Market Sensing

1
Market Sensing

• Customer Analysis

2
What Do We Need to Know About Our Customers?

• Everything!!
• 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...

3
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.

4
How do we identify the relevant market?

• Brainstorm?!
• Use market definition to identify what level of
  demand is most relevant.
• Primary demand
• Selective demand

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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.

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Analyzing primary demand involves...

• Asking questions in two areas
• Buyer identification
• Willingness-to-buy and ability-to-buy

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Selective Demand

• Demand for a specific brand or supplier within
  the relevant market.
• Consistent with defining narrow relevant markets.
• Associated with
• Middle managers.
• Short-run planning focus.
• Significant brand or company competition.
• Stable environment.

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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.

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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?

10
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?

11
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?

12
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?

13
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?

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• 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)?

15
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?

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• 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?

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How Do Firms Collect Data?

• Qualitative research methods
• Focus groups
• Interviews
• Observation
• Quantitative research methods
• Surveys
• Mail, phone, on-line, mall intercept
• Experimental design