9 Winning Marketing Practices
Besides winning business practices, is there a set of winning marketing practices?
One frequently hears of one-liner formulas that promise marketing success. Here are nine of the more prominent one-liners:
1. Win Through Higher Quality
Everyone agrees that poor quality is bad for business. Customers who have been burned with bad quality won’t return and will bad-mouth the company. But what about winning through good quality? There are four problems.
First, quality has a lot of meanings. If an automobile company claims good quality, what does it mean? Do its cars have more starting reliability? Do they accelerate faster? Do the car bodies wear better over time? Customers care about different things, so a quality claim without further definition doesn’t mean much.
Second, people often can’t tell a product’s quality by looking at it. Consider buying a television receiver. You go into Circuit City and see a hundred different sets with the picture on and the sound blaring. You Look at a few popular brands that you favor. The picture quality is similar with most receivers. The casings may differ but hardly tell you anything about the set’s reliability. You don’t ask the salesperson to open the back of the set to inspect the quality of the components. In the end, you have at best an image of quality without any evidence.
Third, most companies are catching up to each other in quality in most markets. When that happens, quality is no longer a determinant of brand choice.
Fourth, some companies are known to have the highest quality, such as Motorola when it touts its 6 sigma quality. But are there enough customers who need that quality level and will pay for it? And what were Motorola’s costs of getting to 6 sigma quality? It is possible that getting to the highest quality level costs too much.
2. Win Through Better Service
We all want good service. But customers define it in different ways. Take service in a restaurant. Some customers would like the waiter to appear quickly, take the order accurately, and deliver the food soon. Other customers would feel that this is rushing them on what otherwise should be a leisurely evening out. Every service breaks down into a list of attributes: speed, cordiality, knowledge, problem-solving, and so on. Each person places different weights at different times in different contexts on each of the service attributes. Claiming better service isn’t enough.
3. Win Through Lower Prices
A low price strategy has worked for a number of companies, including the world’s largest furniture retailer, IKEA; the world’s largest general merchandise retailer, Wal-Mart; and one of America’s most profitable airlines, Southwest. Yet low-price leaders must be careful. A lower-price firm might suddenly enter the market. Sears practiced low prices for years, until Wal-Mart beat it on prices. Low price alone is not enough to build a viable business enterprise. The Yugo automobile was low in price; it was also lowest in quality and disappeared. A measure of quality and service must also be present, so that customers feel they are buying on value, not price alone.
4. Win Through High Market Share
Generally speaking, market share leaders make more money than their lamer competitors. They enjoy scale economies and higher brand recognition. There is a “bandwagon effect,” and first-time buyers have more confidence in choosing the company’s products. But many high market share leaders are not that profitable. A & P was America’s largest supermarket chain for many years and yet made pathetic profits. Consider the condition of such giant companies as IBM, Sears, and General Motors in the 1980s, a time when they were doing more poorly than many of their smaller competitors.
5. Win Through Adaptation and Customization
Many buyers will want the seller to modify his offering to contain special features or services they need. A business firm might want Federal Express to pick up its daily mail at 7 P.M., not 5 P.M. A hotel guest might want to rent a room for only part of the day. Such needs can represent opportunities for the seller. However, for many sellers, the cost may be too high to adapt the offering to each customer. Mass customization is working for some companies, but many others would find it to be an unprofitable strategy.
6. Win Through Continuous Product Improvement.
Continuous product improvement is a sound strategy, especially if the company can lead the pack in product improvements. But not all product improvements are valued. How much more would customers pay if they are told about a better detergent, a sharper razor blade, a faster automobile? Some products reach the limit of their improvement possibilities, and the last improvement doesn’t matter very much.
7. Win Through Product Innovation
A frequent exhortation is “Innovate or Evaporate.” True, some great innovative companies, such as Sony and 3M, have earned substantial profits by introducing superb new products. But the average company has not fared well in its new product introductions. The new product failure in branded consumer packaged goods is still around 80 percent; in the industrial goods world, it is around 30 percent. A company’s dilemma is that if it doesn’t introduce new products, it will probably “evaporate”; if it does introduce new products, it may lose a lot of money.
8. Win Through Entering High Growth Markets
High growth markets such as solid-state electronics, biotechnology, robotics, and telecommunications have the glamour. Some market leaders have made fortunes in those industries. But the average firm entering a high-growth market fails. One hundred new software firms start up in an area, such as computer graphics, and only a few survive. Once the market accepts some firm’s brand as the standard, that firm begins to enjoy increasing volume and returns. Microsoft’s Office has become the standard, and other good alternatives have been shuttled aside. An added problem is that products become obsolete very fast in these fast-growing industries, and each company must invest continually to keep up. They hardly recoup their profits from their last offering before they have to invest in developing its replacement.
9. Win Through Exceeding Customer Expectations
One of the most popular marketing cliches today is that a winning company is one that consistently exceeds customer expectations. Meeting customer expectations will only satisfy customers; exceeding their expectations will delight them. Customers who are delighted with a supplier have a much higher probability of remaining a customer.
The problem is that when a customer’s expectations are exceeded, he has higher expectations next time. The task of exceeding the higher expectations gets more difficult and more costly. Ultimately, the company must settle for just meeting the latest expectations.
Put another way, many of today’s customers want the highest quality, added services, great convenience, customization, return privileges, guarantees—all at the lowest price. Clearly each company has to decide which of these many customer wants it can meet profitably
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Mahmoud Bahgat