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    Customer Led Strategies

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    Tejas Gosavi
    A customer-led strategy focuses on existing customers and growth through new products sold to these customers. The strategy should be based on customer groupings that generate sustainable profits as identified through a customer account profitability analysis. This establishes which customer segments to invest in for a long-term relationship. To attract and retain valuable long-term customers, companies must create more value than competitors through a balanced exchange. Market segmentation identifies customer wants to match products accordingly, starting with objective then subjective criteria. The role of marketing finance is to ensure segments are financially attractive and have greatest profit potential.

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    Customer Led Strategies

    Uploaded by

    Tejas Gosavi
    112 views8 pages
    A customer-led strategy focuses on existing customers and growth through new products sold to these customers. The strategy should be based on customer groupings that generate sustainable profits as identified through a customer account profitability analysis. This establishes which customer segments to invest in for a long-term relationship. To attract and retain valuable long-term customers, companies must create more value than competitors through a balanced exchange. Market segmentation identifies customer wants to match products accordingly, starting with objective then subjective criteria. The role of marketing finance is to ensure segments are financially attractive and have greatest profit potential.

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    mrktng finance

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    A customer-led strategy focuses on existing customers and growth through new products sold to these customers. The strategy should be based on customer groupings that generate sustainable profits as identified through a customer account profitability analysis. This establishes which customer segments to invest in for a long-term relationship. To attract and retain valuable long-term customers, companies must create more value than competitors through a balanced exchange. Market segmentation identifies customer wants to match products accordingly, starting with objective then subjective criteria. The role of marketing finance is to ensure segments are financially attractive and have greatest profit potential.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    112 views8 pages

    Customer Led Strategies

    Uploaded by

    Tejas Gosavi
    A customer-led strategy focuses on existing customers and growth through new products sold to these customers. The strategy should be based on customer groupings that generate sustainable profits as identified through a customer account profitability analysis. This establishes which customer segments to invest in for a long-term relationship. To attract and retain valuable long-term customers, companies must create more value than competitors through a balanced exchange. Market segmentation identifies customer wants to match products accordingly, starting with objective then subjective criteria. The role of marketing finance is to ensure segments are financially attractive and have greatest profit potential.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 8

    Customer-Led

    Strategies

    Overview
    1. What is a customer led strategy?
    A customer-led strategy is built around the existing customers, and growth is generated by identifying new products which can be
    successfully sold to these customers.
    2. which customers should form the basis for future growth
    base the strategy around those customer groupings from which the company can generate sustainable super profits.
    This requires a strategically oriented, long-term customer account profitability (CAP) analysis to be carried out. This CAP
    analysis should indicate the relative profitability of different groups of customers, but it should not be used as an attempt to
    apportion the net profit of the total business among the different customers.
    The analysis should support important strategic decisions regarding which customer segments should be invested in, etc.

    The idea is to evaluate which types of customers are worth investing in because, over their economic life cycle, the business
    expects to be able to generate a positive net present value from the investment. This type of marketing strategy is commonly
    referred to as relationship marketing, because the business tries to develop (i.e. invests in) a long-term relationship with the
    customer. If this type of marketing strategy is in use, the company needs to tailor its marketing finance system to treat these
    customer relationships as a long-term asset of the business.
    in a relationship marketing-based strategy, attention shifts towards customer retention and development rather than being
    exclusively focused on customer acquisition.
    However, in order to attract and retain these valuable long-term customers, the company must create more value for these
    customers than the competition; any sustainable long-term relationship must be mutually beneficial. the balance between the
    value created for the customer and the value created from the customer should be carefully managed. Customer value can be
    defined as the perceived benefit obtained by the customer less the price paid and other costs (e.g. time, inconvenience) incurred
    in order to own the good or service.
    Longterm customers can also provide indirect benefits and these should also be valued. Referrals and referencability, together

    Market Segmentation
    In any customer-led strategy, the marketing strategy process starts with carrying out a market segmentation exercise. The appropriate differential
    advantages for each of these market segments are identified and the business defines its positioning strategy for those attractive segments that it
    decides to target.

