Managing Customers Simulation

Managing Customers Simulation

Overall Strategy

The overall strategy for this simulation was to have what customers want for each targeted market segment. Specifically,

• Identified key market segments and their needs based on market research
• Identified the company’s core competencies and invested in strengthening them
• Allocated sales and marketing resources to focus on targeted market segments
• Focused on retaining existing customers first and then expanded sales to new customers
• Maintained a high level of overall customer satisfaction by providing sufficient support, investing in training and communications, and improving quality

MM’s core competencies included product quality, especially power-to-size ratio, and customer support, which matched the needs of market segments A and C in particular and provided a huge potential in increasing market shares in these segments. Strengthening core competencies while improving thermal resistance would give MM further advantage in competing in these markets. Based on the changing direction to target market segments A and C, the strategy was to refocus the limited resources on improving product quality, increasing marketing efforts and training to meet these customers’ needs while maintaining a fair level of service to segments B and D.

The simulation only allowed one product model to all customers through different discount programs. To maximize the overall profit, revenue, customer satisfaction and market share, I tried to create a scenario that MM could provide a high quality model to segments A, B and C while having a basic model for segment D and small customers who demand low price other than quality. This is not possible in real world because the large volume customers wouldn’t accept an exactly same product at a higher price than small customers. However, for the purpose of this simulation, I believe this could improve the overall performance. Unfortunately, this approach could not fully simulate the scenario due to a restricted discount program (the highest discount was 20%).

Strategies for Each Market Segment

For each market segment, deep understanding of their needs was gained from interview videos provided by the simulation and also based the historical data from the market research. Based on this, I categorized all customers based on their priority rating:

• Top priority: focusing on market segments A and C

• Second priority: maintaining and improving whenever opportunities exist in market segments B and D
• Lowest priority: having a presence in small customers segment for future potential

Developing this priority list helped me in determining where MM should allocate available resources including sales force, customer support, marketing, training, and research and development. Here is a quick summary of the strategy I used for each market segment:

Segment A

These customers’ needs matched MM’s strength (high quality and excellent customer support) very well and generated the largest portion of MM’s total revenue. This market segment was included on the top priority list.

During the entire simulation, I continuously improved power-to-size ratio and provided sufficient sales support to meet their needs, which resulted in significant increase in revenue and market share. Since the quality, in particular power-to-size ratio, was the most important factor in their decision making, I provided them a very high quality product at a relatively high price to meet their needs while maximizing MM’s profit.

Segment B

These customers placed a premium on the motor’s thermal resistance performance that wasn’t MM’s strength. In addition, they worked very closely and loyally with their existing venders and had no intention to look for other venders. Through the analysis, I found MM’s product and strength didn’t align with their needs very well and included this segment on my secondary priority list.

During the simulation, I allocated sufficient resource to maintain reasonable sales in this segment. Considering the higher price these customers are willing to pay, I paid close attention to these customers (not as much as I did to segment A and C) and increased sales whenever there were opportunities. At the end, MM was able to increase sales and maintain a same market share.

Segment C

This segment required superior motor performance on both thermal resistance and power-to-size ratio and was the least price-sensitive customers. Given MM’s strength in power-to-size ratio comparing to other competitors, this segment was identified to have huge potential for MM’s high quality product and was included on the top priority list.

The overall strategy for this segment was to have a high quality product with relatively higher price while maintaining a reasonable level of support considering the product performance was the most important factor in their decision making rather than price or support. I was able to increase MM’s market share to 18% from 4% in this segment.