This document discusses analyzing customer strategy and segmentation. It explains that customers are essential to any organization and developing policies to understand and retain customers is important. The main elements of customer strategy are understanding customer characteristics, trends, segmentation, reputation and types. Organizations can become customer-driven by understanding customers, being responsive to their needs, and providing value. Effective customer strategy involves market segmentation to identify groups that respond differently so efforts can be concentrated. Useful segments are distinguishable, relevant to purchasing, sufficiently sized, and reachable.

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Analysing Customer Strategy

2. Analysing Customers
 Customers are essential to any
organisation engaged in corporate
strategy.
 It is important for an organisation both to
understand its customers and to develop
policies that will encourage them to stay
with the organisation.
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3. Analysing Customers (Cont…
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Analysing customer strategy: the main elements
CUSTOMER COMPANY
 Characteristics:
important customers
and loyalty
 Trends
 Segmentation
 Concentration of size
and purchase
 Reputation
 Types of customer:
domestic, industrial,
service
Personal selling
Advertising
Branding
Promotions
 Customer-driven
organisation
 Product or service
 Pricing and value for
money
 Reputation
 Branding
 Differentiation: e.g.
patents, services
 Exceptional service
 Architecture
CHANNELS OF
COMMUNICATION
Sponsorship
Public Relations
Word of mouth
Independent endorsement
The product itself

4. Analysing Customers (Cont…
 Customers buy the organisation’s products or
services and in this way realise the value that
the company has added to its products.
Customers are thus vital to corporate strategy
development. Indeed, the well-known
marketing writer Theodore Levitt is on record
as saying:
 The purpose of an enterprise is to create and
keep a customer.
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5. Analysing Customers (Cont…
 As a deliberate part of their corporate strategy,
some organisations have set out to become
driven by the customer. There are three main
strands to this approach to strategy:
 Understanding the customer;
 Responsiveness by the organisation to customer
needs;
 Provision of real value for money by the
organisation.
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6. Analysing Customers (Cont…
 The essence of such a strategy is that it
goes way beyond the functions of the
organisation that have traditionally had
direct contact with the customer – that is,
marketing and sales.
 The concept is that everyone becomes
involved.
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7. Analysing Customers (Cont…
Some examples of customer-driven
strategy:-
 Understanding the customer:
 Direct customer contact at many levels.
 Widely disseminated research on key
customer findings, e.g. on segmentation.
 Knowledge of why customers choose the
organisation.
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8. Analysing Customers (Cont…
 Responsiveness of the organisation to
customer needs:
 Regularly receive and act upon customer
satisfaction surveys.
 Responsive to customer complaints and
suggestions.
 Track key customer data on company
image.
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9. Analysing Customers (Cont…
 Provision of real value for money
 Monitor quality relevant to the positioning of
products in the market place.
 Conduct comparative surveys of competitive
prices and service offerings.
 Rewards inside the organisation based on
performance with customers.
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10. Analysing Customers (Cont…
 In the development of customer strategy,
customer analysis will often move rapidly to an
examination of market segmentation.
 Market segmentation may be defined as the
identification of specific groups (or segments)
of customers who respond differently from
other groups to competitive strategies.
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11. Analysing Customers (Cont…
 The advantages of identifying a market
segment include:
 Strength in (and possibly dominance of) a
group, even though the overall market is
large. It may be more profitable to have a
large share of a group than a small share of
the main market.
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12. Analysing Customers (Cont…
 Closer matching of customer needs and the
organisation’s resources through targeting
the segment. This will provide sustainable
competitive advantage.
 Concentration of effort on a smaller area, so
that the company’s resources can be
employed more effectively.
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13. Conclusion
 Having established the segments,
strategic customer analysis then
proceeds to identify the usefulness of
each segment. It is not enough for a
segment to be different. There are four
important characteristics of any segment
if it is to be useful in strategic customer
analysis:
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14. Conclusion (Cont…
 Distinguishable. Customers must be
distinguishable so that they can be isolated
in some way.
 Relevant to purchasing. The distinguishing
criteria must relate to differences in market
demand. For example, they may pay higher
prices for higher quality.
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15. Conclusion (Cont…
 Sufficient size. If the segment is too small,
then it would not justify the resources
needed to reach it.
 Reachable. It must be possible to direct the
strategy to that segment.
 It is important to assess the future growth
prospects of the segment.
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16. References
 Corporate Strategy. Lynch, R. (1997)
London: Pitman Publishing.
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Contact Details
Conrad Sebego-Principal Associate
Email: conrad_sebego@yahoo.ca
Mobile: +27(0)82 468-5060
Fax: +27(0)86 613-8318
Address: 13 Baobab Street, Noordwyk, Midrand, 1687
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