Market Sensing
Customer Analysis
What Do We Need to Know
About Our Customers?
Everything!!
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How they make decisions…
What influences how they make decisions...
Who makes decisions…
When they make decisions…
Where do they make purchases…
What benefits they seek...
Framework for
Customer Analysis
Identify the relevant market
• Which customers or customer segments have
needs/wants that can be satisfactorily met
with the products or services offered?
• Tailor customer analysis to the relevant
market.
How do we identify the
relevant market?
Brainstorm?!
Use market definition to identify what level
of demand is most relevant.
• Primary demand
• Selective demand
Primary Demand
Demand for product form or class.
• Broad definition of relevant market.
• Appropriate when:
• Top management concerned about long-run
growth opportunities.
• Regulatory/technological changes are expected
that may create new opportunities.
• Economic, demographic, social, or cultural
changes are expected to influence product usage.
• Sales gains/losses are coming increasingly from
alternative product forms and classes.
• Competitors do no exist at product-form level.
Analyzing primary demand
involves...
Asking questions in two areas:
• Buyer identification
• Willingness-to-buy and ability-to-buy
Selective Demand
Demand for a specific brand or supplier
within the relevant market.
Consistent with defining narrow relevant
markets.
Associated with:
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Middle managers.
Short-run planning focus.
Significant brand or company competition.
Stable environment.
Analyzing selective
demand involves...
Understanding how customers make
choices from among alternative brands
within the relevant market.
• Focus on specific decision processes and
determinant attributes.
Expanded 5-W Model for
Customer Analysis
Who are our current and potential customers?
• What are the demographic, geographic, and
psychographic characteristics?
• Who actually purchases our products?
• Do these purchases differ from the users?
• Who are the major influencers of the purchase
decision?
• Who is financially responsible for making the
purchase?
5-W Model, continued
What do our customers do with our products?
• In what quantities and in what combinations are
products purchased?
• How do the heavy users of our products differ from
the light users?
• What do customers do with products after
consumption?
• Are customers recycling products or packaging?
5-W model, continued
Where do our customers purchase our
products?
• From what types of intermediaries are products
purchased?
• Does e-commerce have an effect on purchase?
• Are our customers increasing their purchasing from
nonstore outlets such as catalogs, home shopping
networks or the Internet?
5-W model, continued
When do our customers purchase our
products?
• Are purchase and consumption seasonal?
• To what extent do promotional events affect
purchase and consumption?
• Do purchase and consumption vary based on
changes in physical/social surroundings, time
perceptions, or the purchase task?
5-W model, continued
Why (and how) do our customers select
our products?
• What are the basic features provided by our
products relative to competitors’ products?
• What are the customer needs that are fulfilled
by the benefits delivered by our products
relative to competitors’ products?
• How well do our products meet the
comprehensive needs of our customers
relative to competitors’ products?
• How are the needs of our customers
expected to change in the future?
• What methods of payment do our customers
use when making a purchase?
• Are our customers prone to developing close
long-term relationships with us and our
competitors, or do they buy in a transactional
fashion (primarily based on price)?
5-W model, continued
Why do potential customers not purchase
our products?
• What are the basic needs of noncustomers
that are not being met by our products?
• What are the features, benefits, or
advantages of competing products that cause
noncustomers to choose them over our
products?
• Are there issues related to distribution,
communications, and pricing that cause
customers to not purchase our products?
• What is the potential for converting these
noncustomers to our products?
How Do Firms Collect
Data?
Qualitative research methods
• Focus groups
• Interviews
• Observation
Quantitative research methods
• Surveys
• Mail, phone, on-line, mall intercept
• Experimental design