Why is customer satisfaction so important?

Because it IS.

Within the realms of customer satisfaction, which is a very wide scope to begin with, a company typically uses information that is a core component of the marketing research system. Some of the measurements include customer loyalty, loyalty strength, trend information, signal problem areas, phone surveys, or online surveys. But what is often most important are the open ended questions that are asked of customers. The answers that are provided can provide some of the most insightful information for strategy building.

What the company often wants to know is why the customer chooses brand A over brand B or the significant message that will resonate within the ears of your customers.  Is it because they have a superior product? Or could it be that customer service is the crucial strategic method of gaining and maintaining your customers?   

There are certain aspects within the business world that every company should be aware of and it is not the bottom line, it is the reliance upon their customers. Happy customers tell their friends, their family, and their coworkers of this amazing new product or service because they want to share a good thing. Word of mouth advertising is one of the most valuable ways to promote a product. But I digress.

Bread, Chocolate, a dress, and Ida Jean

So, I am a victim of nominal, moderate, and high involvement though processes.  On the way home the other day, I stopped by the food market to pick up a few items. As I walked through the store, I pick up the usual things including tea, a loaf of Wonder Bread, and 2 gallons of milk. This part of the trip to the store would be considered a nominal decision-making process. That means that I don't need to make big decisions surrounding the purchase and they are somewhat habitual purchases. Now this next step may not seem as large on paper as it was in real life, but trust me it sure was a big deal when I arrived home and my wife saw what I bought. It wasn't a new car, but it was indeed out of character and it did require a moderate amount of involvement within the decision-making process. Let me preface this by saying that my wife is pregnant and is due within the next 30 days. When I was waiting in line, I saw a dark chocolate candy bar (a brand in which was my wife's favorite but I had not seen for some time).  I admit that I picked it up and put it back a couple times because I know that my wife is worried about her weight, especially in her ‘condition.’ After setting the candy bar back in the display for the fourth time, I said what the heck.  I decided to purchase two of them for her, well both for me if she chose to reject them. I honestly did not know if I had done the right thing but decided to buy them for her anyway. Even on the way home, I tossed around in my mind if I should have bought them or if I should have just left them in their cozy display. For me, this falls into the moderate involvement purchase process because I really had to evaluate the situation. In the end, I did do the right thing because she was ecstatic over my thoughtfulness and the candy bars.  Although I admit that I ate the majority of the second one. 

Perhaps one of the most high involvement purchases that involved extended decision-making included clothing for my wife. This is our second child and she does have many daily wear clothes that are still in style and that she wore when she was pregnant with our first. But there was an honorary dinner for a close family friend which required both of us to dress in evening wear. I had my suit but my wife did not have a dress. So with our daughter in tow, we went shopping for a dress but the catch was that she was five months pregnant. After a long days shopping trip, seven stores, what seemed to be 57 try-ons, the purchase and return of an outfit, and a cranky three year old, my wife finally found a dress.  Yes, this was an incredibly high involvement purchase and a huge extended decision-making process but it also brings us around to customer satisfaction.

My wife is very shy as well as conservative within the style of clothing that she prefers. In our shopping we went to many boutiques and several department stores with no luck. We were walking back towards our car when she spotted a very small store located almost off of an alleyway. In any case, the store was difficult to find and without knowing where it was, anyone could have missed it. It was in the store that the sales lady, named Ida Jean, honestly and truly took an interest in finding my wife the perfect outfit. Ida Jean catered to me and my three-year-old daughter, as well as my wife. As my wife was trying on dresses, she prepared a most satisfying cup of coffee as well as providing snacks for my daughter. I don't know how she did it, but she managed to be at every turn. She was with my wife helping her into and out of the dresses, helped my wife feel at ease, but yet the next thing I knew she was entertaining my daughter and all without missing a beat.  Ida Jean was a star!

So let's analyze this. 

