Koyo Jeans - Case Report for Abb Electric

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3. Sales Productivity Improvement From the table 1 and 2 in Appendix, the purchase volume increase under marketing campaign and the total purchase volume without the model are $1,797K and $5,564K respectively. In the other hand, the purchase volume increase and the total purchase volume with the model are $3,407K and $10,688K respectively. With the choice model, ABB’s segmentation and the targeting will be more accurate, the return on the marketing campaign will be higher and the total purchase volume will be larger.

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4. Recommendations

- Collect the data about the margin of each customer. In order to target the 18 customers that the company should focus its efforts, the method called targeting by profitability change has been used. However, ABB Electric does not include the profit margin of each potential customer. Thus, the only method is to use the predicted probability change times the purchase volume to calculate the result. Then, based on this result, the first 18 customers are chosen as the target customers. But if the margin can be included in the calculation, the result will be more insightful. Because ABB Electric can target at the more profitable customers.

- Categorize the customers into the mentioned four main types. Through doing this, ABB Electric could target the customers and allocate the resource more precisely. As the case mentioned, the main goal of ABB Electric is to win the customers from its competitors, and most of those customers are the customers from the RECs, municipalities and industrial firms. Without this information, sometimes ABB Electric might target and focus the efforts on the customers who previously purchased the products from ABB Electric.

- Generate the importance weight of each customer. The questionnaire does not include the question that requires the customer to assign the importance weight for each attribute of the product. With the importance weight, ABB Electric could understand the customers better and conduct the segmentation analysis more accurately. Subsequently, ABB Electric may also improve the products to satisfy the target customers.

5. Limitations and Extensions

- Limitation 1: The segmentation method is not rigorous enough. Based on the choice model, we assign the customers into those four segments by comparing D1i to M1 and comparing D2i to M2. However, if we could use some statistical method such as z-test to segmentation, the result will be more convincing.

- Limitation 2: Lack of knowledge of the final decision makers. By understanding who is the most influential person in the decision making process, the company can be more clear to design the marketing or product strategies to win the customers.

- Extension: Improve the product design and enhance the performance of the sales force. With the modeling approach, the company can get the result of the coefficients and elasticities of different attributes. From these outcomes, the company may get some business insights to better the design, quality and service so that it can attain more market share.

Appendix

Table 1 18 Targets with Choice Model

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Original Sales Potential=V0*P0

Probability(Post-MKT): for Swithable and Competitive segments, P1=min{P0*1.5, 1}; for Lost segment, P1=P0.

Post-MKT Sales Potential=V0*P1

Table 2 18 Targets without Model

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