Download - Customer Analysis

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, socio-economic, 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


Other methods for market segmentation includes cluster, cross-tabular, regression analyses.


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


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


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%)


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%)


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%)


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.


Cross-tabular analysis – uses categorical variables constructed from customer membership in a category. Two variables involved are independent and dependent.


Cooking attitude Heavy users Medium users Light users Total

Convenience-oriented 81 144 74 299

Enthusiastic cook 97 115 45 257

Disinterested 35 108 127 270

Decorator 45 96 37 178

Cross-tabular Analysis for Cranberry Sauce Usage


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 – company’s assessment of the

product’s 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 Months

Female 20%

Male 18%

65 and over 12%

55-65 10%

45-54 20%

36-44 21%

25-34 21%

18-24 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


What Use For: Meal Replacements Snacks Athletic Energy Booster


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 SegmentsSegment Size Characteristics Distinctive Attribute

Wide Area Wide Area Travelers:Travelers:

Globetrotters 10% Age 45-54; mostly male; employed in senior positions

Innovators, have modems installed in their portable PCs

Road Warriors 20% Mostly in corporate management and sales, property management and real estate

High cellular phone usage

Overall computer usage lower than for other mobile pros

Corporate Wanderers

12% Travel less than Globetrotters or Road Warriors; spend most time visiting employees within their own companies

Employ portable PCs least

Heaviest fax users (on PCs)

High e-mail users

Longest owners of cellular phones

PDA Market Segments

Segment Size Characteristics Distinctive Attribute

Local Area TravelersLocal Area Travelers

Collaborators 8% Age 25-44

Well educated young professionals, tend to hold advanced degrees

Team leaders, project managers

Innovators

High use of pagers (20% of segment)

Not very mobile but need mobile products

Corridor Cruisers 15% Similar profile to Collaborators Not as likely to adopt new products as Collaborators

Hermits 8% Least mobile;

Youngest segment (many under 35)

Seldom work with others

Mostly finance and telemarketing

Heavy e-mail users

Virtually all are PC users but not portable users

Solo Practitioners 16% Like Hermits but older

Diverse collection of technical professionals in small to medium-size companies

Typically connect to corporate network when traveling

Highest connect times of any group

Small-Site Bosses 11% Run small business Highest portable PC purchase intention in next 12 months; shifting to portable PC as primary computer

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