Customer Experience as Segmentation Basis: The ‘Luxury’ in Question

Customer Experience as Segmentation Basis: The ‘Luxury’ in Question

Perched in one of the bustling corners of the campus, flanked on one side by canopy of trees and on the other by the basketball court – always crammed with participants (MBAs, Executive MBAs and the Research Scholars), the cafeteria at KVJ School of Business, Hyderabad was the favorite joint for the students to take a break. Seated at a far corner, looking at the message on his phone intently was Anshuman Rai, (Anshu) holding a stack of reading material (set of assorted articles). He was ruminating over the previous day’s logjam in the case discussion on Segmentation in Strategic Marketing course.

After his stint as an Assistant Marketing Manager with one of the leading FMCG companies (with an annual turnover of ₹125 crore), he had enrolled for an Executive MBA course to fast track his career with a good lateral placement. Fondly called Anshu, he was pragmatic, industrious, ambitious and easily figured amongst the top percentile of the class. His marketing acumen during the case discussions and other debates was very well-appreciated. Everyone from junior MBAs to his peers at Executive MBA held him in high esteem due to his breadth and depth of knowledge and unusual maturity.

Manav Gupta (Manav), his batch-mate in Executive MBA program, carrying two case studies that were scheduled for discussion for post-noon’s sessions, joined Anshu

Manav: Hi, Anshu, good to see you in canteen…Rare sight. How come you are here? Lost your way?

Anshu: No, I am in the process of preparing a class note that I want to circulate for tomorrow’s Strategic Marketing class

Manav: Oh! You are referring to yesterday’s animated case discussion

Anshu: Yes.

Manav: You were unusually vociferous and seemed quite adamant to get your point across.........

Assignment Questions

I. What are the conventional bases of 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 unorganized sector and e-tailing gaining traction?

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

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

IV. .................

Exhibits

Exhibit I: Product Categories

Exhibit II: Product Categories/Segmentation Bases

Exhibit III: The Six Stages of the Buyer Experience Cycle

Exhibit IV: 5 Levels of EBD model

Exhibit V: Pyramid of Product Lines

Exhibit VI: Inverted Pyramid of Product Lines

Customer Experience as Segmentation Basis: The ‘Luxury’ in Question

Synopsis

The premise of this case study is to enable a discussion as well as understanding of the context of how customer experience (brand experience) can be the basis of consumer segmentation. The discussion highlights the relevance of conventional segmentation bases (Demographic, Geographic, Psychographic and Behavioral including VALS & PRIZM) and how companies could differentiate themselves by designing and delivering unique customer experience in the wake of evolving consumer purchasing patterns and intense competition posed by the rise of e-commerce and unorganized players in every product category. The case study enables the participants to debate whether this unconventional platform is amenable to all the product categories (across the price pyramid) or suits specific to a few categories like luxury, etc.? In this milieu, does this platform stand out as a sure shot recipe for segmentation basis or just complement the existing conventional segmentation bases?

Prerequisite Conceptual Understanding (PCU)/Mandatory Readings

The students/participants should be encouraged to read the following mandatory readings bereft of which a meaningful discussion and adequate analysis of this case study wouldn’t be possible

• • Leon G. Schiffman, et al., “Market Segmentation and Strategic Targeting”, Consumer Behavior, 10th Edition, Pearson Publications, 2010 – To understand the efficacy of designing and delivering unique ‘customer experience as the basis of consumer segmentation
• • B. Joseph Pine II and James H. Gilmore, “Welcome to the Experience Economy”, Harvard Business Review, July-August 1998
• • Theodore Kinni, “What Experience Would You Like with That?”, Strategy + Business, Booz & Co., August 24th 2010 – To understand the basic tenets of customer experience as the major differentiator for companies

Case Positioning and Setting

This case study can be used in MBA, Executive MBA or Executive Development Programs, for either of the following courses:

• • Consumer Behavior Course – Market Segmentation and Strategic Targeting – To examine whether customer (brand) experience can be a segmentation basis in the light of increasing competition and communication clutter
• • Strategic Marketing Course – Devising alternative segmentation bases
• • Designing and Delivering Customer Experience – Both in Manufacturing sector as well as Service Sector

Assignment Questions

• I. What are the conventional bases of 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 unorganized sector and e-tailing gaining traction?
• II. How do you characterize the nature of competition (between the companies in an industry and also the intense rivalry from private labels/unorganized sector) and the efficacy of segmentation bases?
• III. On what basis do you think the companies/in the industries featured in the Exhibit I of the case study across the product-price pyramid have segmented their markets, targeted their customers and positioned their products?
• IV. ....................

Suggested Orchestration

The classroom discussion and analysis was facilitated under two broad sections [Exhibit (TN)-I]...................