Customer Experience as Segmentation Basis The Luxury in Question

Customer Experience as Segmentation Basis: The “Luxury” in Question 1

Case study on Customer Experience as Segmentation Basis: The “Luxury” in Question

1. “What are the conventional bases for segmenting the target audience? What relevance do segmentation platforms like Demographic, Geographic, Psychographic and Behavioral (including VALS & PRIZM models) hold in the wake of increased competition, private label proliferation, rivalry from the unorganized sector, and e-tailing? Gaining traction?”

Segmentation is mainly based on aspects of geography, behavior, and psychography. These are all considered the conventional basis for segmenting the target audience. Segmentation platforms are considered vital since there are changing needs that the customers have. They also adopt innovative approaches to get better customer satisfaction. This makes a company better position itself among the different markets (Gambhiraopet & Chowdary, 2015). It helps create a significant effect on the company, which leads to an improvement in the market share, further building brand loyalty (Walden, 2017). Segmentation platforms also predict the customer’s values and the behaviors considered to be the right behaviors, attitudes, and values which are crucial aspects to help in knowing the target audience and using a distinct set of customers which companies target from time to time. 

The VALS and PRIZM models are systems used to segment consumer markets based on attitudinal variables and geo-demographic factors. These approaches are based on the principles related to the influence of past beliefs and future consumer behavior (Gambhiraopet & Chowdary, 2015). These models are crucial in the era of increased competition since they help organizations gain a competitive advantage over others and maintain better consumer behavior. It also creates rivalry in the unorganized sector since the organized industry understands its customers better and knows what they should expect from the company (Gambhiraopet & Chowdary, 2015). These models make segmentation easier, and they help define the targets for the products. They also develop great media strategies and make advertising easier.

2. “How do you characterize the nature of competition (between the companies in an industry and also the intense rivalry from private labels/ unorganized sectors) and the efficacy of segmentation bases?”

The kind of competition in a company and the effectiveness of segmentation can be characterized in several ways. The first is using differentiation approaches vital in gaining a market share. A differentiation strategy is an approach businesses use to develop (Lafrenière, 2019). It mainly works by giving customers something different and unique from the competition’s items in the marketplace. The main objective of the differentiation approach is to increase the competitive advantage.

The other way to characterize the nature of competition is the variedness in using technical competency in adopting a market approach. Technical competency makes business activities easier by providing simple ways of doing things and solving problems (Walden, 2017). These competencies are the knowledge and abilities required to apply some technical information and principles in the role of jobs and their functions. People are taught such competencies in the learning institutions and the know-how to complete tasks.

The other way is by using customer engagement strategies from time to time. Some examples of these strategies entail using various discounts and schemes launched off-season. In-season customers are provided with discounts to attract them to the company and cause competition between companies (Lafrenière, 2019). They mainly compete for the customers since they become loyal to organizations that give them discounts because they save a lot. Several product mix strategies are adopted to create brand loyalty. The mix strategies include price, product, place, and promotion (Lafrenière, 2019). Companies use these tactical and controllable tools to provide a more desirable response from target markets. The mixed strategies entail all the things that companies do to influence the demand for their products.

3. “On what basis do you think the companies in the industries featured in Exhibit 1 of the case study across the product-price pyramid have segmented their markets, targeted their customers and positioned their products?”

I feel that the companies in the industries displayed in Exhibit 1 in the case study located at the product-rice pyramid are segmented within their markets. They position the products they manufacture and target customers based on certain strategies (Peel, 2002). The first strategy is using research and development. The research is mainly done through a customer satisfaction survey. The company gets to know how satisfied its customers are and what changes it can make.

A good feedback process involves gathering feedback and communicating a response, which creates a feedback loop (Peel, 2002). The other way is using feedback mechanisms which entail a post-evaluation process feedback mechanisms give organizations the perceptions and data about the effectiveness and quality of their efforts from the primary stakeholders. The feedback mechanisms can either be positive or negative. Positive feedback increases the system output, further causing a decline or growth, while negative feedback affects the output and it stabilizes the system at the equilibrium point.

Another strategy used in designing the products according to certain needs of the customers and the existing market challenges. The market has certain challenges, such as recruiting talent, generating the budget sufficiently, finding the correct tools, and retaining customers and staff (Walden, 2017). It looks at how these challenges could affect its products and whether they have been designed according to the customers’ specific needs (Lafrenière, 2019). It also analyzes its demand and supply to determine how they may change. Nevertheless, it also causes a forecasting technique that understands the market trends. The company must be flexible enough to make changes if something happens with its profitability rates.

4. “What is the difference between CRM and CEM? What kind of companies/industries do you think customer experience can be an ideal or suggested segmentation basis?”

CEM and CRM are not similar concepts, but they are termed vital elements that help keep customers happy. They also have technological solutions which gain insights into the customers using data (Pine II & Gilmore, 1998). The difference between these concepts entails its prospect and customer base. Both of them have distinct objectives and functionalities as they manage customer experience. The CEM involves a more holistic approach that attracts and monitors the customers, creating a great experience (Pine II & Gilmore, 1998). Contrarily, CRM is a software solution or platform that allows companies to track the prospect or customer interactions to drive insights and sales and even resolve issues. The right mix of CEM and CRM is a vital piece of the puzzle, and this keeps the customers happy and helps create an understanding of the difference between these two concepts (Pine II & Gilmore, 1998). CEM gathers, tracks, and organizes all the steps of customers’ perspectives and journeys. This is mainly done through surveys, direct feedback, reviews, and other communication methods concerning their experience (Lafrenière, 2019). CRM assists an organization in running efficiently, and it improves customer loyalty by creating an online presence and tracking other aspects of the customer journey.

There is a difference between CEM (Customer Experience Management) and CRM (Customer Relationship Management). CRM is considered a more focused tool whose main role is to increase customer experience since it aims to create customer information management systems that lead to effective customer bonding. However, CEM is the tool that facilitates customer interaction by creating eminent services that the customers get from time to time. These industries involve the service sectors like tourism, healthcare, and the hospitality sector. The customer experience is ideal, or the suggested segmentation basis.

5. “Do you think Customer Experience Management can be applied more effectively in Service Sector than Manufacturing Sector?”

Indeed, the CEM is best applied in the service sector compared to the manufacturing industry. CEM is applicable since the service sector ensures that customers have a great experience and receive the best services (Peel, 2002). CEM would be vital in client retention and increasing the product repurchase rate. It would be better in the service sector than in the manufacturing sector. The products have already been made based on what the customers prefer despite knowing that their preferences may change. There are three components of Customer Experience Management (Lafrenière, 2019). The first is a success. It involves asking whether the interaction between the company and the customer is booming, and this can only be gauged by assessing how the customer thinks. The other is effort. It entails the effort to understand the relationship between the customer and the company (Lafrenière, 2019). The other is emotion, and it shows the emotional outcome of the customer experience. It helps know what the customers feel during the interaction, and these emotions are ranged.