by Vicki Matranga, Design Programs Coordinator
(Jonathan Knowles continued)
Participants Share Common Issues and Discover Relevancies in Workshop Exercises
After tabulating the morning’s exercise worksheets during the lunch break, Knowles presented a simple analysis at the afternoon session. He commented on different dynamics at companies of varied sizes: smaller companies have fewer silos, employees are more multi-functional and the marketing and financial divisions are more likely to work in harmony. Larger companies devote more resources to specialized roles and the interface between marketing and finance can be fractious.
A lengthy discussion about the global value of the Made in America brand ensued. In the Middle East, a U.S. brand won a bid over a product made in Japan that was lower in price. To whom is it important? If people are rational, why would someone pay more for same thing? They must believe U.S. quality, innovation, product safety and prestige are higher. In some countries, U.S. brands and lifestyles are appealing. It could be trust; Knowles related this phenomenon to Maslow’s hierarchy and named it “tribal” –an important element of some people’s identity. We are marketers–we don’t want everyone to want the same thing; we must understand what different customers want.
Understand Your Customer
Product differentiation is an important driver of your business. In a hostile pricing environment, suppliers must provide more evidence why price increases are justified when capable rivals offer products at benchmark prices. After reviewing Maslow’s need pyramid, Knowles called for groups to spend a half hour discussing the sources of value other than product or price for four types of customers: 1) institutional customer — B2B (imagine you are a hotel or hospital), 2) distributors, 3) big box and specialty retailers and 4) serving an end-consumer point of view.
Group leaders presented their findings that outlined many alternative strategies for how suppliers can build relationships and trust with their customers. Suggestions included on-time deliveries, customer service, brand reputation. Risks factors could be eliminated by providing warehousing to maintain stock levels, low minimum ordering quantities, product exclusives. Community initiatives ranged from supporting a client’s charities and special events to joining a buying group. Consumers may want products that promise product safety and no contaminants. The community appeal may feature continuing family traditions, encouraging social gatherings and recommendations from friends and family. Social media has enlarged the recommendation circle now to the entire world. Consumers may find meaning in sustainable products that satisfy social conscience. A consumer buys “what is important for me,” and does not always buy for brand or price. The same needs are fulfilled in varied ways. For some purchasers it could mean acquiring a well known brand or a buying from a street vendor selling something handmade; some want to have unique items, others want what is popular.
Key Points to Remember
“More” is not always the answer. Sometimes less is better, if you can remove a pain point or offer something simple to make the customer’s life easier or more comfortable.
Don’t underestimate how much your customer values information on trends and interpretations of how they compare with others you deal with. Your assessment on the pulse of the market is a great value.
Do you care enough about my company to internalize what’s important to me? Will you put yourself at the service of my success?
Shareholder value is only half of the equation. Create value for customer and capture enough of that value to stay in business.
We all have complicated and multi-level needs that are functions of performance, risk, community, status and meaning. There is no universal framework. Realize that price is not the way to increase value. Think of how to increase benefits to customers in other ways.
Different customers have different needs = segmentation and market selection
Define how your offering represents distinctive value to your customer = value proposition.
Mr. Knowles, CEO of New York-based Type 2 Consulting, is the author of the book, Vulcans, Earthlings and Marketing ROI, and many articles that have appeared in the Wall Street Journal, Harvard Business Review, MIT Sloan Management Review, Intellectual Asset Management, Professional Investor and in the AMA’s Marketing Management magazine.