Customer Analysis

 Know the goals of and steps in customer

research.
 Know the relevance and process of
segmentation.
 Apply basic models in measuring customer
perceptions.
 Know the advantages and limitations of
qualitative and quantitative research.

 Be able to trace secondary sources of

customer data.
 Customer research can be used for different
purposes

 Distinctions are often based upon the type of

research being conducted
◦ Exploratory: Qualitative research

◦ Descriptive: Quantitative research

◦ Causal: Experiments
 Customer analysis can also be subdivided
by the kind of information that is being
sought
◦ Who are our current and potential customers?
◦ What do our customers do with our products
(use situations)?
◦ Where do our customers purchase our
products?
◦ When do our customers purchase our
products?
◦ Why and how do our customers choose our
products (e.g., perception of brands and
products and needs)?
◦ Why do potential customers not purchase our
products?
 There are four usage situations or goals of
the customer analysis

◦ Use for segmentation and choice of the target

market
◦ Use as a basis for strengths and weaknesses
research and positioning decisions
◦ Use to check achieved results and to measure
the effects of marketing mix elements
◦ Use to identify competitors
Goal of customer analysis is information Required data from Type of research
for primary research

Segmentation and choice of target market Who, what, where, Quantitative

when, why
Positioning and strengths and weaknesses Value hierarchy and Qualitative and quantitative
customer
satisfaction: why,
why not?
Analysis of results (control) and research on Why, why not, e.g., Quantitative
effects brand awareness,
brand associations,
customer
satisfaction

Competitor analysis and competitors Who, what, why, why Quantitative

not: chosen brand
 A segment is a group of potential customers
 Researching segments relates to the first
dimension of the marketing strategy
◦ Choosing a target market or targeting
 If the following four conditions are met the
segment maybe considered
◦ Homogeneity/heterogeneity
◦ Sufficient size
◦ Measurable/identifiable
◦ Accessible

 Only quantitative research can provide insight into

these conditions
◦ This type of research involves collecting a large quantity of
data from a large number of people
 Segmentation analysis is divided into three
phases

◦ Collection of the data –

◦ tools such as in-depth interviews and group
discussions with customers followed by structured
questionnaires are used to obtain as much insight
as possible into the motivations, attitudes, and
behavior of the customers
 Phase two is the Analysis of the Data
◦ Forward Segmentation – customers are classified
on the basis of personal characteristics;
subsequently, differences between groups in terms
of product and brand characteristics are examined
◦ Backward segmentation – This process starts with
groups of customers that demonstrate different
behavior in relation to the product or brand;
subsequently a search is made for general
characteristics that can be used to describe the
groups
Category Sub category Variables
Personal (general) 1. Geographic data          Region
         Province, municipality
         Degree of urbanisation
2. Demographic data/ socio-economic          Age
data
         Gender
         Family size
         Family phase
         Religion
         Race
         Income
         Profession
         Education
         Social status
3. Psychographic data          Lifestyle (Activities, Interests, Opinions)

         Personality
         General values
 Category Sub category Variables
Product (category) 1. Benefits          Benefits sought = product-specific
values
         Importance of product
characteristics
(price, quality, taste etc.)
2. Purchasing behaviour          Role in decision-making process
(Initiator, Influencer, Decision Maker)

         Buying process

         Buying/Shopping behaviour
3. Usage behaviour          User status
         Usage situations
         Values in usage situations
  Usage amount (light, medium, heavy
users)
 Category Sub category Variables
Brand 1.Brand awareness and attitude          Towards own brand:
- stage in purchasing process
(awareness, attitude, intention,
purchase)
         Towards competitive brands
- consideration set
2. Brand associations (perceptions)          Own brand
- strength
- relevance
- uniqueness

