Page 212 - Electronic Commerce

Marketing on the Web

In this stage, they are as likely to shop and buy from competitors as they are
from the company.
• Commitment. After experiencing a considerable number of highly satisfactory
encounters with a company, some customers develop a fierce loyalty or
strong preference for the products or brands of that company. These cus-
tomers have reached the commitment stage and are often willing to tell 187
others about how happy they are with their interactions. To lure customers
from the familiarity stage to the commitment stage, companies sometimes
make concessions on prices or terms. Usually, the value of the strong rela-
tionship is worth more to the company than the costs of these concessions.
• Separation. Over time, the conditions that made the relationship valuable
might change. The customer might be disappointed by changes in the level of
service (either as provided by the company or as perceived by the customer)
or product quality. The company can also evaluate the relationship and con-
clude that a particular loyal and committed customer is simply costing too
much to maintain. As the intensity of the relationship fades, the parties enter
a separation stage.

An important goal of any marketing strategy should be to move customers into the
commitment stage as rapidly as possible and keep them there as long as possible.
Companies want to see customers move into the separation stage only if they are costing
more to serve than they are worth.

Life-Cycle Segmentation
Analyzing how customers’ behavior changes as they move through the five stages can
yield information about how they interact with the company and its products in each
stage. The five stages are sometimes called the customer life cycle, and using these stages
to create groups of customers that are in each stage is called life-cycle segmentation.
Two companies that undertake continuing research into market segmentation and how
companies can use segment information to develop better relationships with their customers
are Claritas and Donnelley Marketing.
Claritas created one of the first segment marketing databases, named PRIZM, in the
early 1970s. Claritas built PRIZM to take advantage of people’s tendency to live near other
people with similar tastes and preferences. Thus, PRIZM identifies the demographic
characteristics of people by neighborhood. Claritas developed a number of other products
that offer marketers databases with specific demographic, financial, and psychographic
characteristics. Donnelley Marketing offers similar products, such as its Buyer Behavior
Indicator and Affluence Models databases. Both Donnelley and Claritas extended their
research from traditional direct marketing to help firms sell online. You can learn more
about these companies and their products by following their links in the Web Links for
this chapter.

Customer Acquisition: The Funnel Model
To increase sales and build market share, managers must have a good sense of how their
companies acquire and retain customers. They often must evaluate competing marketing

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