Competitive Advantage through Channel Management

Q1:

A. Customer Focus
Each of these companies recognizes that it is not merely selling a product; rather, it adds value based on its understanding of the consumer experience while purchasing and using the product.
All have: (1) well-defined customer segment(s), (2) an understanding of customer purchase/ usage activities, and (3) sophisticated on-going analyses of their customers.

Dell, Inc. Segments:
• Business Market, which is further divided into: Large companies, Government, Education, Hospitals, Small Business
• Consumers, specifically computer-savvy consumers
Using a combination of demographics (e.g., company size, industry) and product usage characteristics gives Dell an in-depth understanding of differences in customers’ purchasing processes (importance of attributes in purchase decision) and the challenges they face in installation and use (the how/what of computer usage).
Dell is a master of combining one-on-one knowledge of customers with highly quantitative sales analysis. Michael Dell, himself, estimates that he spends as much as 40% of his time with customers, understanding their problems. The structure of the organization is also designed to capture customer knowledge, with sales and support teams assigned to particular customer segments. Constant monitoring of sales data is also a powerful tool for understanding customers, which allows Dell to adjust product to demand in real time.

IKEA Segments:
• First-time furniture buyers; renters or first-home buyers • Customers undergoing “life-transitions”
• Benefits sought: high-quality, stylish furniture at affordable price
Kamprad’s vision of providing attractive furnishings at a reasonable price has universal appeal for customers. But IKEA’s understanding of the customer’s decision process is acute. Furniture buyers are often overwhelmed