         Competitors’ brands

3. Brand loyalty          Behaviour
- customer share (share of wallet)
- switching behaviour
         Emotional
- recommendation: ambassador, fan
 Category
Demographic
Usage variables
Purchasing approach
Situation-related factors
Personal characteristics
Variables
Industry sector
Company size
Location
Technology (required technology at the customer level)
Usage status (heavy user, light user, none)
Customer capacities (need for service)
Purchasing organization (centralized, decentralized)
Power structure (technically oriented, financial, etc.)
Types of relationships (strong, weak)
Purchasing policy (leasing, service, systems, etc.)
Purchasing criteria (quality, service, price, etc.)
Urgency of delivery
Applications of delivered product
Size of order
Degree of similarity to supplier
 Behavior analysis is often based on
differences in the importance customers
attach to certain product attributes or
benefits
◦ This form of segmentation is also called benefit
segmentation
◦ Typically two analysis techniques are used for
benefit segmentation
 Factor analysis is used to reduce the data set to a smaller
number of factors
 Cluster analysis is then used to create segments that are as
differentiated from one another as possible
 The third phase of the segmentation
research process is the description of
segments
◦ a profile is created for each discovered segment,
based on the scores for the examined variables
◦ The focus is on identifying the most
distinguishing characteristics of the segments,
and for identification purposes, each segment is
given a name
◦ Since markets change, the segmentation phases
should be repeated regularly
 Before research on customer wishes can be
established it is important to have an idea of
what customer wishes are

 Three models can be utilized here

◦ Multi-attribute attitude model
◦ Chain of meanings
◦ SERVQUAL model
 These should be viewed as conceptual
models
 This model shows that the value a customer extracts
from a product is determined by the importance that
customer attaches to certain product characteristics
and the scores of brands on these characteristics
 As the model name suggests, the scores on many
characteristics lead to the total judgment or attitude
 This model states
that it is important
to know the
motivation of
people to buy
products
 The model is a
combination of two
other models:
◦ Goal-means chain of
meanings
◦ Customer value
model
 This model is used to measure service quality
 The central issue in using this model is that
the quality of service is defined as the
difference between the expected service and
the realized service
 The SERVQUAL model has identified a number
of dimensions of service quality:
◦ Reliability: the extent to which the provider keeps his
or her promises
◦ Security: how sure a customer can be that his or her
expectations are being met (trust in the provider)
◦ Tangibility: all tangible items of a service, such as
leaflets and the atmosphere in a bank
◦ Empathy: the degree to which the provider puts itself
in the position of the customer
◦ Responsiveness: willingness of the provider to listen
to the customer and do what the customer wants
 Measurement of service quality can be done
by measuring the expectation of the
customer as well as the realization

◦ Expectation is measured as what the customer

would ideally want apart from the specific
provider

◦ The wishes of the customers are never stable and

that customers constantly have to be ‘taught’
what they can and cannot expect
 Determination of target audiences
 Determination of possible values per target

audience
◦ Usage situations: Where and when is the product
category used?
◦ General values per usage situation: What is
important in that situation, and why are you in
that situation?
◦ Product-specific values per usage situation: What
is important in those cases in the product
category?
 Determination of the importance of values
◦ Importance of general values (general needs):
◦ Importance of product-specific values (product-
specific needs): How important is…?
 The importance a customer attaches to a
certain value makes a statement about that
customer’s needs
 A competitive advantage can be obtained

from a characteristic that customers

consider important
 One method for researching the importance
of customer values is to ask directly about
the importance utilizing a rating scale

◦ There are two disadvantages to this method

 Customers often indicate that the consider everything
important
 Customers have a tendency to think concretely:
tangible characteristics are often mentioned as being
important but in reality the abstract images are just as
important
 A second method for researching the
importance of customer values is the
conjoint analysis
◦ This method is used to define the importance of
product characteristics through a deductive
reasoning process
 The advantages of conjoint analysis is that:
◦ The choice process of customers is imitated and
◦ The respondents have to consider implicitly which
characteristics they consider the most important
 Performance of brands regarding values and
distinctiveness
◦ Satisfaction: perceptions of brand performances,
reasons why or why not
◦ Scores and distinctiveness regarding general
values: To what extent is brand X a brand that
possesses the abstract characteristic . . . ? To
what extent is that a distinguishing feature?
◦ Scores and distinctiveness regarding product-
specific values: To what extent is brand X a brand
that possesses the tangible characteristic . . . ? To
what extent is that a distinguishing feature?
 The measurement of brand associations can
be done through both qualitative and
quantitative methods
◦ Qualitative methods include
 The direct association method: With what do you
associate brand A?
 Projective techniques: indirect methods such as indicating
matching photographs or describing the brand as a
person with a character
◦ A goal of qualitative analysis is to gain insight
into the satisfaction of consumers and especially
into the underlying causes of the extent of that
satisfaction
 Indirect quantitative methods for measuring
brand perceptions are used for perceptual
mapping
◦ Perceptual maps are, especially in the case of
positioning and communication decisions,
important and easily understood research methods
◦ In this technique, brands are placed in a coordinate
system in which the axes represent, for example,
conservative/dynamic, tough/feminine, or other
brand personality characteristics
 A valid method for obtaining such perceptual
maps is the technique of multidimensional
scaling (MDS)
◦ In MDS, brands, characteristics, and ideal points
(wishes) of users are conveniently arranged in one
figure through the use of a statistical method that
employs simple questions for respondents to
answer
 Expensive
Labadi
La Palm

