Chapter 7: Developing your customers Flashcards
Define customers and markets
A customer is someone who pays for a product or service. Customers become consumers when they actually use the product or service.
A market is a place where people can sell goods and services (the supply) to people who wish to buy those goods and services (the demand). Supply refers to the sellers who compete for customers in the marketplace, while demand implies the prospective customers’ desire for the goods and services available.
Define market opportunity and product application.
A market opportunity can often be identified by the degree of customer demand for a specific product application.
A product application refers to the goods or services created to meet this demand and thereby provide a solution to a customer problem.
Define customer psychology.
Customer psychology is the study of the processes involved in understanding what customers want or need, the thoughts and emotions that drive decisions, the impact of outside influences (friends, family, media) on purchasing decisions, and the reasons why people choose to buy one product over another.
What are the six actors in the Buying Process?
- End User: Teen playing a video game
- Influencer: customers with a large following who have the power to influence purchase decisions.
- Recommenders: people who may evaluate your product and tell the public about it, such as bloggers.
- Economic buyers: customers who have the ability to approve large-scale purchases, such as buyers for retail chains.
- Decision makers: customers similar to economic buyers who are positioned higher up in the hierarchy and so have even more authority to make purchasing decisions (parents, CEO).
- Saboteurs: Saboteurs are anyone who can veto or slow down a purchasing decision.
What is a Customer Personas?
Customer personas are profiles or representations of your ideal customers based on information and market research. These personas help you create strategies to connect with your target audience and promote products and services to people who will potentially buy them.
What are the six items of a customer personas?
- Demographics: Men in 30s living in a geographic location.
- Psychographics: Attitudes, values, fears.
- Proxy products: Proxy products give you an idea of what else your potential customers are likely to buy or are currently using.
- Day in the life: Walk in the shoes of the customer.
- Biggest fears and motivator:
- Challenges and pain points: Problem that your product solves.
Define segmentation.
Segmentation in business refers to the process of dividing a broader market into smaller, more defined subsets of customers or potential customers who share similar characteristics, needs, behaviors, or preferences.
What is a customer journey map and it’s 5 elements?
A customer journey map is a visual representation that captures customer experiences across multiple touchpoints.
- Discovery
- Research
- Purchase
- Delivery
- After sales
What are the 5 product adoption life cycle?
- Innovators (2.5%): Enthusiastic and willing to take the risk.
- Early adopters (13.5%): Influential people who exploit the innovation for competitive advantage.
- Early majority (34%): Wait for mass appeal therefore practical and risk averse.
- Late majority (34%): Skeptical, pessimistic, risk averse and less affluent.
- Laggards (16%): Negative attitude towards technology and strong aversion to change.
What is crossing the chasm?
According to Moore, the biggest difficulty is making the transition between early adopters and the early majority; he calls this the “chasm.” Crossing the chasm involves focusing your resources on a single, primary market first, known as a launch market, before winning over that market and then using that momentum to dominate larger markets.
Define market sizing.
Market sizing is a method of estimating the number of potential customers and possible revenue or profitability of a product or service.
Define TAM, SAM, SOM.
TAM: total available market, refers to the total market demand for a product or service.
SAM: serviceable available market, is the section of the TAM that your product or service intends to target.
SOM: share of market, is the portion of the SAM that your company is realistically likely to reach.
