SELECTED CUSTOMER ISSUES

1
SELECTED CUSTOMER ISSUES Who are they? What i
s their relative profitability?
Describe the segments in words so that you can
design programs to suit their heterogeneous
needs What are they consuming? When? How? With
whom? With what else? Always? Everybody?
Can you co-opt them? Solicit their help in
product development and design?
- Lead users and co-developers (3M and
Microsoft) - Service provision through customer
communities - Sales force Recognize their abi
lity to harm you - New Coke - Houston PD - C
ustomer competition (home cooking)
Customer versus consumer - Organizational buy
ing - Family decision making Hard issues
Price, Income and Cross Elasticity
Media habits, persuasion (pictures/words,
Canadian anti-smoking ads, involvement, )
Store Preferences Complexities Interaction
s within customer elements, and across other
boxes (Lunds, Audi, e-drugs)
2
SELECTED COMPETITOR ISSUES Competitor Identif
ication - Cross-price elasticities - Substitut
ability performance, usage, geography
- Technological similarity - SIC (or NAICS) cod
es But, Encyclopaedia Britannica thought its
competition was World Books and Groliers
Need a broader approach - Customer needs foc
us (e.g., U S WEST) defines market similarity
- Resources, not just technology
- SWA and Amtrak
3
BROADENING THE PLAYING FIELD RESOURCE SIMI
LARITY Hi Lo M IV A Kodak a
nd SONY R I (Substitutors) K (INDIREC
T competitors) E Hi Intel and AMD NWA and Hilt
on T (DIRECT competitors) (Complementors)
C O M II III M O Lo NWA and Fed
Ex NWA and Intel N (POTENTIAL competitors)
(NON-competitors)
4
SOME IMPLICATIONS Quadrant I may have a large
number of players, but only some subset is
relevant, the consideration set
- US WEST How do you enter the consideratio
n set, stay there and keep others out?
- Leaders keep others out by not mentioning
their name - Followers get in by comparative ad
vertising to associate their name with the
leader Resource acquisition by potential riva
ls (quadrant III and IV) - E.g., sales force, te
chnology, property, labor, equipment
- Microsoft Quadrant IIIs complementary com
petitors have a peculiar dynamic. What should
Hilton do when Northwest drops prices?