CHAPTER
Customer Analysis
5
Meaning of a Customer: - Current and Potential
- Immediate and Final
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Major Topics
1. Review of Major Issues from BA390*
2. An Approach for Customer Analysis*
3. Long-term Value of a Customer
4. Market Segmentation
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Major Topics for Consumer Behavior
1. Consumer Decision Process
2. Types of Buying Decisions
3. Influences on the Rate of
New Product Adoption (RCCDC)
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What We Need to Know about Current and
Potential Customers
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Who buys and uses the product?
What customers buy and how they use it?
Where customers buy?
When customers buy?
How customers choose?
Why they prefer a product over others?
How they respond to marketing programs?
Will they buy it (again)?
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1. Who Buys and Uses the Product
1. Buyer versus Influencer and User
2. Describing Consumers
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Demographic
Socioeconomic
Personality
Psychographics and values
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Buying Roles and Needs/Benefits Sought
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Who Buys and Uses the Product (Cont’d)
3. Describing Business Markets
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Demographic
Operating variables
Purchasing approaches
Situational factors
Personal characteristics
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2. What Customers Buy and How they Use it
 People buy Benefits, not Products
 Product Assortment (RFM): Grocery Products
 Recency
 Frequency
 Monetary Value
 Product Use
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3. Where and When Customers Buy
 Where issue  Desired Service Output in
Shopping
 When issue  Seasonality
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4. How Customers Choose
Multiattribute Model Questions
1. Which attributes do customers use to define a
product?
2. What are the perceptions of the products on the
attributes?*
3. What are the importance weights?
4. What decision rule is used to combine the
information?
1. Compensatory
2. Noncompensatory
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Bank Perceptual Map
B•
A•
Courteous
personnel
C•
E•
D•
Convenient
ATM locations
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5. Why they prefer a product/brand
1. Three elements of a customer value of a brand
 Importance of the usage situation
 Effectiveness of the product category in the situation
 Relative effectiveness of the brand in the situation
2. Sources of Customer Value
 Economic
 Functional
 Psychological: Brand Equity
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Measuring Brand Equity
1. Awareness.
2. Associations.
3. Attitude.
4. Attachment..
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[Manifestations of] Customer Value
• Price.
• Price sensitivity.
• Level of Satisfaction.
• Complaints and compliments.
• Word-of-mouth.*
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[Manifestations of] Customer Value (cont’d).
• Margin/profit contribution.
• Dollar sales.
• Repeat purchase rate.
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Assessing the Value of the Product Category
1.
Determine the uses of the product
2.
Estimate the importance of the uses
3.
List competing products for the uses
4.
Determine the relative effectiveness of the
product category in each usage situation
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Personal Computer Product Category Value
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Assessing the Value of the Brand/Product
• Direct Ratings
• Constant Sum Ratings
• Graded Pair Comparison*
• Conjoint Analysis
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Paired Comparison Example: Soft Drink Preference
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Will they buy it (again)?
• Satisfaction
• Intention
• Behavior
• Loyalty: ex) Casino Study
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Methods for market segmentation
 Descriptive
Purpose
Cluster Analysis
Tabular Analysis*
 Prescriptive Purpose
Regression Analysis: Individual-based
Latent Class Analysis: Segment-based
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Cluster Analysis Illustration
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Raw Data: Cranberry Sauce Usage
Cooking Attitude
Convenience
oriented
Heavy Medium Light
Users users
users
Total
(row marginal)
81
144
74
299
Enthusiastic cook
97
115
45
257
Disinterested
35
108
127
270
Decorator
Column total
(marginal)
45
258
96
463
37
283
178
1004
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Cranberry Sauce Usage Percentages
Cooking
Attitude
Heavy Users
Medium Users
Light Users
Convenience
oriented
Row %
Column %
27%
31
48%
31
25%
26
Enthusiastic cook
Row %
Column %
38
38
45
25
18
16
Disinterested
Row %
Column %
13
14
40
23
47
45
Decorator
Row %
Column %
25
17
54
21
21
13
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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
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Percent Who Have Eaten Energy Bars in the Last Six
Months
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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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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
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Customer Analysis Illustration: Energy Bars (cont)
 What
Use For:
 Meal
Replacements
 Snacks
 Athletic Energy Booster
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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
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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”

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