Creating Customer Value for Generation Y


Seminar Paper, 2010
20 Pages, Grade: 1,0

Excerpt

Inhaltsverzeichnis

Abbreviations

1. Introduction

2. Definitions
2.1. Generations and Generation Y
2.2. Customer Value
2.3. The optician company Apollo-Optik
2.3.1. The company
2.3.2. Products
2.3.3. Markets

3. The Target Group “Generation Y”
3.1. Market segmentation
3.2. Geographic Segmentation
3.3. Demographic Segmentation
3.4. Psychographic Segmentation
3.5. Behavioral Segmentation
3.6. Segmentation of Generation Y

4. Creating special customer value
4.1. Decisions while purchasing glasses
4.2. Supporting the purchasing process
4.3. A suited offer

5. Conclusion

6. Bibliography

Abbreviations

illustration not visible in this excerpt

1. Introduction

Companies nowadays face high competitive markets and very different needs and buying behaviors of consumers. It is therefore a reasonable strategy to segment all potential buyers into distinguished segments. In order to serve these segments more effectively, a company has to understand what the specific needs in such a segment are and how to satisfy them. It is essential that the process of serving a special market segments fits to the market. Otherwise the profits will suffer of lower revenues or higher costs.[1]

When marketers seek for similarities within consumers they use age - and in a broader sense, generations – as a segmentation criterion.[2] One of these generations is the so called “Generation Y”. Born between the beginning of the eighties and the mid nineties, this group cohort is today between fifteen and thirty years old. Nowadays they are coming into work life and are therefore a valuable customer segment with increasing buying power. It is said that this generation has its own set of needs and ways to buy. So it is interesting to analyze how the Generation Y can be reached by companies.[3]

The creation of special customer value for Generation Y for Apollo-Optik will be discussed in this paper. Generation Y will be defined, as well as what is meant by customer value. The company Apollo-Optik will be presented with its products and markets served. Thereafter, this paper is going to analyze the Generation Y for Apollo-Optik with regard to different segmentation criteria. The creation of a special value for a homogenous segment will be discussed at the closing stages.

2. Definitions

2.1. Generations and Generation Y

As Kotler/Keller say, people are influenced by the time in which they grew up. The influence consists of “[…] music, movies, politics, and defining events of that period”[4]. People experiencing the same influences are grouped into generations by demographers. Strauss/Howe define “Generation” as follows: “A GENERATION is a cohort-group whose length approximates the span of a phase of life and whose boundaries are fixed by peer personality.”[5] The authors define the phases of life in a social context as central roles that have to be fulfilled by persons such as the central role of stewardship in adulthood or the central role of leadership in the midlife phase. These roles span in general a period of 21 to 22 years.[6] The peer personality is defined by Strauss/Howe as a generational persona that is recognized by common age location, common beliefs and behavior and a perceived membership in a common generation.[7]

According to Strauss/Howe, a “generation has collective attitudes about family life, sex roles, institutions, politics, religion, lifestyle, and the future. It can be safe or reckless, calm or aggressive, […] interested in culture or interested in politics. In short, it can think, feel, or do anything and individual might think, feel, or do.”[8]

Kotler/Keller define “Generation Y”, also referred to as “Millennial Generation”[9] or “Echo Boomers”, as people born between 1977 and 1994.[10] However, various periods and ranges of age are known in literature for Generation Y. They differ up to nearly ten years. Littmann for instance states that the Generation Y is born between 1977 and 1985.[11]

In this paper, the definition of Kotler/Keller will be used because of its accordance with the definition of generations by Strauss/Howe.

2.2. Customer Value

According to Kotler/Keller, buying decisions of consumers are made, based upon a deliberation about costs and benefits. Consumers seek to maximize the values that they will finally receive with the acquisition. As the authors say, consumers are thereby limited in various ways like income, knowledge or mobility, as well as cumbered with costs for search. With regard to these limitations, value has to be seen as a perceived value.[12]

Kotler/Keller define customer perceived value (CPV) as “the difference between the prospective costumer’s evaluation of all the benefits and all the costs of an offering and the perceived alternatives”[13]. The total customer benefit consists of a perceived bundle of economic, functional, and psychological benefits evaluated in monetary terms. These benefits are based on image, personnel, service, and product involved in the buying process. The total customer costs are also a perceived bundle of different items evaluated in monetary terms. Expected costs for evaluation, obtaining, using as well as disposing of the products or services are an integral part of the total customer costs. They include psychological, energy, time and monetary costs.[14]