The relationship between value creation and customer satisfaction was apparent, at least with my high involvement purchase. The customer needs and the customer use situation can be defined as a dress for a formal dinner. The dress is the desired benefit. The creation of value (comprised of excellent customer service) was within the delivered benefits and the cost of purchase.  Combined, it equals a great overall experience with that particular store, future purchases from that store, as well as word of mouth advertising.  All in all, my wife was satisfied with the purchase, I was satisfied with the purchase, and my daughter was gently rocked to sleep in her stroller by Ida Jean, the sales lady. That is what I call customer service!

For that matter, my wife and I were so impressed with the service that our entire family received that we have written to the owner of the store commending Ida Jean on her excellent service.  We received a reply from the owner about a week ago (along with a 20% off coupon that my wife intends on using after the birth of our second child...hopefully soon...real soon).

The Five C’s in relationship to Competitive Analysis

Customers:   We need to focus on the market demand, buyer behavior, price sensitivity, product usage, etc.  A customer has a plethora of products to choose from, which means that we have many decisions to make, and it will be up to us to determine what that customer needs and what, as a company, we are going to satisfy.  We will need to research benefits, costs, frequencies, quantities, and customer desires. 

Competitors:  We need to focus on the overall competitive environment, perform a competitive analysis, measure opportunities and threats, and evaluate market attractiveness.  Our competitor analyses can give us insight to what the other companies might be up to.  Although sometimes the methods seem to be arbitrary in nature, they appear to hold much value and make sense when it comes time to apply the numbers. But, we must keep in mind that we cannot follow competitors too closely because we could end up losing sight of our customers. 

Collaborators:   This would generally be outside help that the company may recruit or hire for assistance.  It also includes suppliers and other intermediaries such as distributors, retailers, wholesalers, representatives, etc.

Company:  How do we define our market share?  It can be done through market analysis, marketing strategy, and break-even analysis.  Does our company meet the customer’s needs?  Can our company meet the customer’s needs?  What do we need to do to gain customers and can we do it?  We need to figure out how our company compares to the other companies who are our primary competitors. 

Competitive advantage:  Do we have a competitive advantage?  If we don’t, then we need to figure out how to get it and maintain it.  What are the other companies doing to stay on top?  How are we going to define a competitive advantage?  I happen to agree with the Education Portal that suggests that marketing is not just sales.  It takes much more to develop a marketing strategy…but also one must remember to take action and implement! 

But, why would a company want to study their competitors?  Because management needs to know what each of their competitors is doing to understand the advantages and/or the disadvantages of the company.  As well, the understanding will provide a knowledgeable basis for development for future strategies and it will give management an overall understanding of the competitor's history.  Also in play is the aspect of the company attempting to make sure that their product and/or services are better than the competition and it may also impact future funding (for you company possibly receiving funds over the competition or vice versa).

So, what do you want to know about your competition?  These eight key areas would be very useful:

• Major Competitors – Who are they?
• Characteristics – What are the characteristics of your competitors?
• Strengths and Weaknesses – What are their strengths and weaknesses?
• Capabilities – What are their marketing capabilities?
• Environmental changes – How will the competitors respond to environmental changes?
• Marketing Strategies – How will the competitors respond to your company marketing strategies?
• Competitive Advantages – Are there competitive advantages within the marketplace?
• Changes – Will the competitive set change in the future?

By using the above steps as a guide, the company should also define and assess each key competitor by a general business assessment and a marketing capability assessment.  There should also be a thorough evaluation of strengths and weaknesses as well as an estimation of strategies and responses.

Articles

In the article, "The Hypnotic Danger of Competitive Analysis," the author states, "Anything is possible in today's wild world of business."  This could not be any closer to the truth.  anything indeed can happen in the world from unexpected bankruptcies like Kodak, which was one of the most well-known names in the industry.  [Kodak's revenue peaked at $14.3 billion in 2005 and has been sliding since, dipping to $6 billion in 2011.  (Daneman, 2012)]  Or perhaps we can use Mark Zuckerberg, the Harvard un-graduate who is now the king of social media as an unexpected success.

