Marketing
This section contains information on Marketing. As with the other sections
it is in no particular order.
Q. Who is your customer
most likely to be influenced by?
A. A recommendation by an authoritative and impartial source that does
not stand to gain if a sale is made.
The 'Ascending Scale of Power of Influence', as marketers call it, is a method
to rank media in the order in which it is most likely to favourably influence
your customers.
At the top of the scale is the personal recommendation of someone whose opinion
is trusted and who is known to be unbiased. An example here is the endorsement
of an industry expert who is not on the payroll, such as an existing user of the
goods or services, who is in the same line of business as the prospective customer.
Whilst highly effective, this method is hard to achieve and can be expensive and
time consuming.
Further down the scale is an approach by a sales person. Whilst they may be
seen to be knowledgeable, and hopefully your best sales person will be that, they
clearly stand to gain of a sale is made. So they can hardly be unbiased. Sales
calls, however they are made, are an expensive way to reach customers, especially
if their orders are likely to be small and infrequent.
Further down the scale of influence comes advertising in the general media…press,
radio, TV and so forth. However whilst these methods may be lower down the scale,
they can reach much more of the market, and if done well can be effective. But
as a rule of thumb you need three bursts of advertising on TV and the like to
have any real chance of getting worthwhile results. The first advertisement alerts
people to the product or service, the second reminds them to get a pen and paper
and on the third occasion "viewers" are organised enough to get down
the details. At least that is the theory!
Q. The fastest
and most certain way to attain profitable growth is to:
A. Discourage existing customers from defecting and get them and others
like them to buy more.
Every business loses customers.
What is not generally appreciated is that even if you can win more new ones
than you lose, you are still missing out on a major growth opportunity.
Bain, the American consulting group has demonstrated that by hanging on to
an extra 5 per cent of your customers each year you can double profits. As on
average companies lose and find half their customers every five years, there is
plenty of scope for improvement.
The reasons that "loyalty" improves profitability are:
- Retaining customers costs less than finding and capturing new ones.
- Loyal customers tend to place larger orders.
- Loyal customers don't always place price first, whilst new ones do.
Q. What is the single most important reason that customers
defect to the competition?
A. Indifference to complaints.
According to research cited by Philip Kotler, the American marketing guru based
at Northwestern University, 96% of unhappy people never tell the company, they
just stop buying! He also claims that an unhappy customer gripes to between eleven
and twenty others. Kotler claims that indifference to complaints is the main reason
customers defect to the competition.
However as most won't complain of their own accord you have to "maximise
the customers' opportunity to complain". You have to set up systems to ensure
you are 'listening' to customers: satisfaction surveys, feedback questionnaires
and so forth, and you must be seen to be acting on complaints and criticisms.
Q. What proportion of complaining customers would probably
buy from the same supplier if their complaint were dealt with effectively?
A. 80%!
This takes us back to the research quoted by Philip Kotler in his classic book,
Marketing Management; Analysis, Planning, Implementation and Control. He claims
that of the customers who register a complaint, between 54 and 70 percent will
do business with the organisation if their complaint is resolved.
The figure goes up to a staggering 95% if the customer feels that the complaint
was resolved quickly.
Overall it is estimated that around 80% of complaining customers could easily
we wooed back. As a further bonus customers who have complained to an organisation
and had their complaints satisfactorily resolved tell an average of five people
about the treatment they have received.
Q. The four
"P's" of marketing are:
A. Product, price, place of sale, promotion.
There are literally dozens of marketing mix tools, however E-Jerome McCarthy
in his book, Basic Marketing- A Managerial Approach, popularised a four-factor
classification of these tools called the Four Ps. Each 'P' has a number of subheadings.
So, for example, Price, covers such factors as discounts, allowances, credit terms
and so forth.
Q. When launching a new product or service
the proportion of the whole market who are likely to buy initially are known as
Innovators. What percentage of a typical market is likely to be Innovators?
A. 2.5%
Lets suppose you have decided to launch into the Internet Flower business.
Initially your market has been constrained to affluent men within 5 miles of your
base because of initial difficulties with delivery. So if market research shows
that there are 100,000 people that meet the profile of your ideal customer and
they have regular access to the Internet, the market open for exploitation at
the outset may be as low as 2,500.
That is 2.5% of the total. Only the Innovators, generally the more adventurous
types who try out new things early on are likely to buy initially. The Early Adopters
will only start buying when the service has the seal of approval from the Innovators,
and so on down the chain, until you reach the laggards. Market researchers have
come up with this typical profile of a market place, with Innovators only accounting
for 2.5%, Early Adopters 13.5% and so forth through to Laggards who account for
the final 16% of the market. 
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