“Do what you do so well that they will want to see it
again and bring their friends.”
-Walt Disney
“The customers who glide into your arms for a
minimal price discount are the same customers
whodance away with someone else at the slightest
enticement”
-Frederick Reichheld
Customers Differentiated by Loyalty and Profitability) is
one tool. This matrix differentiates among four types of
customers based on profitability and loyalty and spells
out appropriate strategies for each sort of customer:
Low-loyalty/Low-profitability customers
(“strangers”) should lead the firm to avoid, or
at least to carefully reassess “loss–leader”
High-loyalty/low-profitability customers
(“barnacles”) present marketers with a trickier
Situation
Low-loyalty/high-profitability customers (“butterflies”)
buy full-margin items but, for somereason, are not
loyal.
Of course, the best customers of all are highloyalty,
high-profitability “true friends.” These customers
should compel the greatest investment in
communications, customer relationshipmanagement
Consumer Segmentation Variables
-Geographic
-Demographic
-Psychographic
-Behavioral
The overall objective of market segmentation
is to tailor products and services (and the overall
marketing program) to the needs of the individual
segments. To do that profitably, all identified
segments should possess the following characteristics:
The segment should be internally homogeneous.
The segment should be externally heterogeneous
The segment should be accessible.
The segment should be measurable.
The segment should be substantial.
The segment should be actionable.
Market Segmentation
When addressing the market and developing a value
proposition and marketing mix, a
company has basically two options: mass marketing or
segmented marketing.
IMPLICATIONS FOR MARKETING
These experience curve effects occur as cost savings
and are gained through activities such as learning,
technical progress, product and process improvement,
Market Share and Profits
The firm with lower costs can charge a lower price for
its product
STRATEGIC IMPLICATIONS
OF MARKET SHARE
A number of issues emerge, when companies use
market share for their strategic considerations.
Causation and Covariates
As previously mentioned, the causal direction of the
relationship between market share and profitability
is less clear than simple observations might suggest.
Competitor-Oriented Objectives
Another problem with building strategy on market
share objectives is that market share is a competitor
oriented objective
Define the Scope
Most scenario analyses in marketing strategy are
focused on specific product offerings and their target
markets.