FREE online courses on Business Strategies - Business Strategy - Identifying Customers Needs
To survive and achieve strategic
competitiveness in the today's competitive landscape, companies must:
identify who their customers are
determine customer needs or preferences
focus on satisfying the needs of some group
of customers
determine how to compete--select a
strategy--that enables them to satisfy customer needs
The first step is to identify & segment
customers based on differences in needs or preferences. This enables the company
to have a better grasp on what might be important to a set of customers.
|
For consumer markets:
Demographic factors
Socioeconomic factors
Geographic factors
Psychological factors
Consumption patterns
Perceptual factors
|
For Industrial markets:
End-use segments
Product segments
Geographic segments
Common buying factor segments
Customer size segments
|
TABLE: Basis for Customer Segmentation
Once customers have been segmented into
homogenous groups, companies must determine whether or not differences in needs
or preferences among customer groups are significant. If they are not, companies might decide to offer a standard
product to all customers (a standard product is one that appeals to or satisfies
the needs of an average or typical customer).
Companies may choose to ignore significant
differences in customer needs and offer standard products because they believe
that the product cannot easily be customised or differentiated, or that the
company's competencies are best suited to manufacturing standard products.
Companies that offer standard, undifferentiated products typically offer them at
the lowest competitive price as they follow a cost leadership strategy. However,
companies that choose to ignore significant differences in customer needs may
find that they no longer are strategically competitive.
