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Prepared by: Chona O. Bautista

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ë 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.
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½  
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ë ½ho buys and uses the product
ë ½hat customers buy and how they use it
ë ½here customers buy
ë ½hen customers buy
ë How customers choose
ë ½hy customers choose a product
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ë Onitiator (identifies the need)
ë Onfluencer (has the informational and
preferential input into the decision)
ë Decider (makes final decision through budget
authorization)
ë Buyer (makes the actual purchase)
ë User
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ë |
 
can be divided into
following categories: demographic, socio-
economic, personality, psychographic,
behavioral
ë !
 
can be segmented
according to company size, industry, location
and other factors such as operating variables,
purchasing approaches, situational, and
personal
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ë Other methods for market segmentation
includes cluster, cross-tabular, regression
analyses.
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ë Cluster analysis examines the values of the
variables for each respondent and then
groups respondents together based upon
similarities of their values.
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ë 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
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ë -oad ½arriors ± 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%)
ë True Blues ± men and women with moderate to high
incomes who are loyal to a brand and sometimes to a
particular station (16%)
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ë åeneration 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%)
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ë Homebodies ± usually homemakers who
shuttle kids around during the day and buy
gas from whatever station is along the way
(21%)
ë Price Shoppers ± not loyal to a brand or
station, rarely buy premium (20%)
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ë 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.
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ë Cross-tabular analysis ± uses categorical
variables constructed from customer
membership in a category. Two variables
involved are independent and dependent.
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Cross-tabular Analysis for Cranberry Sauce Usage

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
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ë -egression analysis ± used when the product
manager can specify explicit relationship
between a dependent variable and one or
more descriptor variables.
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ë !

 ± what customers get for what they
pay; firm produces features but customers
buy benefits
ë 2 
 


± the number of brands
purchased by customers in the segments
ë Œ± how customers use the product
including when, where, how and with what
else they use the product
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ë 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.
ë Channels are not fixed because customers migrate to
other channels as their information needs and other
market conditions change
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ë -efers 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.
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ë This examines why customers make
purchase decisions, in particular why they
choose one product over another.
ë Customer value is what the product is worth
to the consumer in terms of economic (net
financial benefit), functional (performance),
and psychological (brand equity)
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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
‡ ½ord of mouth
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‡ Margin ± higher margin indicates more
value
‡ Peso sales ± higher market share means
high value
‡ Competitive activity
‡ -epeat purchase rate ± high loyalty
indicates high brand value
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ë Physical characteristics, benefits sought
ë Perceptions
ë -andom events like special in-store displays,
promotions, referral, etc.
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Consumer decision-making is also dependent
on the level of difficulty of the problem they
are trying to solve.
ë 

  
 2
 situations
are generally found among first time
purchasers and with products that are
technologically new.
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ë A
   
A2
 assumes that
the customer understands the basic
functioning of the product. Ot involves
comparison of alternatives.
ë - 

   
-2
 purchases
follow a predetermined rule for making
decisions.
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ë ½ho the Customers are:

ë 63.7 percent of volume is from households
with greater than $40,000 income
ë 32.4 percent of volume is from households
with greater than $60,000 income
ë 72.8 percent of volume is from households
with no kids
ë 65.8 percent of volume is from households
where the Head has some college education
ë 39.4 percent of volume is from households
with the Head under 35 years old
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! "# 

Female 20%
Male 18%
65 and over 12%
55-65 10%
45-54 20%
36-44 21%
25-34 21%
18-24 27%
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ë Customer Segments:
ë ³Hard-core Athletes´
ë ³Musclemen´
ë ³Dieters´
ë ³Health Purists´
ë ³Health Conscious and On-the-åo´
ë ³Sports Enthusiasts´
ë ³Specialty Segments´
ë ³Nutrition-seeking Families´
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$ %
ë ½hat They Buy:
ë Convenience
ë Taste
ë Texture
ë Health Benefits
ë Performance/Energy
ë Hunger Satisfaction
ë Price (expect to pay $1.00 to $1.50 per bar)
ë Packaging/Buy On Bulk
ë Availability
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$ %
ë ½hat Use For:
ë Meal -eplacements
ë Snacks
ë Athletic Energy Booster
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$ %
ë ½here They Buy:
ë Health Food Stores
ë Outdoor -etailers (e.g., -EO)
ë årocery Stores
ë Drug Stores
ë Convenience Stores
ë Mass Merchandisers
ë Club Stores
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ë ½ho the Customers Are:
ë Primarily upscale mobile professionals
ë Predominately male
ë Analytical and quantitative in nature
ë ½ell educated
ë Over 21 years of age
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Segment Size Characteristics Distinctive Attribute
½ide Area
Travelers:
ålobetrotters 10% ÷

 
  

 


 
 



 






-oad ½arriors 20% 



  
 

 


  




 
 



 


 
 

  








Corporate 12% ! 


  %

 
½anderers "



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$   

 


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'! 

Segment Size Characteristics Distinctive Attribute
) ÷
! 



 
 8% Age 25-44 Onnovators
½ell educated young professionals, High use of pagers (20% of
tend to hold advanced degrees segment)
Team leaders, project managers Not very mobile but need
mobile products

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


8% Least mobile; Heavy e-mail users
Youngest segment (many under 35) Virtually all are PC users but
Seldom work with others not portable users
Mostly finance and telemarketing
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 16% Like Hermits but older Typically connect to corporate
Diverse collection of technical network when traveling
professionals in small to medium-size Highest connect times of any
companies group
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+
11% -un small business Highest portable PC purchase
intention in next 12 months;
shifting to portable PC as
primary computer
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$ %

ë ½hat They Buy:

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

ë ½here They Buy:

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