In the article, "What's the Competition Doing to You?" the author points out the , "Something is missing when companies focus internally and only indirectly consider the external competitive environment."  Kodak, did you get a chance to read that? Apparently, Mark and the rest of the Facebook crew did heed that type of advice, as they are still at the top of their industry.  If a company chooses to ignore the landscape and position the focus in the wrong place....ummm...Kodak, go ahead and finish the story.

In the article, "Mapping Your Competitive Position," the author has designed a way for companies to use a particular statistical analysis method for mapping of strategies.  it includes, but is not limited to, regression analysis, mapping and definition of the marketplace, and valuation of benefits.  The end result is not meant to be a cure-all or even a Band-aid.  It is meant to be used as a tool to assist in finding the correct strategies for the company.

Competitive analysis is important for any business.  A competitive analysis is designed to gain a better picture of what competitors are doing, what plans they may have, provide an understanding of the marketplace, define or refine strategic decisions, and provide clarifications regarding the nature of the competition.

Pharmasim

I have learned to make sure that you have all of your ducks in a row prior to making a decision.  Always, always, always look into the future and get as much information in the beginning that you possibly can.  I overlooked reports initially believing that they would be of no use and ended up that I needed them, especially for long term planning.

Daneman, Matthew. "Kodak files business plan, sees turnaround, growth in 2013." USAToday.  14 Aug. 2012. Web. 20 Apr. 2013.

What exactly do marketing managers do?  That is the question! 

One thing that is clear is that a marketing manager does not just sell.  They must understand the customer and manage the customer journey.  They must be able to develop a marketing strategy and manage the marketing mix.  They must be able to instill a marketing led philosophy throughout the organization.  They must be able to measure success and manage failure, as well as ensure timely delivery.  They should be able to perform research and identify primary opportunities.  The marketing manager should be accustomed to managing budgets and agencies.  The marketing manager should be adept at making customer driven decisions.

It is important to know what others are doing in the marketplace.   Using Sony and the Betamax as an example, "The Betamax video recorder hit stores in 1975.  A year later, Sony's rival released another video recorder -- the VHS.  By early 1977, four other companies were selling VHS machines.  Meanwhile, Sony chose not to license Betamax technology.  Because the two formats were incompatible, consumers had to choose between the two.  As Sony was the lone Betamax producer, you can guess which system they chose." (AOL.com, 2013) This is a self-telling story of keeping your eye on the competitor.

  

It is also important to align with what each customer desires.  Smith & Wesson, yes, the famous gun company, once tried to produce a bicycle to appeal to the public.  A what you say?  I was taken aback, too.  When I think of a bicycle, I think of Schwinn and see a family happily biking their way through a serene park-like setting to a picnic. Smith & Wesson does indeed produce bicycles but they are geared towards the law enforcement industry.  "A study commissioned by the company found brand awareness so strong that consumers said they would consider S&W not only for handguns, but for other products as well.  As long as that something isn't mountain bikes.  S&W had been selling bicycles designed for law enforcement, security and emergency response since 1997.  So in 2002, it took another step by offering mountain bikes to consumers too.  Unfortunately, while the bikes continue to be loved by public service officials, the public never caught the fever." (AOL.com, 2013)  A marketing failure?  Possibly, but I have a tendency to believe that it was more of an ill-fated product alignment with the market desires.  I wonder what would have happened if they had decided upon a thermos?

Identifying trends, research, and cultural effects are a must do for the marketing of every product. Let’s use the marketing blunder of American Motors and the car model of the Matador.  "The Matador did not do well in Puerto Rico where 'matador' has the connotation of 'killer'.  Bull-fighting was abolished on the island more than 100 years ago when the U.S. took control of Puerto Rico." (Texin, 2009)  Now tell me, who would want to ride in a car called killer?  This is a primary example of NOT doing your homework!