    Ex. Dell Computers


    For most industries, mass customisation equals over-fragmentation of the market and would be financially disastrous. Therefore market
    segmentation is really an aggregation process of grouping together similar customers.
    Marketing finance has an important role in ensuring that each of these redefined market segmentations is financially attractive, and to highlight
    those that have the greatest potential for generating super profits.
    Segmentations can be objective or subjective.
    Objective-demographics, geographic, size etc. , do not help in future strategic planning| Subjective- buying methods, distribution requirements, level
    of importance of the product to the customer
    Softer and more judgemental criteria for segmentation criteria: level and importance of innovation and flexibility, style of key decision-makers (e.g.
    risk-taking professional or risk averse family member), degree of loyalty, stage of development (e.g. high growth versus mature or declining), degree
    of systems compatibility.
    True market segmentation seeks to identify what customers really want and then matches the companys products to these specific requirements.

    For business to consumer industries the range is even greater.


    Objective segmentations clearly include age, gender, socio-demographics (the normal a, b, c1, c2, d, e classifications) but these
    have now been developed into geo-demographics and biographics. Geo-demographics analyses clusters of similar people and
    families living in particular localised areas, so that consumer-focused companies can tailor their distribution of specific products
    to the particular needs of the consumers that are likely to use the shops in the area.
    The more rapidly growing method of segmenting consumer markets is based around psychographics; these relate to life styles,
    personality types and self-concepts.
    There are also still other forms of segmentation that are particularly relevant to certain industries; these include: occasions for
    purchase or use (known as situational context), where some consumers will drink different brands when they are at home than
    they do when out with friends or work colleagues; buying/usage intensity, where some high usage consumers will use more than
    one brand (possibly in distinct situations) so that share of usage may be an important piece of marketing information.

    Introduction
    What is a customer led strategy?
    A customer-led strategy is built around the existing customers, and growth is generated by
    identifying new products which can be successfully sold to these customers.

    Which customers should form the basis for future growth?


    Customer groupings from which the company can generate sustainable super profits
    Long-term customer account profitability (CAP) analysis to be carried out to
    - Indicate the relative profitability of different groups of customers
    - Support strategic decisions regarding which customer segments should be invested in, etc.
    (Should not be used as an attempt to apportion the net profit of the total business among the
    different customers.)

    Relationship Marketing
    Develop a long-term relationship with the customers
    The relationships must be considered as long-term assets by the company
    A shift from customer acquisition to retention and development

    How to attract and retain these valuable long-term customer?


    The company must create more value for these customers than the competition
    The balance between the value created for the customer and from the customer should be
    carefully managed
    Customer value can be defined as the perceived benefit obtained by the customer less the
    price paid and other costs (e.g. time, inconvenience) incurred in order to own the good or
    service
    Long term customers also provide indirect benefits like referrals and referencability thus being
    financially worthwhile despite generating apparently less than required direct returns

    Market segmentation
    In any customer-led strategy, the marketing strategy process starts with carrying out a market
    segmentation exercise
    The positioning strategy is based on the differential advantages of the defined attractive
    Trends
    in marketing
    segments
    it decides to target
    strategies
    From
    One size fits all
    Mass Production
    Through

    Inside out planning

    Product
    Differentiation

    To

    Outside in planning

    Market segmentation

    And Possibly
    Mass customisation
    Individual
    segmentation
    Product differentiation is still not really market
    segmentation as it is bending demand to the
    will of supply in that it is still production-oriented
    True market segmentation seeks to identify what customers really want and then matches
    the companys products to these specific requirements (mass customisation)
    Role of Marketing finance:
    - To ensure these redefined market segments are financially attractive
    - To highlight those that have the greatest potential for generating super profits

    Segmentation can objective or


    subjective
    Objective
    Geographic (eg. regionally)
    Size (eg. Total Sales revenue)
    Organisation type (eg.
    International, national)
    age, gender, sociodemographics

    Subjective
    Buying methods
    Distribution requirements
    Level of importance of the product to the customer
    Level and importance of innovation and flexibility
    Style of key decision-makers (e.g. risk-taking professional
    or risk averse family member)
    Degree of loyalty, stage of development (e.g. high growth
    versus mature or declining)
    Degree of systems compatibility.

    The more rapidly growing method of segmenting consumer markets is based around
    psychographics; these relate to life styles, personality types and self-concepts
    There are also segmentations that are particularly relevant to certain industries:
    Occasions for purchase or use (known as situational context)
    Buying/usage intensity
    True market segmentation seeks to identify what customers really want and then
    matches the companys products to these specific requirements

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