Final Customer Buying from a Product Producer

Customer characteristics, and the segments they suggest, flow from the customer's reaction to the costs the customer incurs with the product over the product's life. We organize the innovation examples according to the costs the customer incurs. Final or end-user customers incur four cost steps in connection with the product sold by a producer. You should be able to fit your own particular industry's costs into these four typical costs. The examples illustrate where management teams in many industries have innovated to meet the needs of the specific customer segments.

Using the following thought outline, we suggest you conduct your innovation for new ideas to segment customers by needs.

1. ACQUIRE: Acquire steps include all activities the customer completes preceding the use or the consumption of the product. These steps include the customer's efforts needed for evaluation and acquisition of the product. Examples>>

2. USE: Use steps include all the customer's value added activities or the consumption of the product itself. These steps include all the costs the customer incurs in employing the product in its intended use. Examples>>

3. MAINTAIN: Maintain steps include all activities required to keep the product in working order. These steps include the costs the customer incurs to diagnose and correct product problems. Examples>>

4. DISPOSE: Dispose steps include all activities required to eliminate the product from the customer's premises. These steps include the costs for removal and final disposition of the product. Examples>>

Basic Strategy Guide Users Go To: Step 12

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