A value must be created that delivers satisfaction and loyalty.  Customer loyalty is very significant in the creation and maintenance of competitive advantages.  It would stand to reason that even with small increases in loyal customers a large amount of profitability can be realized.  Loyalty on the company’s behalf is remembering what your customer base likes, keeping in touch with the customer, rewarding them for choosing your company, and figuring out what you can do to make them even happier.  Loyalty on the consumer’s behalf is primarily comprised of a continuance to use the company’s product or service. 

So what is the role of the marketing manager when it comes to customer loyalty?  According to Cohen, "The marketer finds out what the customer wants and influences the organization to produce it."  (Cohen, 2012)  The marketer must convince the organization that the market orientation should be tied into the customer focus and that a higher level of overall satisfaction and loyalty will increase retention.  In a nutshell, a happy customer positively influences the profitability level of the business.

It takes a cornucopia of information, research, metrics, studies, investigations, and other methods of exploration and influence to come up with the right marketing mix.  The marketing manager must be able to understand the entire puzzle of the target market, loyalty aspects, value that is created as well as deliver the same to the marketplace.

Cohen, William (2012-09-26). Drucker on Marketing: Lessons from the World's Most Influential Business Thinker (p. 34). McGraw-Hill. Kindle Edition.

Texin, Tex. "Translations That (Allegedly) Embarrassed Their Marketing Departments."  Marketing Translation Mistakes. 2009. Web. 12 Apr 2013.

"Top 25 Biggest Product Flops Of All Time." Daily Finance.  AOL.com, 2013. Web. 13 Apr. 2013

Marketing: Week 1

When companies align themselves for marketing efforts, they typically have production, materials, and office aspects in place.  But it is not all smoke, mirrors, and a wave of a magic wand.  Often, just because your product is better, bigger, or faster, does not mean that it will sell. 

A business has got to have two functions in order to achieve profit maximization.  “According to Drucker, profit supplies the business with energy by supporting its two basic functions: marketing and innovation.” (Cohen, 2012)  The comparison of profits to oxygen is a great way to gain an overall understanding.  Cohen also points out, “If the focus is solely on profit maximization, the customer can be ignored or given secondary consideration.” (Cohen, 2012)  It is the perfect combination of innovation and marketing that leads to profit.  

Part of the overall purpose of marketing is to invite the potential customer to the product.  But, if the company lacks the innovation to retain the customer, then all may be lost, including the profit.

If profit maximization is the only goal of the company, it could lead to long term danger.  The danger could arrive in the form of incorrect, hazardous, or misleading products.  It could mean injury or death to a consumer or an employee.  It could lead to a company closure, loss of customers, and loss of innovation.  Is it really worth the risk?

The ultimate test of a company is the gaining of a customer.  “…Drucker wrote, “The customer is the foundation of a business and keeps it in existence. He alone gives employment. To supply the wants and needs of a consumer, society entrusts wealth-producing resources to the business enterprise.” (Cohen, 2012)  Customers are what dictates the who, what, why, where, when, and how of any product.  The trick for the marketing department is to figure out what goes to who and why and decipher the where, when and how…and to do it successfully time after time.

Cohen states, “If you still think that marketing and selling are pretty much the same, you are wrong because you have only part of the answer. Drucker knew that not only are selling and marketing not the same, but that good selling could actually be adversarial to good marketing.” (Cohen, 2012)  If a product is sold to a customer who has no use for the product, is of shoddy workmanship, or the right product does not land in the right customer’s lap, then the company may wish to consider the effects of a zero profit margin.  As well, if a product is pushed into the marketplace that has a minimal profit margin, how effective to the bottom line profit can that be?

Cohen, William (2012-09-26). Drucker on Marketing: Lessons from the World's Most Influential Business Thinker . McGraw-Hill. Kindle Edition.