Top Market Strategy

Top Market Strategy

by Elizabeth Rush Kruger
Released August 2011
Publisher(s): Business Expert Press
ISBN: 9781606493113

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Book description


Virtually every business seeks to increase its profit from customers, but few business executives realize that a universal principle governs their customer profitability. They may be applying the 80/20 rule to sales, quality control, investing, production, or other business functions without realizing that the 80:20 ratio actually summarizes the Pareto distribution of inputs to outputs. According to his equilibrium theory of relationships, stability is reached when inputs in the top 20% generate 80% of the outputs while inputs in the bottom 80% generate 20% of the outputs. Recently mathematicians confirmed that the Pareto distribution is as universal as the normal "bell-shaped" distribution, but is log linear and predicts results, rather than probabilities. Applying this universal principle to customer profitability, a typical business can predict that customers in the top 20% generate 80% of customer profitability (four times more profit than expected), whereas customers in the bottom 80% generate only 20% (one-fourth as much as expected). This means the 20% most profitable customers tend to be 16 times more profitable than the 80% least profitable customers. In order to capitalize on the Pareto principle, a business should 1. segment its customers by their profitability, 2. distinguish the top 20% of its customers in top market segment from the bottom 80% of the customers in the bottom market segment, and 3. target the top market segment with its marketing strategies. The purpose of this book is to show business students and executives how to implement this process and thereby achieve the predicted results.

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

Product information

  • Title: Top Market Strategy
  • Author(s): Elizabeth Rush Kruger
  • Release date: August 2011
  • Publisher(s): Business Expert Press
  • ISBN: 9781606493113