Page 123 - The Handbook for Quality Management a Complete Guide to Operational Excellence

110 I n t e g r a t e d P l a n n i n g U n d e r s t a n d i n g C u s t o m e r E x p e c t a t i o n s a n d N e e d s 111

Customer Identification and Segmentation

Customer identification and segmentation is part of the strategic marketing
activity. The basis of customer identification and segmentation is that the
firm cannot be all things to all people. There are many possible reasons this
might be so: the customers’ buying requirements vary, customers are geo-
graphically dispersed, the competition can serve some market needs better
than you, etc. If relatively homogenous groups of customers can be identi-
fied, it will be easier to target products and services that meet these needs.
A three-step strategy is recommended:
1. Identify homogenous market segments. Identify segmentation
variables and segment the market. Develop profiles of the resulting
segments.

2. Decide which market segments you wish to enter. Evaluate the
attractiveness of each segment. Select the target segment(s).
3. Develop a product or service positioned to appeal to the special
requirements of the selected market segments. Identify possible
positioning concepts for each target segment. Select, develop,
and communicate the chosen positioning concept.
Market segmentation is typically conducted by evaluating existing
and prospective customer motivations, attitudes, and behavior through
interviews, focus groups, and surveys. Product/service attributes are
evaluated, including their importance ratings. Brand awareness and
brand ratings are studied, as are product-usage patterns. Due to the stra-
tegic importance of these studies, extreme care must be taken to ensure
that samples are representative of the market as a whole and of the seg-
ments being studied. These studies belong to the enumerative class of
statistical studies (see Chap. 9). Professional assistance is a good invest-
ment, as advanced statistical techniques are often employed, such as clus-
ter analysis, factor analysis, or regression analysis. Once identified,
clusters are profiled by attitudes, demographics, etc. Cluster labels are
determined by studying the dominant characteristic of customers within
the cluster.
From this analysis, target segment(s) are determined. The strategy
used for selecting the target segment(s) may form a basis for the devel-
opment of the strategic quality plan.
Key segmentation concepts are illustrated in Fig. 6.2.

• No market segmentation (A). Here we have a completely undifferentiated
set of customers. When this situation exists, each customer is viewed
as being no different from any other customer. Mass marketing is
used. Uniform quality is the goal.

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