(PDF) Approaches to Customer Segmentation

CENTRA SOFTWARE CASE
Case: Centra Software
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CENTRA SOFTWARE CASE
Question 1
Centra should segment its markets a way that helps it to reach out its target customers
appropriately. Market segmentation encompasses organizing the company’s customers or
business base along certain characteristics that enables it to meet the needs of their customers
appropriately. In this perspective, Centra should segment its market on the basis of behavioral
and demographic aspects.
Centra marketing strategy focuses on dominating the enterprise eLearning market. In
order to mature its new enterprise-wide software markets, the company should understand the
behavior and needs of various customer groups within its market. On this basis, behavioral
market segmentation strategy will be appropriate in helping Centra to attract a group of
relatively visionary customers who are most likely to show tolerance for product
imperfections. The strategy would help the company to use these visionary customers to
attract other less indulgent customers to support the market-leading vendor. The strategy will
be helpful to Centra in securing the benefits of dominant technology standard and promote a
robust product performance.
Demographic segment strategy is the other highly applicable technique that the Centra
can use to penetrate and dominate its market. Demographic segmentation entails identifying
non-character traits of target customers. Some of these common traits include age, gender,
income, level of education and profession. Centra has three main products, which are
eMeeting, conference, and symposium (Deighton, 2002). Each of these products appeals to
different classes of customers. Marketing these products require a prior knowledge of the
non-character traits of the target customers. For example, in an enterprise marketing, different
departments may require different products depending on the nature of their work. This
means that Centra marketing team have to identify these respective needs based on the
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CENTRA SOFTWARE CASE
different characteristics and offer products that would meet the specific needs of the
customers.
Centra has three products and each of them has its specific role. The first product is
the eMeeting, which allows firms to conduct virtual meetings for up to 100 participants. The
meeting can either target internal or external audiences. The second product is the conference
product, which offers interactive seminars and corporate briefings to up to 1,000 participants
in different places (Deighton, 2002). It relies on either intranet, extranet or the Internet to take
place. The third product, Symposium, provides a virtual classroom experience for interactive
team collaboration or hands-on training. It is highly applicable for about 250 participants. It is
majorly applicable in new-hire orientation and employee training for a product launch.
Average Deal ¿¿Total Revenue Achieved
Number of closed −won opportunities
Average deal ¿eMeeting=$ 201
28 =$ 7.18
Average deal ¿Conference =$ 3450
48 =$ 71.88
Average deal ¿Symposium =$ 14836
398 =$ 37.28
Question 2
Centra’s field sales force and telesales force have certain similarities and differences.
A close observance of the performance of these two marketing strategies in the United States
determines their comparative aspects. From exhibit 5, it is noticeable that field sales have up
to 25 employees within the fourth quarter of 2000 whereas telesales had only 2 employees
within the same quarter. During the same period, the quarterly salary and commission per
employee was $46,250 for field sales whereas it was $24,000 for telesales (Deighton, 2002).
The difference shows that the compensation for field sales employee is almost double that of
the telesales. Within that same period, field sales recorded a number of sales of up to 43
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