Marketing Simulation: Managing Segments and Customers

Marker Motion, Inc. $($MM$)$ manufactures inertial motion capture sensors$.$ Customers utilizing MM$\text{'}$s solutions are typically analyzing human movement for applications which include improving manual work processes in order to improve employee safety and$/$or efficiency, designing automation on production floors, and various types of ergonomic product development.

With $45$ employees, MM$\text{'}$s revenues grew at an average rate of $5\mathrm{.}5\%$ over the prior three$-$year period; however, the most recent quarterly financial data showed a decline in revenue. Although senior management was pleased that MM had just turned a modest profit after several years of losses, there was concern about recent potential market share loss.

The inertial motion capture sensors in which MM specialized offered several advantages over optical systems, which use two tracking cameras and match$-$moving software to track movement visually. Both methods are commonly used to create character movement in the movie and video game industries. Non$-$optical systems, like that of MM$,$ provide a capture rate up to $70$ times faster than that of the optical method and, after running a calibration protocol to measure study subjects' body dimensions, can accurately measure joint angles, reach distances, and other body kinematics with high precision.

Purchasing Criteria

The most critical sensor package purchasing criteria include the following:

Size and weight. Since sensors need to be able to send data about both large position changes and tiny micromovements, it is essential that they be positioned securely during a study. Bulky sensors can feel awkward to the subject, resulting in unnaturally affected data. If a sensor is poorly affixed or loose, the data is corrupted by its own micromovements. Ideally, you need smaller, lighter sensors$.$

Battery life. When researchers need to capture motion over long periods of time, battery life is an important strength in non$-$optical sensors$.$ Stopping to replace sensors or charge batteries results in wasted time and resources. Furthermore, the motion being captured would be interrupted as well, affecting the integrity of the data.

Cost. Because inertial motion sensors contain accelerometers, a battery, and a complex electronic controller, they cost more up front than passive optical sensors$.$ However, inertial motion sensors could often be a less expensive than optical packages, as they don't require an extensive camera setup.

Customer Base

Approximately $70\%$ of Marker Motion's revenue comes from customers that place large$-$volume orders. The balance is generated from customers that ordered in smaller volumes from distributors. Customers placing large$-$volume orders were roughly divided into four subsegments $($A$$D$),$ distinguishable by their purchasing behavior and the relative importance they assigned to specific product features.

Segment A places a premium on the sensors$\text{'}$ battery life and generally requires a high level of sales support due to the requirement for customization.

Segment B places a premium on small and light sensors$,$ and also values the market and technical knowledge of a manufacturer's sales representatives.

Segment C$,$ the least price$-$sensitive of large$-$volume customers, requires superior battery life as well as small, easy$-$to$-$affix sensors$.$ These customers conduct sophisticated research for highly technical applications, therefore their technical standards are stringent.

Segment D is price$-$sensitive$.$ They buy sensors in bulk for large scale studies.

Finally, small customers who purchase through distributors are also quite price$-$sensitive$.$ Since small$-$volume purchasers generally have to buy off$-$the$-$shelf sensor packages from a distributor's catalog, they are concerned that the product would be easy to integrate into their software and that the vendor's product literature would be comprehensive.

$1.$ Are all segments equally attractive to MM$?$ If yes, why? If not, why not? How do the different segment needs and expectations evolve over time?

$2.$ How does customer satisfaction change over time? How do you balance hard performance metrics such as revenues and profits with soft metrics such as customer satisfaction?

$3.$ How does customer satisfaction relate to customer loyalty?

$4.$ How should you manage MM pricing? What does it take to justify price increase? How does price discounting affect the outcome?

$5.$ How do you balance short$-$term and long$-$term investments?

$6.$ How does channel conflict figure into your pricing decisions? How do you minimize channel conflict?