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Anna Peter

Prof Ramaswamy added that companies needed to engage in dialogue with customers and ensure a high degree of transparency in company operations to retain customer interest.

Mumbai , April 15

CONSUMERS seeking choices and new experiences are increasingly pressuring companies' margins.

With a plethora of offerings, customers are increasingly choosing products that promise personal interactions with sales or marketing staff.

This, according to Prof Venkat Ramaswamy of Stephen M. Ross School of Business, University of Michigan, is the `value creation dilemma' affecting modern business. Customers are increasingly craving the buying `experience' and `choice' rather than the product itself.

Prof Ramaswamy said that traditional value creation processes were breaking down and most companies still associated value creation with products and services. However, the consumer had, in the interim, become knowledgeable and was clear about his `choice'.

Some of the sectors that are witnessing pressures on bottomlines due to this phenomenon are entertainment, electronics, healthcare and financial services.

Some companies that have implemented changes in strategy have seen remarkable results. Apple with its iPod and eq-life, a pharmacy chain in the US, have used customer interactions successfully to boost product sales.

iPod has been so successful that long queues form at each iPod store opening. It has an in-store learning environment that helps customers understand the iPod and how it works.

The most frequently asked question was how music could be downloaded. The iPod can hold about 5,000 songs, which can be downloaded at about a dollar a song.

Customers are engaged by their need to know how to use products and services and are carried through these functions by staff. For the company, processes, customer and product become the main focus and the interaction creates more value for the company.

Various reports indicate that more than 10 million Apple iPods have been sold worldwide since their introduction in October 2001 and some four million were sold in December 2004 alone.

Similarly eq-life, a chain of pharmacies in the US, joined hands with PrairieStone Pharmacy and Park Nicollet Health Services to roll out a new retail concept.

The company believed that its staff could focus on patient care and leave the "pouring, licking and sticking" of prescriptions to technology. This leaves its pharmacists free to advise customers on illnesses, lifestyles and health issues.

In India, Hindustan Lever has rolled out a similar interactive concept with the Ayush Therapy Centre.

Prof Ramaswamy added that companies needed to engage in dialogue with customers and ensure a high degree of transparency in company operations to retain customer interest.

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`Consumers choose products that promise personal interactions'

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