CHOOSING THE

RIGHT
CUSTOMER
- Robert Simons
GROUP III
Section A

All companies claim

that their strategies
are customer driven.
But the term
customer is among
the most elastic in
management theory.

DOING IT RIGHT

SCIENTISTS
Merck identifies
scientists as its primary
customers instead of its
drug using consumers

UNDEFINED !!!
Yahoo never clearly
defined its customers.
They under invested in
search, and their website
became messy and
confusing

TECHNOLOGISTS &
ENGINEERS
Google focused on users
who appreciated technology
and hence, allocated most
of its resources to its
technologists and engineers

By not identifying one primary customer, companies that

consider themselves "customer focused" soon become
anything but that
3

MEET OUR LOVELY CLINTS

4 STEPS TO CREATE THE

WINNING BUSSINESS MODEL

Identify Your
Primary
Customer

Understand
what your
Primary
Customer
Values

Allocate
Resources To
Win

Make the
Control
Process
Interactive

The most important customers are

not those that generate the most
revenue but those that can unlock the
most value in your business

IDENTIFYING THE RIGHT CUSTOMERS

Perspecti
ve

Companys Culture,
Mission and Folklore. It
is the lens through
which executives
consider opportunities
and strategic direction.
Eg:

Amazon

Capabilities

Profit Potential

Embedded resources of
the firm. Such
capabilities, which are
built up over time are
often difficult to copy.

Customers ability to
deliver profits. Of
course profit potential
isnt always about
customers who can pay
premium prices.

Eg:

Google
Eg:

Walmart
6

UNDERSTAND WHAT PRIMARY CUSTOMER VALUES

Customer often dont

know what exactly they
value. Some demand
lowest price, others
want the dedicated
service relationship,
others are looking for
best technology and
some look for brand or
other specific attributes.

Data Analytics is an
important tool in
uncovering and rapidly
responding to changing
customer needs. It can
help you fine tune a
product to better meet
the customers known
need. Eg: Google,
Nestle

Some company set up

systematic dialogues
with their primary
customer that they are
getting what they want.
Eg: FedEx

Some company set up

process for identifying
products or service that
customers may not
know they need. Eg:
P&G

ALLOCATE RESOURCES TO WIN

Low Price
Centralized
operating
functions
(merchandising
and distribution)
should receive
bulk of
organizational
resources to
create economies
of scale and
scope.
Ex: Walmart

Local Value
Creation

Global standard
of excellence

If the customer
values products
and services that
are customized to
local
tastes,
preferences, and
regulations, you
should organize
like Nestl

If customers are
looking for the
best possible
technology
or brand no matter
where they are
located, organize
resources around
global business
units. Ex: Microsoft

Dedicated
service
relationship
If the customer
is looking for an
ongoing, deeply
embedded
service
relationship, you
should organize
like IBM

Expert
knowledge
If the primary
customer is
looking for expert
technical
knowledge, follow
the example of
Google and Merck,
where R&D sits
prominently on
and receive the
bulk of the
company's
attention and
resources 8

MAKE THE CONTROL PROCESS INTERACTIVE

Three questions managers should
ask
What has changed?
Why?
What are we going to do about
it
Market-sensing process:
Study what the customer
wants, which other products
they need, how their
environment effects them.

Improve Brand Identity:

If the brand identity should emit something
different you have to change it and make
the customer think better about your
product.

Brand Identity:
Figure out which image the
customer has in mind about your
product

New-offering realization
process:
Alter the product if your
goals are not achieved for
example if primary customer
profit declines.

"Companies that get it wrong are

those that build departments with
'innovation' in their titles. We need to
have everyone in the business
innovating."

10

Thank You

11