• Journal of Distribution Science
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• v.11 no.4
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• pp.61-72
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• 2013

Purpose - It is widely accepted that the process of developing marketing strategy is composed of three steps: market segmentation, target market selection and positioning. However, mass marketing strategy based on cost reduction through economies of scale and standardized products, can be also an effective strategic option. Many marketing scholars including Theodore Levitt emphasize the importance of applying the mass production concept to various industries including service industries. Especially, in times of economic downturn, the capability of providing consumers with low-priced, value products can be an important source of competitive advantage, as well as the ability of providing high-priced premium products. Marketers should decide whether they will implement mass marketing strategy or target marketing strategy. The present study theoretically shows that firms should understand the target customers' price elasticity as well as the firm's cost structure in order to make such a strategic decision. Research design, data, and methodology - Instead of implementing an empirical study, this study provides a theoretical(mathematical) investigation on the effect of consumers' price elasticity on a firm's optimal price level, profit, sales volume, revenue, and cost. The results are mostly deduced from derivative calculations and several graphs are utilized to represent the results on the relationships between the variables under study. Results - The analytical results suggest that it is more profitable for a firm to adopt the segment/target marketing strategy (more specifically the differentiation strategy) when the degree of consumers' heterogeneity is high and the proportion of the fixed cost in the total cost is low. On the other hand, if the degree of consumers' heterogeneity is low and the fixed cost is high, it is better to adopt the mass marketing strategy or the cost leadership strategy. The strategy of concentrating on a single target market will be effective when consumers' needs are highly heterogeneous but the fixed cost is high. Any of the three types of generic strategies proposed my Porter(1980, 1985) can be applied when both the consumers' heterogeneity and the fixed cost are low. This study also proposes the contribution-margin-based method for developing the optimal pricing strategy. Conclusions - One of the primary roles of marketers is to find a proper compromise between the two conflicting goals of maximizing customer satisfaction and minimizing cost. In order to do so, he or she should understand the characteristics of the target customers as well as the cost structure of the firm. In addition to the theoretical analyses, this study discusses several business cases and explains how superior companies find the optimal compromise position between these two goals and dominate the market. One of the radical changes recently taking place in business arena is the reduction of production and distribution costs of both physical goods and information due to the advancement and the wide diffusion of information technology. The cost reduction combined with lowered priced elasticity incurred by customized products and services, will enable many firms to adopt the mass customization strategy.

• Archives of design research
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• v.17 no.2
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• pp.77-86
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• 2004

User-Centered Design Approach plays important role in dealing with usability issues for developing modern technology products. Yet it is still questionable whether the User-Centered approach is enough for the development of successful consumer contents since the User-Centered Design is originated from the software engineering field where meeting customers' functional requirement is the most critical aspect in developing a software. However, modern consumer market is already saturated and in order to meet ever increasing consumer requirements, the User-Centered Design approach needs to be expanded. As a way of incorporating the User-Centered Approach into the consumer product development, Jordan suggested the 'Pleasure-based Approach' in industrial design field, which usually generates multi-dimensional user requirements: 1)physical, 2)cognitive, 3)identity and 4) social. It is the current tendency that many portal and community service providers focus on fulfilling both functional and emotional needs for users when developing new items, contents and services. Previously fulfilling consumers' emotional needs solely depend on visual designer's graphical sense and capability. However, taking the customer-centered approach on withdrawing consumers' unknown needs is getting critical in the competitive market environment. This paper reviews different types of user research techniques and categorized into 6 ways based on Kano(1992)'s product quality model. Based on his theory, only performance factors, such as suability, can be identified through the user-centered design approach. The user-centered design approach has to be expanded to include factors include personality, sociability, pleasure, and so on. In order to identify performance as well as excellent factors through user research, a user-research framework was established and tested through the case study, which is ' the development of new online service for teens '. The results of the user research were summarized at the end of the paper and the pros and cons of each research techniques were analyzed.