We are now in an era of ‘electronic commerce’. Many new oppor-
tunities have arisen in recent years following advances in informa-
tion technology and computing and, as a result, new channels to
market have emerged. The internet is the most obvious example of
this. For example, by 1997 Dell Computers was selling $2 million
worth of computers to final customers every day via the internet.
This distribution channel is expected to grow dramatically over the
next five years.
Ultimately the use of new and existing channels will be driven by
the desire to build channel relationships such that the lifetime value
of desired consumers will be maximized. This task will be consid-
ered later in this chapter.
Segmentation and analysis of the customer market domain
Market segmentation
Market segmentation is a process of dividing up a broad generic
market into a number of smaller groups, or market segments, based
on characteristics or responses of customers in those segments. In
the past much market segmentation has been done using very broad
segments; in some cases organizations have undertaken no real
market segmentation at all.
Segmentation needs to be performed at all levels of the customer
market domain, not just with the organization’s direct buyer. For
example, a large international manufacturer of consumer durables,
serving many international markets, may segment its buyers (the
wholesalers to which it sells directly) in a number of ways, includ-
ing by:
● country
● size
● volume
● level of sophistication
● ownership, etc.
The customer market domain: Managing relationships with buyers 37