Tulip Alisa

Novotel
Coco nut Groove Moderate Service
High Service

Maple Leaf

Less Expensive
 MDS has several important advantages as a
research method
◦ The results of MDS (graphic representations of the
positions of brands) are easily understood, making it an
excellent communication tool for positioning decisions
◦ MDS makes it possible to use more than two dimensions.
The dimensions on which people judge a brand are placed
in the figure as vectors
◦ The positions of the brands in the coordinate system space
are “hard”; that is, they have been calculated according to a
quantitative method
◦ The method of data collection in MDS is true to life:
Respondents are asked to compare brands as a whole with
each other just as they do in a shop, and only afterward are
the characteristics placed in the figure
 This is a simple tool that graphically
represents both tangible and abstract brand
characteristics conveniently
 Conducting measurement research creates
insight into the strengths and weaknesses of
a brand

◦ It is important to distinguish between customers

and potential customers
 Potential customers often perceive a brand differently
than customers
 Having a direct insight into what customers will
consider important in the future is more important
than knowing what customers consider important
currently
 The following steps should be taken to arrive at a
prognoses for future customer values
◦ Aside from customer research, consult sources about
trends in customer wishes such as sellers, researchers,
consultants, and other experts
◦ Analyze the tracking data and attempt to link any changes
in customer values to factors such as economic fluctuations
and social-cultural developments
◦ Discuss the data from the customer analysis, the other
sources, and the company’s self-analysis in brainstorming
sessions to arrive at prognoses collectively
Primary data are data that the organization
collects by itself through fieldwork
 In doing primary research the following
choices have to be made:

◦ Choice of the target audience (who?)

◦ Desired information and choice of quantitative or
qualitative research (what?)
◦ Structure (how?):
 Data collection
 Sampling
 Method of questioning
 Quantitative Research is  Qualitative Research
performed on a large consists of personal
number of people interviews with individuals
 This creates ‘harder’  This type of research seeks
conclusions to provide answers to:
 Differences between ◦ Strategic market description
subgroups can be made ◦ Consumer decision-making
visible behavior
 This type of research is ◦ Customer satisfaction
more factual in nature ◦ Communication research
◦ Idea generation
◦ Development of products
and concepts
◦ Development of a
quantitative questionnaire.
 Customer research always
starts with qualitative
research
◦ An inventory of potential
problems is obtained and
information is collected
 Quantitative research may
follow to gain insight into
whether or not goals were
achieved
 This maybe followed by a
deeper qualitative analysis
to determine the cause or
causes of the problems
 In many countries market research agencies
collect quantitative data that are very
important in the context of consumer
marketing
 Two types of data sets (and agencies) can be

distinguished:
◦ Agencies that collect quantitative data, including
consumer purchasing behavior.
◦ Agencies that are involved in collecting data on
households (such as prosperity and lifestyle) for
direct-marketing objectives.
 The databases of Nielsen, IRI and GfK may be
used for markets of fast-moving consumer
goods
 These databases contain weekly data regarding
sales, price, distribution, and promotions
 Customer Analysis – Mainly conducted via market
research ( primary and secondary research)

 Main objectives of customer analysis:

 Identifies segments;

 Marketing position ( via values hierarchy research);

 information for measuring performance (customer

satisfaction, brand performance etc;

 Insights into customer perception of competition.

 Chapter Five Industry Analysis
◦ Know the differences between and the goals of an
industry analysis and a competitor analysis
◦ Know the components of an industry analysis
◦ Realize that a Porter analysis is only part of an
industry analysis, which in turn is part of an
external analysis
◦ Be able to perform a macro environmental
analysis for a company
◦ Know how to assess the attractiveness of a
market