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Top Market Strategy

Book Description

Virtually every business seeks to increase its profit, but few business leaders realize that a universal law governs profit from customers. You may be applying the 80/20 rule to sales, quality control, investing, or production, without realizing that this rule summarizes the Pareto distribution of inputs to outputs. The 80/20 rule predicts that the top 20% of inputs generate 80% of the outputs, balanced by the bottom 80% of inputs generating 20% of the outputs. Recently mathematicians confirmed that the Pareto distribution is universal and as valid as the normal “bell-shaped” distribution.

This universal law predicts that when customers are segmented by their profitability, the top 20% generate 80% of your profit from customers -- four times more than expected – whereas the bottom 80% generate 20% of your profit from customers -- one-fourth as much as expected. This means that customers in your top market segment generate 16 times more profit than customers in your bottom market segment. Hence, when you replace customers in your bottom market segment with new customers in the top market segment, your profit from customers will quadruple.

The steps for achieving this amazing result are segmenting your customers by their profitability, distinguishing the top 20% of your customers from others, identifying prospects with these traits, creating a top market strategy, and converting these prospects into highly profitable new customers. The purpose of this book is to show you exactly how to implement a top market strategy in your business, and thereby, achieve the predicted increase in your profit from customers

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Abstract
    1. Abstract
  4. Keywords
    1. Keywords
  5. Contents
  6. Illustrations
    1. Figures
  7. Icons
  8. Tables
  9. Foreword
  10. Preface
  11. Part I: Marketing Fundamentals
    1. Chapter 1: Essentials of Marketing
      1. 1.1 Marketing
      2. 1.2 Marketing Strategy
      3. 1.3 Market Segmentation
      4. 1.4 Target Marketing
      5. 1.5 Strategic Positioning
      6. 1.6 Research Phases
    2. Chapter 2: Decisions About Customer Surveys
      1. 2.1 Exploratory Research
      2. 2.2 Sampling
      3. 2.3 Sample Size
      4. 2.4 Validity and Reliability
      5. 2.5 Levels of Data
      6. 2.6 Survey Methods
      7. 2.7 Sections of a Customer Survey
  12. Part II: The 80/20 Rule
    1. Chapter 3: The Pareto Distribution
      1. 3.1 Discovered by Pareto
      2. 3.2 Universal and Predictable
      3. 3.3 Comparable to a Normal Distribution
      4. 3.4 Replicated by Research
      5. 3.5 Discussion
    2. Chapter 4: Applications of the 80/20 Rule
      1. 4.1 Applications
      2. 4.2 Application to Profit From Customers
  13. Part III: Application to Profit From Customers
    1. Chapter 5: Segmentation by Profit from Customers
      1. 5.1 Overview
      2. 5.2 Definition of Profit From Customers
      3. 5.3 Current Profitability Segments
      4. 5.4 Profitability With New Customers
    2. Chapter 6: Steps of Profitability Segmentation
      1. 6.1 Conduct Survey Research With Customers
      2. 6.2 Create Proxy Variables
      3. 6.3 Segment Your Customers by Their Profitability
      4. 6.4 Distinguish Your Top Market Segment
      5. 6.5 Target Your Top Market Segment With Your Resources
      6. 6.6 Position Your Business With Marketing Strategies
      7. 6.7 Steps to Quadruple Your Profit From Customers
  14. Part IV: How to Increase Profit From Customers
    1. Chapter 7: Interview Diverse Customers
    2. Chapter 8: Create the Customer Survey
      1. 8.1 Summarize Responses
    3. Chapter 9: Survey Customers and Analyze Responses
      1. 9.1 Quota Sampling
      2. 9.2 Analysis of Customer Responses
    4. Chapter 10: Define the Profitability Segments
    5. Chapter 11: Distinguish the Top Market Segment
    6. Chapter 12: Evaluate and Target the Top Market Segment
      1. 12.1 Evaluate JetSpray's Top Market Segment
      2. 12.2 Target Your Top Market Segment
    7. Chapter 13: Create Research-Driven Marketing Strategies
      1. 13.1 JetSpray's Marketing Strategies
    8. Chapter 14: Quadruple Profit from Customers
      1. 14.1 JetSpray's Current Profit From Customers
      2. 14.2 JetSpray's Profitability With New Customers
  15. Appendixes
    1. Appendix 1: Report on Overall JetSpray Customers
      1. Methodology
      2. A1.1 Demographics (Items S-4 and 12–14)
      3. A1.2 Psychographics (Items 7–11)
      4. A1.3 Buying Behavior (Items S-2, S-3, and 1–6)
    2. Appendix 2: Report on JetSpray's Top Market Segment
      1. Methodology
      2. A2.1 Demographics (Items S-4, 12–14)
      3. A2.2 Psychographics (Items 7–11)
      4. A2.3 Buying Behavior (Items S-2, S-3, 1–6)
    3. Appendix 3: How to Analyze Overall Customers
      1. A3.1 Code and Enter Customer Responses
      2. A3.2 Count Responses and Purchases
      3. A3.3 Confirm the Fulfillment of Quotas
      4. A3.4 Calculate Percentages for Nonmetric Items
      5. A3.5 Calculate Averages for Metric Items
      6. A3.6 Compile Tables for the Report
      7. A3.7 Pivot the Tables Into Bar Charts
      8. A3.8 Outline the Report
      9. A3.9 Summarize the Results in Descending Order
    4. Appendix 4: How to Segment Customers by Profitability
      1. A4.1 Define the Loyalty Index as the Proxy for Potential Profit per Item
      2. A4.2 Define Seating Capacity as the Proxy for Volume of Items
      3. A4.3 Define the Profitability Index as the Proxy for Profit From Customers
      4. A4.4 Sort Respondents by Their Profitability Index Scores
      5. A4.5 Define the Profitability Segments
      6. A4.6 Chart the Profitability Segments
      7. A4.7 Create a Pie Chart of the Profitability Segments
    5. Appendix 5: How to Profile a Target Market
      1. A5.1 Calculate Percentages for Nonmetric Items for Both Groups
      2. A5.2 Test Whether the Percentages for the Two Groups Are Significantly Different
      3. A5.3 Average Metric Responses for Both Groups
      4. A5.4 Test If the Averages Are Significantly Different for the Two Groups
      5. A5.5 Compile Tables for the Report
      6. A5.6 Pivot the Tables Into Bar Charts
      7. A5.7 Outline the Report and Insert the Bar Charts Into the Outline
      8. A5.8 Summarize the Results and Mark Significant Differences Between Groups
      9. A5.9 Compile These Distinctions as a Buyer Profile
    6. Appendix 6: Data Worksheet in Microsoft Excel
      1. Row Codes
      2. Column Codes
      3. Top Left Section (A1:U58)
      4. Middle Left Section (A59:U115)
      5. Bottom Left Section (A116:U170)
      6. Top Center Section (V1:AQ58)
      7. Middle Center Section (V59:AQ115)
      8. Bottom Center Section (V116:AQ169)
      9. Top Right Section (AR1:BL58)
      10. Middle Right Section (AR59:BL115)
      11. Bottom Right Section (AR116:BL170)
  16. Notes
    1. Chapter 1
    2. Chapter 3
    3. Chapter 4
  17. References
  18. Announcing the Business Expert Press Digital Library
    1. Announcing the Business Expert Press Digital Library