Marketing Channel Strategy

END-USER ANALYSIS
338
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End-users make trade-offs among different combinations of (a) product 
attributes, (b) price, and (c) service outputs offered by different sellers to 
make final purchase decisions.
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Segmenting the market by service output demands is a useful tool for chan-
nel design, because the resulting groups of end-users are similar (within each 
group) in terms of the channel that best serves their needs.
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The ultimate purpose of a service output-based end-user analysis and design 
is to identify and assess end-user segments, target a subset of the segments 
identified, and customize the marketing channel system solution used to 
sell to each targeted segment.
•
Omni-channel strategies and new technologies influence and shape end-
user segments.
A P P E N D I X 1 0 . 1 : S E R V I C E O U T P U T 
S E G M E N T A T I O N T E M P L A T E — T O O L S F O R 
A N A L Y S I S
Table 10.1 shows a completed end-user segmentation analysis in the market for tel-
ecommunications equipment and services. This analysis rests on the collection of 
sophisticated marketing research data. Marketing channel managers generally are 
well advised to conduct marketing research to determine what end-users really want 
in the way of service outputs, because the cost of guessing incorrectly is very high in 
a channel context.
This Appendix describes how to complete the service output segmentation tem-
plate in Table 10.2 (an empty and generic version of Table 10.1). With the assumption 
that the channel manager lacks detailed, quantitative marketing research data, we 
seek to provide an intuitive sense of how to perform such an analysis and what to 
do with codified information. The segmentation template is designed to help users 
segment the market, in ways that matter for distribution channel design, as well as 
to report on the segments’ distinct demands for service outputs.
The first task is to identify the segments in the market being served. Standard 
segmentation measures may or may not be appropriate in a channel management 
context, though. A key criterion to determine whether the existing segmentation is 
appropriate is whether the resulting groups of buyers require different sets of service 
outputs. For example, we might identify two segments for buyers of laptop comput-
ers: men and women. It is likely a valid segmentation criterion for some purposes 
(e.g., choosing advertising media to send promotional messages) but unlikely to be 
useful in a channel design and management context, because there is no discernible 
difference in the service outputs demanded by men and women. A better segmenta-
tion thus might be business buyers, personal use buyers, and student buyers.

END-USER ANALYSIS
339
The next step is to fill in information about the service output demands of each 
identified segment on the segmentation template. More information is always bet-
ter, but in the absence of detailed marketing research data, it can be useful simply to 
identify demands as “Low,” “Medium,” or “High.” Then the manager can address 
precisely how they express their service output demands. Consider a few prototyp-
ical examples:
 
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A business buying laptop computers wants to buy more units than does a per-
sonal use or a student buyer. Breaking bulk (i.e., providing a smaller lot size) is 
effortful, so the business segment has LOW demand for the bulk-breaking service 
output, whereas the personal use buyer and student have HIGH demands for this 
output (i.e., they want to buy only one computer at a time).
 
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