In order to increase the value for the customer, the marketer can either increase the benefits or reduce the costs. In competitive markets, a consumer will face several offerings he or she has to decide upon. The offerings are assessed with a perceived value and compared with each other. The consumers will examine the ratio of given value offerings and choose the offering with the highest perceived value.[15]

Kotler/Keller state that a marketer has three options to increase the CPV of its offerings. Firstly, the benefits can be increased. According to the authors, this can be done by “improving economic, functional, and psychological benefits of its product, service, personnel and/or image”[16]. Secondly, the nonmonetary costs can be reduced by decreasing time, energy, and psychological costs. Thirdly, the monetary cost can be reduced.[17]

2.3. The optician company Apollo-Optik

2.3.1. The company

The Apollo-Optik Holding GmbH & Co. KG is based in Schwabach with its general partner Apollo-Optik Beteiligungs GmbH. Apollo-Optik was founded in 1972 and has been part of the Pearle Europe Group since 1998. In the year 2000, Apollo-Optik took over the optician activities of Karstadt and acquired Synotik in 2003, as well as Krane Optic in 2007. Apollo-Optik has over 700 braches including franchising partners in Germany.[18] Apollo-Optik is a co-founder of the PAYBACK, as well as participant of the BSW consumer loyalty program. It is also member of the German Automobile Club (ADAC) affiliate program.[19]

The optician industry in Germany has a total net turn-over in 2009 of 4.0378 billion euro with the ten biggest chain stores accounting for 35.4%. Net sales of Apollo-Optik are estimated to be have been 355 million euro in 2009, according to the German Central Association of Opticians. Regarding net sales, Apollo-Optik is the second largest German optician chain store after the optician company Fielmann.[20]

According to Apollo-Optik, their claim is “Weit mehr als eine Brille” (far more than just glasses) with focus on individual customer needs in terms of fitting visual aids.[21]

2.3.2. Products

Apollo-Optik predominantly sells glasses for visually impaired people. They offer glasses for women, men, children, special designer glasses, sunglasses, as well as contact lenses and ready-to-use glasses.[22] They also sell special purpose glasses like goggles for swimming as well as diving masks, protection goggles, magnifying glasses, and glasses for shooting.[23]

The range of products can be divided into the following segments. Firstly, spectacle frames for women, men, and children with a special subsection of fashion frames for women in cooperation with the cosmetic company Artdeco. Apollo-Optik offers a wide variety of branded frames such as adidas, D&G, Emporio Armani, Eschenbach, as well as exclusive brands such as Affair, Dr. Look, and Vincenti. Secondly, Apollo-Optik sells different types of lenses. They sell for instance single vision lenses, bifocal lenses, trifocal lenses, and progressive lenses. Thirdly, contact lenses and care products are sold by Apollo-Optik with their private brand iWear as well as branded products.[24] Fourthly, they offer sunglasses with and without corrective lenses. Fifthly, special purpose glasses are sold. Sixthly, additional services are offered by Apollo-Optik in combination with glasses and goggles. Apollo-Optik offers insurances for glasses in cooperation with ERGO Direkt Versicherungen. They also provide visual tests and a customer advisory service.[25]

2.3.3. Markets

Apollo-Optik offers its service first and foremost to visually impaired people. According to the Allensbach study “Sehbewusstsein der Deutschen 2008”, 62% of the German population wear glasses and 4.3% wear contact lenses occasionally or permanently. The percentage of wearers of glasses increases with age. In the age group of 20 to 29 year olds, the quota is 26%, increasing to 93% in the age group of 60 years and above.[26]

In reference to the Allensbach study, on average the German wearer of glasses possessed 1.8 usable glasses in 2008 which is a decrease of two points compared to the year 2005. The percentage of people who own one pair of glasses is 46%. Two or more pairs of glasses are owned by 53% and only 20% possess three and more pairs of glasses.[27]

In 2008, people wearing glasses have bought a new pair every 2.85 years on average. This rate is lower for women and the age group of the 16 to 29 year olds. The study showed that 69.1% of the interviewees bought one pair of new glasses in the last twelve months. Only 13.9% bought two or more pairs of glasses in this period.[28]

With its assortment, Apollo-Optik covers a comprehensive range of the market for visual aids. The relevant market for Apollo-Optik can be defined as visually impaired people in Germany covering their total life span from childhood to adulthood.

