External Analysis - Customers

External Analysis - Customers

1. Measuring markets

   • Means-ends approach
     • there are many means to achieve one end From means to ends: product features -> product benefits -> wants -> needs
   • Types of measures
     • metric
       • expressed in terms of numbers - price preference out of 10
     • non metric
       • ordinal , nominal  ex. ranking

2. Market maps

   • locates customers in relationship to particular dimensions (attitudinal, preference)
   • provides with representation of market structure
   • Dimensions
     • perceptions
       • (what customer wants the brand to be
     • preferences
       • what customer thinks about brand)
   • benefits
     • suggests where firm might be located
     • suggests where competitors might be located
     • suggests what are the boundaries of battle field
   • Measurement techniques
     • that we need to create these maps these techniques a4re complementary
     • customer judgement: perceptions, preferences
       • perceptions and preferences which are concerned with what customers think feel as opposed what they do
       • strengths
         • maps areas where brand does not exist
           • since it can ask customer what other thing she might prefer instead
         • handles product concepts
         • more data on minor brands
         • handles hidden attributes-attitudes
         • known map dimensions
       • weaknesses
         • less reliable data, judgements only
         • individual data, problem of aggregation
         • expensive primary data collection
       • answer WHY people buy
       • free response / evoked set
         • c. name all brands in product field, order matters
       • money metric
         • simulation of CRED - see if customer switches when prices are changed
           • difference in price is measure of CRED for a person
       • direct grouping
         • brands are grouped in terms of how similar they are
       • product deletion
         • from favourite brand to next favourite etc
       • decision sequence analysis
         • can be presented as decision tree
         • c. name the sequence of choices of their high involvement purchase decision
           • assumes complex decisions are made in sequence
           • assumes thata at first choices are made between two different things
       • product by use analysis
         • nature of markets is influenced by variety of of uses product has
     • behavioral
       • current consumer behavior purchase usage - what customers do
       • Strentgths
         • actual behavior, more reliable data
         • measures are well understood
         • can employ secondary data
       • Weaknesses
         • existing products and markets only
         • only historical data
         • map dimensions uknown
         • less data on minor brands
       • answer HOW people buy
       • substitutability
         • products that are perceived as substitutes are located in the same region in the map
       • Cross Elasticity of Demand CRED for brand
         • the impact that a change in price has on demand
         • large
           • brands are close substitutes - close on map
         • small
           • brands are not substitutes - apart on map
       • brand switching behavior
         • probability (frequency) of customer switching from one brand to another
         • uses individual behavior
         • when prob is high - brands are substitutes
         • assumes high involvement products
       • multibrand buying
         • low involvement
           • order of purchase is not as important as overall pattern
         • preference is revealed by frequency of purchase
           • key index is number of people who buy two brands - duplication ration
             • if we analyse 2 brands
       • customer portfolios
   • Scaling techniques
     • scaling with predetermined dimensions
       • dimensions are decided in advance
     • scaling with post determined dimensions (non metric scaling)
       • dimensions are decided after purchase
       • problems
         • respondents may use more than 2 dimensions
         • we dont know dimensions
           • ways to label them
             • externally - expensive products are at top of map -> price is dimension
             • combine pre and post scaling t. - non metric first and then predetermined scaling - compare by examining same brand (perceptual scaling)
         • respondents use different dimensions
       • advantages
         • adding ideal brand to the set brands produces both perceptual and preference map
           • respondent compares choices to this ideal brand - what he really prefers
   • Cluster Analysis
     • putting together cases (respondents) which have similar characteristics
     • use when there are lot of dimensions and lot of respondents in the sample