Pricing Strategy: Value-based Market Segmentation

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What are value drivers in the context of customer segmentation?

Purchase motivators that vary significantly among segments

Why is it important not to assume preliminary segmentations based on obvious criteria will yield effective discrimination on value criteria?

Because it may lead to incorrect conclusions about customer needs

What is the purpose of determining operational constraints and advantages in customer segmentation?

To identify areas where you can deliver value efficiently

Why is it important to create primary and secondary segments in customer segmentation?

To address different customer needs and operational constraints

How many stages should most firms find it convenient to segment their marketplace into?

As many as there are value drivers

What is the focus of value-based segmentation?

Evaluating groups of customers based on revenue and relationship costs

What kind of inputs are considered in the step 'Determine Operational Constraints and Advantages'?

Personnel capabilities, capital spending plans, and overall company strategy

Why do companies use value-based segmentation?

To identify the most and least profitable customer segments

What is the primary goal of market segmentation?

To divide a market into subgroups with common buying behaviors

What is the first step in the value-based segmentation process?

Determine basic segmentation criteria

In consumer markets, what are some examples of basic demographic segmentation criteria mentioned in the text?

Age, gender, and income

What are some enterprise firmographics that can be used as segmentation criteria?

Revenue, industry, and number of employees

What role do fences play in pricing strategy?

To encourage compliance with price policies

Why is it essential to describe segments in everyday business terms?

To help salespeople understand customer types in each segment

What is the purpose of secondary segmentation?

To divide primary segments further based on the second most important criterion

Why is it important to recognize that segmentation is not useful until metrics and fences are developed?

Because without metrics and fences, segmentation lacks practical utility

What do metrics and fences represent in the context of segmentation?

They help in developing value-based market segmentation

What is the purpose of developing detailed segment descriptions?

To help salespeople and marketing planners understand customer types in each segment

Explore the concept of value-based segmentation in pricing strategy, focusing on evaluating customer groups based on revenue generation and relationship costs. Learn how companies identify profitable segments and adjust marketing budgets accordingly.

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