Value Perceptions Among Customers

women_holding_money_face_2

Organizations should think strategically when creating value perceptions of their products or services.  In fact, they should seek to establish a formal tiered system where possible. Strategic leaders have a long view on value creation.

Strategic thinking is defined as ‘the generation and application of business insights on a continual basis to achieve competitive advantage.’ In fact, strategic thinking focuses on value creation by enabling a provocative and creative dialogue among people who can affect a company’s direction.

Marketing expert Ken Favaro maintains that putting value creation first gives businesses two advantages over their competition in driving for profitable and sustainable growth: the first is capital and the second is talent. In fact, he argued that successful value creators never suffer from capital shortage. 

Yet, this process shouldn’t be done in a vacuum. Customers and all members of the supply chain should provide input so that the expectations are clear. Businesses that pay more would get more benefits (i.e. certain perks, discounts, etc.). Therefore, the value proposition would be enhanced.

However, being strategically conscious about these business relationships isn’t simple.  Value must be understood and sought out.  Value is viewed as the perceived experience and worth gained from a product or service.  Organizations should make their product clear to customers; some businesses need to introduce a tiered system, based on value-added services.

For example, if I want cheap fast food, I go to McDonalds. Therefore, my expectations are lower than going to a five star restaurant.  Customers are very understanding when the seller’s value proposition is clear. Favaro further suggests that putting value creation consistently first requires leadership skills, discipline, and perseverance. He further challenged organizations to demand higher standards from managers who would jeopardize these business relationships.

Mark Johnston and Greg Marshall, authors of Relationship Selling, discuss that perceived value is in the eyes of the customer and varies.  They further argued that customers expect and deserve consistency in the way an organization’s value-added message is put forth.  Therefore, sales professionals’ biggest challenge is selling value.

Please discuss value perception of customers from your professional experience.

© 2014 by Daryl D. Green

 

Value Creation for Customers

haggling-buying

Customers determine the value of a product or service.  In today’s competitive environment, value creation is a corporate advantage.  However, building this value is often difficult.  People have different ways to assess value.  Some folks use traditional ways based on some established reference point, such as a company’s price guide. 

Yet, some ways are informal.  In many countries, haggling is an acceptable practice of transactional selling.  Philip Kotler and Kevin Keller, authors of Marketing Management, explain how businesses must understand customer decision making processes for purchases. They note, “They [customers] tend to be value maximizers, within the bounds of search costs and limited knowledge, mobility, and income.” 

Here’s a personal example. My family visited Mexico and began the great American tradition of haggling sellers to get the price of merchandise down. Radio host Dave Ramsey believes everything is negotiable. Anything that is worth the effort of negotiation must have passed the value threshold to the consumer. Paul Peter and James Donnelly, authors of Marketing Management, note that culture, social class, and reference group influences play an important role in consumer behavior. 

Some risks are involved with purchasing.  This reality has a bearing on value for customers. If decisions involve low risk, they are often done quickly with little thought.  Yet, major purchases normally require more risks, like buying a house. Therefore, having a good relationship with the seller is important.

The buying decision stages are (1) recognition of need or problem, (2) determination and description of the traits and quality of the needed items, (3) research for qualified buyers, (4) acquisition and analysis of proposals or bids, (5) evaluation of proposals and selection of suppliers, (6) selection of an order routine, and (7) performance evaluation and feedback.

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that many organizational purchases are motivated by the requirements of the firm’s production processes, merchandise inventory, or day-to-day operations. Therefore, customers are very value conscious on high priced items, such as cars. 

Customers use varying methods to reduce their buying risks. Negotiation expert Carleen Hawn recommends five common sense approaches for effective negotiations, which are: (a) don’t bargain over positions, (b) separate the people from the problem, (c) focus on interests, (d) invent options for mutual gain, and (e) insist on using objective criteria. In most cases, haggling at a specific retailer involves a one-time transaction. Johnston and Marshall further suggest that value creation is what ultimately gets customers to come back.  Therefore, businesses that allow haggling must build relationship selling components for repeat value to customers. 

Discuss your professional experience with value creation in your industry or organization.

© 2014 by Daryl D. Green

Quality of Life & Corporate Responsibility

depression-business-women

Life keeps getting tougher for folks to survive.  While politicians and media pundits seize the opportunity of each life-changing event, families seek to make the best of a struggling economy.  According to the latest government job report this month, just 74,000 more people were employed in December versus 205,000 expected by USA Today’s survey of 37 economists.[1] 

Life will become tougher for job seekers as globalization sweeps down on country after country.  For some countries, they will become industry leaders while others will fade into the night of obscurity.  Many Americans are retreating from the workforce, causing the unemployment rate to fall to 6.7% in December. 

In fact, only 62.8% of the adult population is participating in the labor market now; participation rates relate to those individuals who have employment or those actively seeking employment.[2]  Heidi Shierholz, an Economic Policy Institute economist, explains: “We’re going to have a long-term unemployment crisis for a long time.” 

This current low participation in the job market matches the lowest level since 1978.  According to USA Today business reporter John Waggoner, the economy could be puzzling to the average American: “…corporations have plenty of cash in their coffers to expand and meet future demand.  But the job numbers don’t reflect that yet.”[3]  

Companies taunt their corporate responsibility to the community with such public relationship activities as sponsoring local events.  Yet, more workers wish these companies would renew their social contracts with American employees to ensure them of a decent wage.

