1.14 Customer Excellence
Here the focus is on the market choice within Piercy’s pathway to customer orientation, which also includes the value proposition and key relationships which are not discussed here.
1\. Market choices
This involves Philip Kotler’s exchange process, in which you need to know who your customers are and to motivate them to buy, and Millman’s six markets model, which helps identifying your different customers, often linked to each other, as well as their wants and needs.
The markets are:
\- Recruitments
\- Supplier
\- Internal
\- Customer
\- Referral
\- Influence
Customer buying behaviour is “the decision processes and acts of individuals involved in buying and using products and services.” (Dibb, 1997)
\- Buyer reactions to products are important
\- understand influences
\- using segments
\- understanding behaviour helps predict future
Lancaster and Massingham proposed a framework for understanding customers and said there are three areas to take into account:
1\. Customers as Individuals
You need to know about things like experience, learning style, personality, lifestyle and stage in their life cycle as well as the resulting characteristics important for their buying behaviour. (See book 14 page 13)
2\. Customer as a decision maker
The decision making process evolves around: need recognition, information search, evaluation, buying decision, post-purchase evaluation.
An important thing to remember is External Stimuli which can be influenced by the individual, information search, culture, marketing and the environment. This will move to problem recognition. All the steps from there are deeply influenced by individual and cultural influences.
This process is especially apparent in high risk purchases. High-credence services (doctor, dentist, financial services, …) are an item where you will not have full knowledge. You need to trust that the service you get will fulfil you need.
In the information search this will make personal things like word-of-mouth become more important.
You might have an easier time switching between services which might put the evaluation elsewhere in the process and post-purchase evaluation becomes more important.
High-involvement decisions will rely on more people and are influenced by the extent of decision making and degree of involvement.
\- Inertia: more of a habit and low involvement, you just buy as it is not worth the trouble for something else.
\- Brand loyalty: again a habit thing but with high involvement in the purchase, possible more of trust than habit
\- Limited decision making: high decision making but low involvement because of low risk purchase
\- Complex decision making: everything high, like house or car or holiday
Businesses to business decisions are often risky and a good relationship between buyer and seller is needed to reduce the perceived risk.
3\. Customers as members of (sub-) cultures
Defined as the sum of all learned beliefs, values and customs. Different countries eat different amounts of pasta for example.
From that knowledge you need to move on to market segmentation, used to divide the market in easily targeted groups. There are different segments and variables but understanding the common characteristics that help you group potential customers based on your knowledge about them, is crucial for a correct strategy.
To target segments you can do so:
\- Undifferentiated
\- differentiated
\- Concentrated
\- customized
You should also look at choosing segments in which you can keep customers long term. On top of that one-to-one customization becomes more important as it also becomes possible.
You also need to take into account how your customers affect you, e.g. loud guests in a restaurant targeted at fine dining.
If you know all of the above, then you need to think about positioning. Your company for your customers to be able to be aware of the differences between you and your competitors.