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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.

Marketing Graph - Product Adoption Cycle

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