Question

• Think about some of your friends and what you have discovered by visiting their homes. Do they buy different things than you do? If so, why? How might a company distinguish you from them in terms of its targeting?
• Is it always harder to find new customers than it is to retain old ones or does it depend on the business you're in?
• Does one-to-one marketing have to be expensive? How can small organizations interact with their customers in a cost-effective way?
• Are large companies better off using multi segment strategies and small companies better off using niche strategies? Why or why not?
• How have companies such as JCPenney and Sears tried to change their position (reposition their stores)?
• Do you think hotel companies have segmented the market too much and confused customers?

Answer 1

1- Yes they do buy different things then us. My friend own a BMW car while I own a hyundai Santro and the difference between the 2 is of around 40 lakhs (around $53000). The company ccan segment the customer on the basis of Value segmentation which is based on the “transactional worth” of their customers i.e. how much are the customers willing to spend on a particular product.

2- No this cannot be generalised that finding new customers is harder than it is to retain old ones since it depends upon business to business. These days, there is a lot of competiton among the sellers and they break price to a great extent and operate on lower margins or even discounts to increase the customer base. New customers generally require one time offer but to retain an existing customer the company needs to give continous benefits and do innovation in their products.

3- No one to one marketing need not be expensive. One to one marketing basically means being able and willing to change one's behavior toward every individual customer based on customer experience and what the customer interacts with you. Small organizations can interact with their customers in a cost effective manner by making proper use of the database. They can update customer's record and remind them of offers through e-mails. They can offer extra discounts on birthdays.

4. Yes large companies are better off using multi segment startegies since they have great database and market insights, they have strong financial positions and can make use of R&D in segmenting the customers and launching the same product with little difference in the makets for different segments. They can burn huge amounts of cash in promoting the product and marketing it. Strong financial position helps in creating longer supply chains and better distribution of products and thus covering a larger segment of custmers.
Niche strategies are better for small business since it helps in knowing the customer and their demands. It does not require promoting the product extensively and thus helping the small businesses.