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PART I
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Identifying and Selecting Customer Value
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2
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Focus on the customer
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In earlier years the dominant business paradigm was mass production in which rms produced as much as they could, depending on cost structures In many situations the market was only partly satis ed A mass production mentality encourages a strong pressure to move output down the distribution channel to where it can be consumed with an accompanying pressure on selling what has been produced Selling is emphasized, not marketing
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Marketing, being a more sophisticated and complex process, gets ignored Selling focuses on the needs of the seller, marketing on the needs of the buyer Selling is preoccupied with the seller s needs to convert his product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and nally consuming it (Levitt 1991, p 10)
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While a focus on mass production still exists in many organizations, the beliefs and assumptions held in common and taken for granted in successful organizations are a customer orientation where the focus is on satisfying customer needs and wants while providing a pro t for shareholders A focus on customers means addressing their needs in consumer and industrial markets and understanding their behaviour in all its aspects The wide selection of products available nowadays indicates that most of us nd something that meets our requirements Pleasing the customer is, therefore, not about producing more products and services but about producing the right products
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Relevance of a customer orientation
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A customer orientation means focusing exclusively on customers as the way to achieve long-run pro ts It means directly appealing to customers by offering a better match of products or services to customer needs An unbalanced customer focus may arise, however, where the product category or brand manager devotes attention only to customers and pays less attention to other actors in the business system Too great a focus on customers can lead to rapid pseudo-product innovation and differentiation, short product life cycles and emphasis on small-batch production of specialized products that may be a response to a wish list rather than to real needs
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[24] Strategic Marketing
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Companies which treat every customer the same are following an approach based on mass production mass marketing presuming that all customers have similar needs and wants and that the provision of value means satisfying customers with standard products, communicated in the same way throughout the market and delivered at the same price and through the same distribution channels The mass market approach is appropriate when there is little variation in the needs of customers for a speci c product Apart from some commodities, it is extremely rare to nd this condition in practice since people express wide-ranging preferences for the things they buy The extensive range of product and service options available in retail outlets attests to the validity of this claim For this reason a customer orientation obliges the organization to examine customer expectations regarding the performance of a product or service purchased The balance of expectations when measured against performance presents managers with a measure of customer satisfaction (Figure 21) Satis ed customers are presumed to manifest long-term loyalty which results in pro ts for the organization
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Consumer organizational market continuum
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A consumer market is de ned as all the individuals and households who are actual and potential buyers of products and services for personal, family or household consumption An organizational market contains all the organizations which buy products and services as components, raw materials or equipment to be used in the provision of other products and services While these markets are often treated separately, they have much in common Buying behaviours at both ends of the continuum from consumer to organizational markets are similar, only the emphasis is different The actors and in uencers are people motivated by similar factors but to different degrees
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