Q 69Q 69
Xerox serves a diverse set of customers in the business market.
Customer group A demands a wide variety of services in addition to a perfectly functioning copier. These customers value the relationship with Xerox and are willing to pay a premium for product and service quality.
Customer group B wants a quality copier but, most of all, they want a rock bottom price and choose suppliers on that basis.
Customer group C demands a quality product and extensive service support but wants all of this for a "rock bottom" price. These customers will freely switch from one supplier to the next. As competition intensifies for Xerox, more customers are moving into this group each month.
First, describe how Xerox might develop a portfolio of relationship strategies to meet the needs of such diverse customer groups. Second, some customers in each group are more costly to serve than others. How should such cost differences be reflected in the particular relationship strategies that Xerox follows? Third, what strategies can Xerox follow to increase the switching costs of customers in Group B or Group C?