How customers are classified into various groups for marketing purposes?

How customers are classified into various groups for marketing purposes?

 

Customer classification is an important issue in the real world of marketing, that the more understanding the business has about its customer behavior patterns, the greater the chance that more effective marketing strategies can be developed. There effective differentiation purchasing customers like the demographics and other information needed for a substantial marketing purpose.  Many studies have tried to optimize parameters of customer related system, selection of appropriate customer features to measure similarity between the input and stored marketing base and selection of appropriate instances to eliminate customer classification failures. However, customer classifications approaches have been applied independently although customers are simultaneously improve the prediction of marketing performance.

 

There has been proposed model involving real world customer classification which predicts customers’ buying behavior for specific product using demographic characteristics. Experimental results show that the proposed technique may improve the classification accuracy and outperform various optimized models of customer classification organization. In some cases, customer classification is important for the development of advanced logistical distribution strategies in response to the growing complexity in business logistical markets. There present innovative approach that can be employed to cluster customers before executing fleet routing in logistical operations. The approach is developed on the basis of fuzzy clustering techniques and involves three sequential mechanisms including binary transformation, generation of fuzzy correlation matrix, as well as customer clustering. Such a customer clustering method should be performed prior to vehicle dispatching and routing in the process of goods distribution (Abell, 1980; Kotler, 1984).

 

There clusters customers on the basis of their demand attributes, rather than the static geographic property which is considered extensively in most published vehicle routing algorithms. In addition, case study were conducted to demonstrate the potential advantages of the proposed fuzzy clustering based method thus, stimulating research on time based customer classification logistics and management. Customer classification denotes lifetime value, mainstay concept in direct response marketing for many years, has been increasingly considered in the field of general marketing. However, the vast majority of literature has been dedicated to extolling its use as a decision-making criterion, presented isolated numerical examples of its calculation/determination and considered it as part of discussions of profitability and discussed its role in customer acquisition decisions and customer acquisition trade-offs for determination of customer classification and its lifetime value.

 

When there consider that the last two make up the majority of why client or customer will no longer use service or buy products – it can be hard pill to swallow. After all it means they are an inactive client because they felt you didn’t care about them and your competitor did (Porter, 1980; Porter, 1985).  There makes sense when business consider that customers often purchase the service or product because they have developed relationship with the latter, there  owned another product as referred by customer friend or associate. It’s important to try to satisfy the customers with the right products and services, supported by the right promotion and making it available at the right time and location.

 

Customers can easily detect indifference and insincerity and they simply will not tolerate it. Long-term client and customer loyalty is a long term challenge that you must strive for every day and with every transaction no matter how big or small.  While growing business needs to constantly capture new customers, the focus and priority should be on pleasing your existing customer base. Companies that fail to nurture and retain their customer base ultimately fail. They will spend twice as much to get new clients as well as in maintaining existing customer base. Companies will also be limited in the ability to attract new clients if companies can’t hold onto and satisfy your existing customers and clients. The bottom line is that one of the key components in marketing and business growth is to spend the majority of time and effort nurturing customer relationships, so that companies get business from existing clients and customers, strategy that will move forward in increasing sales without increasing too much budget.

 

References

 

Abell, DF. Defining the Business: The Starting Point of Strategic Planning (Englewood Cliffs, NJ: Prentice-Hall, 1980

 

Kotler, P. Marketing Management. Analysis, Planning and Control, 5th. ed. (Englewood Cliffs, NJ: Prentice-Hall, 1984

 

Porter, M. Competitive Strategy (New York: The Free Press, 1980)

 

Porter, M. Competitive Advantage (New York: The Free Press, 1985)

 

 

Credit:ivythesis.typepad.com