The Hindu Business Line : Customers buy benefits, not products

HOW much time do you take to respond to customer questions? Two minutes, 20 hours, or two days? If you're saying, "Um ... er ... uh," let me cheer you up. You needn't be apologetic, after all, because there is good company. Two out of three top European companies do not respond within 48 hours, informs P. R. Smith in the second edition of Great Answers to Tough Marketing Questions, from Kogan Page, distributed by Viva (www.vivagroupindia.net) .

In most companies, there is no dearth of marketing awareness; what is missing is "a corresponding level of proper application," writes Smith, in answer to the question, `Why are most companies weak at marketing?' In short, we have the knowledge but not the enthusiasm, as stated by the Chartered Institute of Marketing.

Quite zealously, therefore, I plunge into the book that is full of 100-plus questions and `no-nonsense answers.' First things first, so I stop at `What is marketing?' Marketing is selling goods that don't come back to people that do, and it is about being best at something important to your customers; these definitions are from `unknown' sources, yet meaningful. Peter Drucker's view is straight and simple: "Any business enterprise has two and only these two basic functions: marketing and innovation." A poster-able quote!

Service sounds good, but "you can only offer what is within your resources," reminds Smith. If customer service is becoming expensive, ask yourself a few questions: "Will you lose business if you withdraw the extra service? Does the competition offer the same level of extra service? Would customers be prepared to pay more for it? Is there a more cost-effective way of delivering the same service?" The author adds that most customer service costs very little. For instance, "A smile can make all the difference. The same staff can deliver either the best or worst customer service depending on their level of training and motivation."

Heraclitus (500 AD), a Greek philosopher, said, "You cannot step twice into the same river." Likewise, "marketing mix has to change to meet new market conditions." Plans also should change if they aren't delivering results. Review annual plans every quarter, advises Smith. "All plans are but snapshots in time. Unless they are flexible and revised regularly, they will probably fail." SOSTAC plus 3Ms make a perfect plan. The acronym stands for situation analysis, objectives, strategy, tactics, action, and control; and the 3Ms are men, money, and minutes.

One of the tougher questions reads, "Is price simply what the customer will pay, or is it a more flexible marketing tool?" It is important to know the answer because "setting the right price can mean the difference between profit and loss, survival and failure." A basic rule, as Smith puts it, is to price "at the level that your customers expect to pay for the quality you are delivering."

Too high a price results in low sales, and too low a price gives you high sales but without profit. Therefore, "research into customers' attitudes towards not just the product, but also how they will value it." Remember that value is "a combination of price and perceived quality."

What are logistics? Physical distribution. To plan this, start with the customer and "work backwards to production." Logistics involve "a chain of events from sales forecasting to production planning to stock holding, warehousing, packing, order processing, vehicle maintenance, staffing, transporting, customer service, invoice, and so on."

Tough job; but your customers may not be interested in listening to your logistics hitches. "They simply want goods delivered on time, in a secure, cost-effective and, ideally, friendly way."

Customers don't buy products, they buy benefits. Charles Revlon's quote captures that spirit: "In the factory we make cosmetics, in the market we sell hope." Thus, there's the core product, intangibly sitting inside the tangible product. Outside the tangible one is the augmented product — such as "guarantees and services like credit facilities, delivery, installation, training, advice," and so on. A mature market may look for fewer intangibles, but "more intangibles might just create a competitive advantage."

A book that is tangibly rich in topics, intangibly attractive for its directness, and augmented by understandable English. So, how long do you expect to take to start on Smith? Twenty hours, or two days?

BookMark@thehindu.co.in

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