3. The Target Group “Generation Y”

3.1. Market segmentation

According to Kotler/Keller, the starting point for the discussion of market segmentation is the question if a market should be segmented at all. With no segmentation criterion applied it is “Mass Marketing” with mass production, mass distribution and mass promotion. The focus here is lower costs through economies of scale. However, as Kotler/Keller say, the costs for mass marketing are rising nowadays and it is becoming more difficult to reach people. If, on the other hand, a market is to be segmented, several segmentation levels can be differentiated.[29]

The opposite of mass marketing is “Individual Marketing”. It is also referred to as “segments of one”[30]. Every customer is treated individually and can be part of the creation process by deciding how the product or service should be.[31] “Segment Marketing” is in-between those levels, with market segments defined as “a group of customers who share a similar set of needs and wants”[32]. The marketing program can be adapted and fine-tuned to each segment.[33] A special level of segment marketing is “Niche Marketing”. Kotler/Keller define niches as “a more narrowly defined customer group seeking a distinctive mix of benefits”[34]. Niches are smaller segments in relation to market segments. In general, niche customers are willing to pay higher prices for their special needs.[35]

[...]


[1] See Kotler/Keller, Marketing Management, 2009 p 207.

[2] See Kotler/Keller, Marketing Management, 2009 p 219f.

[3] See Kotler/Keller, Marketing Management, 2009 p 220.

[4] Kotler/Keller, Marketing Management, 2009 p 219.

[5] Strauss/Howe, Generations, 1991 p 60. Italic and capital letters in the original.

[6] See Strauss/Howe, Generations, 1991 p 60ff.

[7] See Strauss/Howe, Generations, 1991 p 64ff.

[8] Strauss/Howe, Generations, 1991 p 63.

[9] See Strauss/Howe, Generations, 1991 p 335.

[10] See Kotler/Keller, Marketing Management, 2009 p 220.

[11] See Handelsblatt, Junge Kundschaft, 2000 and Littmann, MARKEN-ZEICHEN, 2009.

[12] See Kotler/Keller, Marketing Management, 2009 p 121.

[13] Kotler/Keller, Marketing Management, 2009 p 121.

[14] See Kotler/Keller, Marketing Management, 2009 p 121.

[15] See Kotler/Keller, Marketing Management, 2009 p 121.

[16] Kotler/Keller, Marketing Management, 2009 p 121.

[17] See Kotler/Keller, Marketing Management, 2009 p 121.

[18] See Apollo-Optik, Unternehmensprofil, 2010 p 1.

[19] See Apollo-Optik, Unternehmensprofil, 2010 p 3.

[20] See Zentralverband der Augenoptiker, Filialisten, 2009.

[21] See Apollo-Optik, Unternehmensprofil, 2010 p 1.

[22] See Apollo-Optik, Web-Site – Sortiment, 2010.

[23] See Apollo-Optik, Web-Site – Spezialbrillen, 2010.

[24] See Apollo-Optik, Unternehmensprofil, 2010 p 5.

[25] See Apollo-Optik, Web-Site – Sortiment, 2010; Apollo-Optik, Web-Site – Beratung, 2010; Apollo-Optik, Web-Site – Service, 2010.

[26] See Institut für Demoskopie Allensbach, Brillenstudie, 2008, Appendix C p 1.

[27] See Institut für Demoskopie Allensbach, Brillenstudie, 2008, Appendix C p 1.

[28] See Institut für Demoskopie Allensbach, Brillenstudie, 2008, Appendix C p 2f.

[29] See Kotler/Keller, Marketing Management, 2009 p 208.

[30] Kotler/Keller, Marketing Management, 2009 p 210.

[31] See Kotler/Keller, Marketing Management, 2009 p 210.

[32] Kotler/Keller, Marketing Management, 2009 p 208.

[33] See Kotler/Keller, Marketing Management, 2009 p 208f.

[34] Kotler/Keller, Marketing Management, 2009 p 209.

[35] See Kotler/Keller, Marketing Management, 2009 p 209f.

Excerpt out of 20 pages

Details

Title
Creating Customer Value for Generation Y
College
AKAD University of Applied Sciences Pinneberg
Course
MKE 01
Grade
1,0
Author
Year
2010
Pages
20
Catalog Number
V200220
ISBN (eBook)
9783656278030
ISBN (Book)
9783656278092
File size
609 KB
Language
English
Tags
generation y, customer value, marketing, strategy, marketing strategy, apollo optik, targeting, market segmentation, geographic segmentation, demographic segmentation, psychographic segmentation, behavioral segmentation, purchase, purchasing glasses, social media, web 2.0, generations, millennial generation, echo boomers, customer perceived value, brille, brillen, kontaklinsen, generation zukunft, purchase decision
Quote paper
Dipl.Kfm, Christopher Schroeder (Author), 2010, Creating Customer Value for Generation Y, Munich, GRIN Verlag, https://www.grin.com/document/200220

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