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Customer Manufacturing Group
In This Issue
Influence
Pricing
Customer retention
Critical Success Factors
QR codes
More Information 



 

 


The Era of Influence

influencers

Marketing's over-arching responsibility to help the company grow the top-line has not changed. However, how to do that continues to evolve.

 

New tools and communications methods appear regularly. Understanding the potential value of those tools is important. However, there is a more important fundamental shift marketers need to understand. 

 

It is now less about getting to the decision maker, and more about how to influence the influencers of that decision maker. This month's paper looks at how to do that. 

 

Read this month's paper.

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Customer Manufacturing Update
June 2012

Dear Mitchell,

 

Here is your June Customer Manufacturing Update. The role of Marketing in helping to create sales continues to adapt. In this month's paper, Marketing 21: The Era of Influence, we look at the rise in the importance of the Influencer rather than just the Decision Maker. 

If People Were Rational Prices Would Be

 

Despite the beliefs of economists to the contrary, Kahneman & Taversky proved convincingly that human beings were not rational when it comes to prices. This point was driven home to me again when looking at Iceberg VodkaVodka. The U.S. Government defines Vodka by code as being "without distinctive character, aroma, taste or color." This is true no matter how many times it is distilled or who endorses it. And yet the market for ultra-premium vodka such as Grey Goose, Belvedere, etc., has grown dramatically over the last 20 years. These ultra or super-premium products and their ilk sell for $50/bottle or more.

 

Why? If what is in the bottle is regulated by law to be tasteless and odorless, how can you get people to pay more? And that is one of the secrets of pricing. Turns out price can be a proxy for value when value is difficult to determine on its own. If you price it higher, maybe it's worth more.

 

But now we see a strong increase in "low-priced" premium vodkas selling for less than $20/bottle. But with cool bottles. Or a back-story, like Iceberg Vodka from Newfoundland. Does this spell the end for high-priced vodka? I doubt it, but many of those so-called super-premium brands are likely to disappear as more low-cost premium brands appear.

 

What is your pricing strategy? Is it based on costs? Based on rational thinking? Or based on customer behavior?

Who Is This One For?

 

We are fans of Hyundai's innovative marketing and have posted before about their consumer-focused ideas. Their breakthrough program that if you got laid off you could return your car with no further obligation lead to a 28% increase in sales when most brands were suffering lower sales.Hyundai logo

 

Last year, Hyundai offered a guaranteed trade-in value program. Under this program they guaranteed the future value of your car. Kind of like with a lease. In fact they are using the Automotive Lease Guide as their benchmark for trade-in.

 

The caveat (obviously the car must be in good condition, just like with a leased vehicle) is that the car must be maintained by the dealer according to factory recommended service. Ah, now who is this program really for? We are not sure that uncertainty about the future value of Hyundais is keeping people from buying them ... and we may be wrong. What is clear is that this program could drive service business to the dealer.

 

Turns out Hyundai dealers have much lower service customer retention rates than do their competitors, and the percentage of dealer overhead absorbed by service is also well below the best brands. So, it would seem this program may be designed more to help the dealers get more service business than to overcome a sales obstacle from customers. That would be too bad if it is true.

 

 

As Yogi Berra was alleged to have said, "If people don't want to come out to the ballpark, nobody is going to stop them." If Hyundai dealers have a service retention problem, what is its root cause? Trying to get more customers to use the service department for a benefit they don't find beneficial could backfire. As our friend Ted Steinberg likes to say, "all this will do is give them an opportunity to irritate even more customers."

 

Not being automobile marketers, we may be wrong on this one, but we think Hyundai is suffering from automobile marketing delusion. Why not fix the root cause problem that is keeping its customers from using the dealer's service department; then you can drive people to the service department with any number of programs, which will result in a positive experience.

 

Hyundai does a lot of things well, which is why they have the highest customer retention rate in the industry for new car repurchase. They just need to figure out what's wrong in the service area.

 

Critical Success Factors 

 

Many planning frameworks (ours too) include the construct of critical success factors. Simply stated, critical success factors are those actions/factors which are necessary and sufficient to achieve the results anticipated by the plan. The key is necessary (do you really need to doCritical success factors this), and sufficient (if you do all them will you achieve the desired outcome).

 

One often overlooked issue around critical success factors is whether you are trying to achieve parity or gain an advantage. If you are trying to "catch up," the critical success factors necessary to do that  are likely to be different from the critical success factors necessary to achieve an advantage.

 

Since advantage usually comes from what you deliver or how you deliver it, it is probable that the critical success factors necessary to do something new, or deliver it in a new way, will be different; and potentially harder to achieve than parity creating factors.

 

Since the competitive bar is always being raised, when you create your plan, and develop your critical success factors, ask the key question about the outcome you are trying to achieve: Is it parity or an advantage?

 

You can download an outline of our framework if you like.

If you build it, will they come? Even if it's easy to get there?

 

QR codes are the latest "it" marketing tactic. While similar to the Cue Cat technology of the '90s that used bar codes, QR codes rely on smart cell phones to take you to the website of interest. The question is, "of interest to whom?

 

How many hot, viral QR code-driven websites have you heard about? There is no "law" that says you have to link to a customer-centric site with your QR code. So like too many marketing tactics, this one is most likely going to be inside-out driven, not outside-in. How long will it take before people are conditioned that QR codes are a waste of time?

 

To be fair, QR code usage is up, but you can see some really stupid placements such as high up on billboards that can't be scanned; in areas where cell phone coverage is non-existent; and in TV ads to name a few. That's just unthinking people mindlessly deploying the latest tactic. But at least they can tell their boss that they are using the "latest" technology.

 

The key question remains: Is there any benefit to the user in following the code to a site? There is no law that says you can't waste people's time, but there is a law which says people won't let that happen indefinitely.

 
 
 
Free Reading Guide

If you have a copy of our book Value Acceleration, you can download a free reading guide to help you and your team get the most from the book. (And btw, the book has been updated for 2012 and is also available in a Kindle edition.)


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Updates. If there are others you feel would benefit from this issue, use the Forward email link just below on the left.

 

Sincerely,

 

MGSig

Mitchell Gooz

 

Customer Manufacturing Group, Inc.

www.customermfg.com

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