contd. Cross-tabular analysis uses categorical

variables constructed from customer membership in a category. Two variables involved are independent and dependent.

Who Buys the Product? contd.Cross-tabular Analysis for Cranberry Sauce UsageCooking attitude Convenience-oriented Enthusiastic cook Disinterested Decorator Heavy users 81 97 35 45 Medium users 144 115 108 96 Light users 74 45 127 37 Total 299 257 270 178

Who Buys the Product? contd. Regression analysis used when the product

manager can specify explicit relationship between a dependent variable and one or more descriptor variables.

What Customers Buy and How They Use It Benefits what customers get for what they

pay; firm produces features but customers buy benefits Product Assortment the number of brands purchased by customers in the segments Use how customers use the product including when, where, how and with what else they use the product

Where do Customers Buy? An analysis of where customers make purchase

decisions is a critical input into decisions about the channels of distribution. The channels must adapt to changing patterns of customer purchase location. Channels are not fixed because customers migrate to other channels as their information needs and other market conditions change

When do Customers Buy? Refers to the season of the year customers

buy a particular product. For fast food restaurants we talk about breakfast, lunch, merienda, dinner, capital equipment purchase is made near the end of the fiscal year. Customers buy in malls during paydays, bonuses, and when there is a sale.

Why do Customers Prefer a Product? This examines why customers make

purchase decisions, in particular why they choose one product over another. Customer value is what the product is worth to the consumer in terms of economic (net financial benefit), functional (performance), and psychological (brand equity)

Why do Customers Prefer a Product? contd.The following are manifestations of customer value: Price companys assessment of the products value Price sensitivity customers reaction to price changes Complaints and compliments Word of mouth

Why do Customers Prefer a Product? contd.

Margin higher margin indicates more value Peso sales higher market share means high value Competitive activity Repeat purchase rate high loyalty indicates high brand value

How do Customers Choose? Physical characteristics, benefits sought Perceptions Random events like special in-store displays,

promotions, referral, etc.

How do Customers Choose? contd.Consumer decision-making is also dependent on the level of difficulty of the problem they are trying to solve.

Extensive problem solving (EPS) situations are generally found among first time purchasers and with products that are technologically new.

How do Customers Choose? contd.

Limited problem solving (LPS) assumes that the customer understands the basic functioning of the product. It involves comparison of alternatives. Routinized problem solving (RPS) purchases follow a predetermined rule for making decisions.

Customer Analysis Illustration: Energy Bars Who the Customers are: 63.7 percent of volume is from households with greater than $40,000 income 32.4 percent of volume is from households with greater than $60,000 income 72.8 percent of volume is from households with no kids 65.8 percent of volume is from households where the Head has some college education 39.4 percent of volume is from households with the Head under 35 years old

Percent Who Have Eaten Energy Bars in the Last Six MonthsFemale Male 65 and over 55-65 45-54 36-44 25-34 18-24 20% 18% 12% 10% 20% 21% 21% 27%

Customer Analysis Illustration: Energy Bars Customer Segments:

Hard-core Athletes Musclemen Dieters Health Purists Health Conscious and On-the-Go Sports Enthusiasts Specialty Segments Nutrition-seeking Families

Customer Analysis Illustration: Energy Bars (cont) What They Buy: Convenience Taste Texture Health Benefits Performance/Energy Hunger Satisfaction Price (expect to pay $1.00 to $1.50 per bar) Packaging/Buy In Bulk Availability

Customer Analysis Illustration: Energy Bars (cont) What Use For:

Meal Replacements Snacks Athletic Energy Booster

Customer Analysis Illustration: Energy Bars (cont) Where They Buy:

Health Food Stores Outdoor Retailers (e.g., REI) Grocery Stores Drug Stores Convenience Stores Mass Merchandisers Club Stores

Customer Analysis Illustration: Personal Digital Assistants Who the Customers Are:

Primarily upscale mobile professionals Predominately male Analytical and quantitative in nature Well educated Over 21 years of age

PDA Market SegmentsSegmentWide Area Travelers: Globetrotters 10%Age 45-54; mostly male; employed in senior positions Mostly in corporate management and sales, property management and real estate Travel less than Globetrotters or Road Warriors; spend most time visiting employees within their own companies Innovators, have modems installed in their portable PCs High cellular phone usage Overall computer usage lower than for other mobile pros Employ portable PCs least Heaviest fax users (on PCs) High e-mail users Longest owners of cellular phones

Size

Characteristics

Distinctive Attribute

Road Warriors

20%

Corporate Wanderers

12%

PDA Market SegmentsSegmentLocal Area Travelers Collaborators8% Age 25-44 Well educated young professionals, tend to hold advanced degrees Team leaders, project managers Similar profile to Collaborators Least mobile; Youngest segment (many under 35) Seldom work with others Mostly finance and telemarketing Like Hermits but older Diverse collection of technical professionals in small to medium-size companies Run small business Innovators High use of pagers (20% of segment) Not very mobile but need mobile products Not as likely to adopt new products as Collaborators Heavy e-mail users Virtually all are PC users but not portable users Typically connect to corporate network when traveling Highest connect times of any group Highest portable PC purchase intention in next 12 months; shifting to portable PC as primary computer

Size

Characteristics

Distinctive Attribute

Corridor Cruisers Hermits

15% 8%

Solo Practitioners

16%

Small-Site Bosses

11%

Customer Analysis Illustration: PDAs(cont)

What They Buy:

Small size/light weight PC connectivity E-mail communications capability Phone/address book Appointment book/calendar/alarm One-way paging

Customer Analysis Illustration: PDAs(cont)

Where They Buy:

Buy lower-priced, low feature devices from consumer electronics stores and office supply superstores Higher-end PDAs are purchased from computer stores, through mail order, or via the Internet