Customer Service and Marketing at MM
Who are MM’s target customers? Are all segments equally attractive to MM? If yes, why? If not, why not? How do the different segments’ needs and expectations evolve over time?
The goal is to increase the overall market share and profits of MM’s Motors in the current market environment by targeting appropriate customer segments and proper allocation of marketing resources. Our initial strategy was to concentrate on segment A because of the following reasons:
1. MM possesses a competitive position in this segment in terms of quality product offering and close customer relationships through high level of customer support.
2. With intensive improvements in power-to-size ratios and customer service, we saw potential to regain and grow our market share in Segment A and anchor them as our main business.
Initially, we contemplated pursuing sales from Segment D and small customers. However, Segment D’s main concern turned out to be solely on price. To maintain them, as key customers, we would need to reduce list price substantially. This would prevent us from maximizing revenue and profit from other segments. As for small customers, we recognized an issue of channel conflict as these customers purchased through the distributor channel. We learnt through the simulation that distributors would vary their profit margins freely, and could at times sell the motors lower than our prices to large customers. Hence, to avoid this conflict, we decided not to focus on small customers. Furthermore, we also learnt that we could encounter low market share and decreasing profit margins if we tried to target more than 2 customer segments. So therefore, we decided not to pursue Segment D and small customers. How does customer satisfaction change over time? How do you balance hard performance metrics such as revenues and profits with soft metrics such as customer satisfaction?
The segment of the motor industry in which MM operated was highly competitive,