Being direct... AdVantage Apr 2004
What's it really all about: Making money out of customers ...
... or striving to create value for them ?
Shake off the shackles of the past ... check out Alan Mitchell's perhaps challenging view of a future focus for business!
Since writing about 'Right Side Up Marketing' by Alan Mitchell in the February issue, I have acquired a copy of his very latest book - 'The New Bottom Line', which he has written in collaboration with Andreas Bauer and Gerhard Hausruckinger. What makes this particular work extremely fascinating for me is whereas 'Right Side Up' primarily focused on the marketing imperative and the issue of how technology is changing people, this latest book makes the business case for understanding how companies should effectively be taking their products to market in the 21st Century - and more importantly, why.
As always, there is no possible way that I can do this work justice in an 800-word column, so if any of this appeals to your sense of curiosity, please get a copy of the book and work through its thirteen brilliant chapters for yourself. I am going to focus on a couple of quotes from just two of those chapters, and will hopefully create sufficient intrigue - to make you rush out and buy your own copy!
In the opening chapter called 'The Value Gaps', the authors describe one of the key value gaps (the distribution of seller-centric versus buyer-centric information) as follows: '… the rhetoric of marketing is about identifying and meeting customer needs, but when old bottom line seller-centric marketers actually go to market, their marketing activities (really) focus on the needs of the seller (themselves): i.e. how to sell more, more profitably…'
'The rhetoric of marketing tells us that by focusing on the needs of the customer, the company changes what it does (tweaks what it makes) to suit the customer's needs. But when seller-centric companies go to market, their marketing activities are (really) designed to get customers to change what they do, to suit the needs of the company: i.e. 'buy my brand!'…'
A second primary 'Value Gap' is the traditional focus on functional rather than emotional needs: …'mass production is very good at meeting functional and operational needs. It's not so good at addressing people's real emotional needs. You can't make happiness in a factory; you can't sell it through retailer's shops. The only place where we can make happiness - is in our own life…'
'…There's many a seller-centric marketer who attempts to appeal to peoples' need for a sense of community, self-esteem, identity, belonging or meaning - as a means of attracting them to their brand and closing a sale. But using people's emotions, as a means to an end, is very different to helping them maximise the emotional value they make in their own lives…' We really should find ways to help make a difference for our customers!
The 'Value Gaps' are summed up as follows: '…The value gaps exist because old bottom line businesses are unable or unwilling to address them. They are the product of deep-seated structural barriers and marketing myopia. Separately and together, they represent a huge untapped business opportunity. Addressing this opportunity however, requires a different type of business (or a business with very different focus). Every consumer-facing industry is affected by these value gaps, and successfully addressing them will transform the economics; criteria for success; value offerings; infrastructure and culture, of each and every one of the industries concerned…'
The second chapter that I want to quote from is way towards the end of the book, and is called 'Make Marketing a Service'. The authors start the chapter by making the point that the one thing that new bottom-liners understand implicitly is the economic value of relationships. Even many old bottom line companies have recognised the value of relationships and have started to build new bottom line capabilities - but sadly, for their old bottom line reasons. Examples are On-to-one Marketing; CRM; Lifetime Value Modelling; Cross-selling; Transactional Segmentation etc.
However, the authors also point out that some of these companies may well be missing the bigger picture: '…traditional marketers have long stressed that brands offer emotional as well as functional benefits. Some of these emotional benefits flow out of functional ones: a sense of reassurance about quality, for example. The brand acts as a 'badge' that says something about 'me' to other people, or is 'aspirational', for example. The manipulative side of this is the growth of 'smoke and mirrors' image-driven marketing - where companies seek to maximise the badging and other elements of their brand, to justify ludicrous margins…'
This sort of brand strategy focuses on making money out of customers (short term) rather than creating value for them, (a critical justification for any ongoing relationship) and while it may have worked adequately while the customers were gullible and perhaps unwitting participants in the process, the evidence is mounting that ordinary people are wising-up fast!
Sadly, particularly in the world of business, managements are not renowned for easily replacing that which seems familiar and secure…with something perceived as 'unproven', especially something that may be seen as 'putting at risk' - the making of money!!