End-User Analysis, Segmentation & Targeting

Why End-Users Matter 

 • Channel strategy must start with how customers want to buy, not only what they buy. 

 • Even if manufacturers sell through intermediaries, end-user demand drives the whole channel. 

 • Different customers want different levels of convenience, speed, service, and information. 

What Are Service Outputs? 

Service outputs = non-product benefits customers get from the channel. 

1. Bulk-Breaking 

 • Ability to buy small quantities even if produced in large batches. 

 • Example: small detergent bottle at higher unit price. 

2. Spatial Convenience 

 • How easy it is to access the product (location, delivery). 

 • Example: 7-Eleven, vending machines, CDW delivering to offices. 

3. Waiting Time / Delivery Speed 

 • How long customers must wait after ordering. 

 • Shorter wait = higher price; longer wait = lower price. 

 • Example: Chipotle pre-order app, urgent repair services. 

4. Product Variety & Assortment 

 • Variety = number of different product lines. 

 • Assortment = depth within each line (many models/options). 

 • Example: Hot Topic launching trendy products in 8 weeks. 

5. Customer Service 

 • Help, advice, installation, troubleshooting, after-sales care. 

 • Example: Cabela’s high-touch customer service for outdoor buyers. 6. Information Sharing • Education before/after purchase (usage tips, demos). 

 • Example: Home Depot DIY classes, Microsoft/HP in-store demos. 

Why Segment End-Users? 

 • Different customers value service outputs differently. 

 • Segmentation aims to group end-users based on how they want to buy, not what they buy. 

 • Helps managers identify niche opportunities and design the right channel. Examples: 

 • Tailor who visits busy executives (high service, high price). 

 • Kirana stores in India providing credit, delivery, personalization. 

 Steps in Service Output Segmentation 

 Step 1 – Identify All Service Outputs Needed 

 • Use interviews, focus groups to list what customers need (speed? assortment? service?). 

 Step 2 – Group Customers by Similar Needs 

 • Use surveys or constant-sum scales to force trade-offs. 

 • Lowest Total Cost 

 • Responsive Support 

 • Full-Service 

 • References & Credentials 

 Step 3 – Name Each Segment 

 • Names should describe the key service output needs. 

 • Helps internal communication and strategy alignment. 

Targeting End-User Segments 

After segmentation, managers must choose which segments to focus on. 

Key considerations: 

 • Segment size & growth potential 

 • Fit with company capabilities 

 • Cost to serve 

 • Level of competition 

 • Profit potential 

Targeting also means deciding which segments NOT to serve. 

Omni-Channel & New Segment Behaviors 

As channels multiply (store, online, mobile, social), new segments emerge: 

 • Showroomers (see offline → buy online) 

 • Webroomers (research online → buy offline) 

 • Speed-seekers (fast delivery) 

 • Assortment-seekers 

 • Service-seekers 

Omni-channel experiences make segmentation more complex but also create more opportunities. 

Key Takeaways 

 • What customers buy ≠ how they want to buy. 

 • Service outputs define channel value. 

 • End-users trade off product, price, and service output levels. 

 • Segmenting by service output needs improves channel design.

 • Use segmentation to target high-potential segments and tailor the channel system. 

 Palmatier, R. W., Sivadas, E., Stern, L. W., & El-Ansary, A. I. (2019). Marketing channel strategy: An omni-channel approach. Routledge