Scribd
Upload
18 views17 pages

Marketing Channels - Chapter 2

Uploaded by

exportteam.alexpanel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
18 views17 pages

Marketing Channels - Chapter 2

Uploaded by

exportteam.alexpanel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 17

Chapter 2:

End User analysis


Learning Objectives
After Completing this chapter, Learner will be acquainted by:
The Importance of Segmentation
End-User Segmentation Criteria: Service Outputs
Segmenting End-Users by Service Output
Targeting End-User Segments
Importance of end users
Developing a marketing channel strategy must start with the end-
users
It is the end-user who holds the “power of the purchase”
We need to know the nature of end-users’ demands
The most useful insights for channel design are not about what
end-users want to consume but rather how they want to buy and
use the products or services being purchased
Why Segmentation?
End-users have varying preferences and demands for service outputs
Grouping end-users by their service output demands help us define
potential target market segments and then design specific marketing
channel and supply chain solutions for each segment

Who is/are potential target segment/s?

Service Output: The elements that describe how the product


or service can be bought
Service output segmentation criteria
All else being equal (e.g., price, physical product attributes), end-users
prefer a marketing channel that provides more service outputs
Six categories:
1. Bulk breaking
2. Spatial convenience
3. Waiting or delivery time
4. Product variety
5. Customer service
6. Information sharing
Service output segmentation criteria
Bulk breaking
End-user’s ability to buy a desired (possibly small) number of units
Buying in small lots reduces the need for end-users to carry unnecessary
inventory
The more bulk breaking the channel does, the smaller the lots size end-users
can buy, and the higher is the channel’s service output level
Leads the end-user to be more willing to pay a higher price that covers the costs
to the channel of providing small lot sizes
Examples
When renting a vacation house, the family likely prefers a small bottle of
laundry detergent
Willing to pay a considerably higher price per ounce for the convenience of
buying and using a smaller bottle of detergent when on vacation
The more an end-user consumes, the more utility he or she attains
Goods such as cookies or soda, firms can profit more from selling smaller
packages when the general consumer finds a small portion more acceptable
Service output segmentation criteria
Spatial convenience
Provided by market decentralization in wholesale and/or retail outlets
Increases consumers’ satisfaction by reducing transportation requirements
and search costs

Examples

Examples: Community shopping centers, neighborhood supermarkets,


convenience stores, vending machines, and gas stations
The business PC buyer appreciates that CDW delivers PCs directly to the place
of business, as well as coming to pick up computers that need service
Service output segmentation criteria
Waiting time
Time that the end-user must wait between ordering and receiving the goods or
post-sale service
The longer end-users are willing to wait, the more compensation (i.e., lower
prices) they receive, whereas quick delivery is associated with a higher price paid
The intensity of demand for quick delivery varies for the purchase of original
equipment (for which it may be lower) versus the purchase of post-sales service
(for which it is frequently very high)

Example

A hospital purchases an expensive ultrasound machine. Unlikely to be willing to


pay a higher price for quick delivery of the machine itself. However, if the
ultrasound machine breaks down, the demand for quick repair service may be
very intense. Willing to pay a price premium for a service contract that promises
speedy service
Service output segmentation criteria
Product variety and assortment
Variety : generically different classes of goods that constitute the product
offering, namely, the breadth of product lines
Assortment: the depth of product brands or models offered within each generic
product category
It is critical which assortment of goods is offered to each target consumer

Could you give examples?


Service output segmentation criteria
Customer service
All aspects of easing the shopping and purchase process for end-users as they
interact with commercial suppliers (for business-to-business purchases) or
retailers (for business-to-consumer purchases).
Excellent customer service can translate directly into sales and profit
Service output segmentation criteria
Information Provision
 Do I need information to make a purchase, or do I enter the buying process
having already made a decision?
Pick Your Service Output Level (Low – Medium- High)
Segmenting end user by service output

Segmenting the market into groups of end-users who differ not in the product(s)
they want to buy, but in how they want to buy

Example
A (usually small) segment of buyers who are both very service-sensitive
and very price-insensitive

Have you defined yours yet?


Segmenting end-user by service output
Steps of segment end-users

Generate a comprehensive
list of all the potential
service outputs desired by
each end-user

Using this list of possible •are maximally similar within a group


•are maximally different between
service outputs, groups
segmentation produces •differ on dimensions that matter for
building a distribution system
groups of buyers who:

Name each segment to


capture its identifying
characteristics
Targeting process

Assess segment attractiveness


Target a subset of the segments identified
Customize the marketing channel system solution used to sell to each targeted
segment

Targeting a channel segment: choosing to focus on a


segment, with the goal of achieving significant sales and
profits from selling to it
Targeting multiple channel segments

Build different marketing channels for each segment can be costly and hard-to-
manage, channel managers likely choose an “attractive” subset

In other words: Targeting means choosing which segments not to target

Information on the targeted segments then can be used to design new


marketing channels to meet needs or to modify existing marketing channels
to better respond to demands for service outputs

You might also like