Marketing Analytics: Segmenting Customers

Instructions:

Read the problem below and refer to the spreadsheet provided. The spreadsheet values highlighted in yellow can be manipulated in order to determine possible outcomes and answer the questions. You must answer the follow$-$up questions $($a$-$e$)$ correctly to receive full credit.

Problem:

The marketing manager for Audiotronics Software Company is seeking new market opportunities. He is focusing on the voice recognition market and has narrowed down to three segments: The Fearful Typists, The Power Users, and The Professional Specialists.

The Fearful Typists don't know much about computers$-$they just want a fast way to create e$-$mail messages, letters, and simple reports without errors. They don't need a lot of special features. They want simple instructions and a program that's easy to learn. The Power Users know a lot about computers, use them often, and want a voice recognition program with many special features. All computer programs seem easy to them$-$so they aren't worried about learning to use the various features.

The Professional Specialists have jobs that require a lot of writing. They don't know much about computers but are willing to learn. They want special features needed for their work$-$but only if they aren't too hard to learn and use.

The marketing manager prepared a table summarizing the importance of each of three key needs in the three segments $($see Table $1$ below$).$

Table $1$

$\backslash$table$[[,$Importance of Need $(1=$ not important; $10=$ very important$),,],[$Market Segment,Features,Easy to Use,Easy to Learn$],[$Fearful Typists,$3,8,9],[$Power Users,$9,2,2],[$Professional Specialists,$7,5,6]]$

Audiotronics' sales staff conducted interviews with seven potential customers who were asked to rate how important each of these three needs were in their work. The manager prepared a spreadsheet to help him cluster $($aggregate$)$ each person into one of the segments$-$along with other similar people. Each person's ratings are entered in the spreadsheet below, and the clustering procedure computes a similarity score that indicates how similar $($a low score$)$ or dissimilar $($a high score$)$ the person is to the typical person in each of the segments. The manager can then "aggregate" potential customers into the segment that is most similar $($that is$,$ the one with the lowest similarity score$).$

Spreadsheet

The spreadsheet values outlined in yellow can be changed in order to determine possible outcomes. You can find the initial values in the corresponding blue cells in column C$.$ Start by entering the initial values into column B$.$ Then review the questions below and adjust the values in column $B$ to determine the correct answers.

$\backslash$table$[[,$A$,$B$,$C$],[1,,,$Initial$],[2,$CUSTOMER'S RATING OF NEEDS:,,$],[3,$Importance of Special Features,$3\mathrm{.}0,8\mathrm{.}0],[4,$Importance of Ease of Use,$9\mathrm{.}0,4\mathrm{.}0],[5,$Importance of Ease of Learning,$7\mathrm{.}0,7\mathrm{.}0],[6,,,],[7,$OVERALL SIMILARITY SCORES:,,$],[8,$Similarity to FEARFUL TYPIST Segment,$5\mathrm{.}0,45\mathrm{.}0],[9,$Similarity to POWER USERS Segment,$110\mathrm{.}0,30\mathrm{.}0],[10,$Similarity to SPECIALISTS Segment,$33\mathrm{.}0,3\mathrm{.}0]]$