Customer Segmentation and Product Differentiation

[haogwu]

Hi guys, first off, great game and I love the continued support and development.

I think a big feature would be to introduce different customer segments. Every consumer would have different preferences for different product attributes. For example, for a smartphone, one consumer might think price is extremely important, brand not so much, screen important, CPU very important, etc. Another would care only about branding. If you plot out the population for any two attributes, it would look like a scatterplot. Your market share will be determined whether you product attributes match a consumer's preference better than a competitor. MBA games such as MARKSTRAT and BASES model this, to great effect.

This means that it is very hard to capture huge market share is difficult as no one product will match the preferences of all consumers. Marketing will also be more important (right now you can basically eventually gain 80% market share with no advertising), as a large group of consumers should predominately only care about what product has the strongest brand name unless there's an enormous gap in quality/price. There should also be a segment of value consumers who will just buy the lowest priced product unless there's an enormous gap in quality. When you manufacture a product, you should be able to pick the attributes you want (high quality, high cost, or lower quality and lower cost).

Consumer preferences should change randomly over time as well, as clusters and segments grow and shrink. As wages grow, there should be a growing segment of consumers who prefer high quality, high price, high brand products. Of course, different products should have different consumer priorities to mirror real life (frozen chicken will be mostly price, some quality..... leather bags should be more brand over quality and price, etc.)

Take a look at the MARKSTRAT and BASES games (if you guys haven't already), I bet you guys can improve on them dramatically given the world you've built. (Maybe you can tap into the huge educational software market as well. This game is so much more advanced than what I played in B-school).