Customers segmentation

What profit differentials exist across markets and customer segments based on the unique characteristics of the marketplace ... 

In addition to customer profitability tools at the transaction level, additional tools will need to be implemented and delivered to the accountable individuals in areas such as customer segmentation, target margin setting, contract terms policies, raw material cost movement expectations, and customer/product mix optimization. 

Customer segmentation by size/region/ need (Key buying factors)... 

Dell, for example (Fig. 22.1), became one of the biggest and the most valuable PC producers during the 90s while there are obvious differences between the PC and chemical businesses, approaches like product-customer segmentation or online inventory management can definitely be successfully borrowed. 

It is crucial to know the requirements and service breakpoints of each customer segment (Fig. 22.3) and the related economic opportunities. Most successful players go as far as designing and tailoring differentiated supply chains and service level offers (Fig. 22.4), and tracking service levels and profitability to address service issues and extra costs. 

At the beginning of substantial or transformational innovation, both the customer segments and the eventual definition of the product are largely unknown. This makes it vital to think startup , to build an entrepreneurial mentality and business management skills. 

For each customer segment, identify performance (objective and measurable) and perception (subjective) expectations. You can gather this information using customer surveys, focus groups, or interviews. The specific approach will depend, in part, on the level of innovation in your solution—it would be difficult for people to complete a survey, for instance, on a completely new offering they have never seen, although a survey would be in order if you re simply adding new features to a well-known product. 

Although it s critical to meet the expectations of end users, be careful not to alienate brokers or fixers along the way. The most successful organizations are able to align expectations between different customer segments so that conflicts are minimized. 

Mermet, J.M. and Ivaldi, J.C. (1993) Real time internal standardisation for ICP-AES using custom segmented array charge coupled device detector, Journal of Analytical Atomic Spectrometry, 8, pp795-801. 

Once the customer segments are identified, each segment should be evriluated in terms of its importance to the success of the focal company. Factors such as sales, profit, contribution margin, and competitive threat can be used to select the priority that each customer or customer segment has in the supply chain. 

Lastly, performance goals should be established for each customer segment. With performance goals in place, the development of revised intermediate performance metrics and adjusted business processes that support the new goals can proceed. 

At 3M, manufacturing planners work with customer planners to develop strategies for each customer segment. Changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness to customers. 

A serial supply chain consists of a number of entities that work sequentially to deliver product. In a serial supply chain, any given node s supply is affected by the decisions of upstream entities, and that node s demand is generated by downstream entities. Serial supply chains provide a simple supply chain structure, but it often implies use of a one-size- fits-all strategy that can generate significant costs if products and customer segments... 

In the grocery environment, many retailers compete based on variety of products offered. Thus the retailer satisfies the demands of different customer segments, with individual segments not being required to compromise their needs. The same approach is used by some book retailers, in that the increased cost of variety is compensated by a higher revenue if demand is enhanced and associated margins improve. The ability of... 

The a ressiveness of private label and national brands in choosing their respective pricing plans can be affected by the nature of customer preferences across products. Banks and Moorthy [3] describe a model in which there are two customer segments a brand-loyal segment with a search cost and a price-sensitive customer segment with no search costs. The branded product thus has to defend its brand by appropriate choice of price promotions. They show that as the search costs for the brand-loyal... 

The retailer has to deal with various customer segments with different reactions to a promotion. Some customers may stockpile while others may not. The retailer can thus use a retail promotion to move product from retailer warehouse to the customer location depending on the customer... 

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