 

Consequently, some workers often become victim of their company’s good fortune.  Thomas Friedman, author of The World is Flat, explains, “The best companies outsource to win, not to shrink.  They outsource to innovate faster and more cheaply in order to grow larger, gain market share, and hire more and different specialists—not to save money by firing more people.”   

The world’s poor stands at more than 1.1 billion people, mostly rural Africans, Indians, and other South Asians.  In fact, the poorest fifth of the world’s people earn just 2% of the world’s income.[4]  With companies moving into emerging markets, they can raise the standard of living for millions.   

Today world’s middle class earns an average of $700 to $7,500 per family member according to the United Nations’ Millennium Development Report.  Many companies would argue that their global reach has improved the quality of life for millions around the world and this is a small price to pay for the loss of a few jobs domestically.  

Discuss if American businesses must deal with the search for cheaper labor and the consequences on the quality of life for millions of individuals locally.                                                                              

© 2014 by Daryl D. Green


[1] “Weak jobs report is not all bad for investors” by John Waggoner

[2] 2013 ends with weakest job growth in years by Annalyn Kurtz

[3]“Weak jobs report is not all bad for investors” by John Waggoner

[4]How Much Is Enough by Alan Durning

Visibility for Professionals

Questons

In our society, which makes many determinations about a person’s character from his or her actions, high visibility is important to position oneself to success.

Philip Kotler and Kevin Keller, authors of Marketing Management, argue the importance of branding for individuals as well as for products to help them stand out among the crowd: “For branding strategies to be successful and brand value to be created, consumers must be convinced there are meaningful differences among branding in the product or service category.”[1]  Therefore, professionals need to distinguish themselves from their competitors.

Sadly, most workers are invisible to their management.  Some employees believe that if they work hard and are loyal to their organizations, they will be promoted and rewarded accordingly.  However, these individuals often see less qualified and less talented people get promoted ahead of them.

Renowned Pastor Richard S. Brown Jr. underlines this misunderstanding of this current culture:  “Everyone wants to be outstanding but no one wants to stand out.”  Today’s organizations promote individuals who know how to shine.  From a marketing perspective, these individuals understand how to use visibility to promote their personal brand.

 https://www.youtube.com/watch?v=o3fMQ1SWDU4

In the book, High Visibility: The Making and Marketing of Professionals into Celebrities,  Irvin Rein, Philip Kotler, and Martin Stoller examined the  role that celebrities play in society and the fact the everyone is involved in either producing or consuming celebrities.[2]  Yet, when you discuss this reality openly to others, most managers and executives would argue that it is the individual technical performance or merit of their work that gets them ahead.

However, most folks will not take advice from a ‘no named’ or unfamiliar expert, given the choices between an unrecognized and a celebrity expert.  Therefore, high visibility can open doors to opportunity.

Rein, Kotler, and Stoller note:  “Today for the visibility-conscious professional, fame is the ultimate accomplishment.  Well-knownness has evolved into celebrity, and in today’s society, that means power and money – not just to its possessor, but also to businesses, institutions, political parties, causes, entrepreneurs, and charities.” [3]

For the savvy professional, gaining visibility goes to understanding what’s important to his or her organization or targeted institution.  This task requires doing the necessary research to determine the organization’s priorities and goals.  Furthermore, this matter requires understanding the personal characteristics of the key decision makers and looking for opportunities for high visibility.  The rewards of high visibility can be great.

Rein, Kotler, and Stoller further explain: “Our society is generally quite willing to pay this ‘celebrity premium,’ to reward those who take the risks to become the highly visible people we so love to revere or revile.” Of course, high visibility normally requires a great amount of sacrifice on an individual’s part.  Often, it can mean taking a job that no one wants because odds of success are slim.

As in many stories highlighted in the magazine tabloids about celebrities, relationships can also be a casualty of high visibility.  As society searches for more heroes and fulfilled fantasies, celebrities and fame will forever be a part of our society.  Consequently, high visibility will afford opportunists with more fortune than the Average Joe.  Therefore, working professionals need to understand how high visibility can be used in order to provide them with advantages that are more competitive.   

Please discuss the visibility for professionals based on your own work experience.

© 2013 by Daryl D. Green

 


[1] Marketing Management by Philip Kotler and Kevin Keller

[2] High Visibility: The Making and Marketing of Professionals into Celebrities by Irvin Rein, Philip Kotler, and Martin Stoller

[3] High Visibility: The Making and Marketing of Professionals into Celebrities by Irvin Rein, Philip Kotler, and Martin Stoller

Marketing for Professionals

MM-boy-custom

Several years ago, I was riding the Metro subway in Washington, DC and got off at the end of the line.  The location was in a depressed area, and few businesses were there for commuters.  As I waited for my ride, I saw these two boys carrying a huge box of M&Ms in hopes of selling to weary commuters.

I found it amusing that these young men were hustling in such a manner. Yet, this spoke to the spirit of entrepreneurs.  The boys found an unmet need in the market.  Yes, with no stores located in the immediate area, these young men sold a lot of M&Ms to hungry commuters.

With increasing competition abroad, today’s professionals cannot afford to be ignorant in understanding business practices such as marketing.  The problem is that marketing is not second nature for all business professionals.

Sadly, most business owners do not have the time to take a long, drawn-out college course, while others want a simple process for understanding the basic concepts until they can take more formalized courses.  In fact, when you do not have a lot of money to spend on advertising your product, you have to be smarter and more creative in order to stay ahead of the competition. 

Marketing is the cornerstone of understanding today’s economic changes. Philip Kotler and Kevin Keller, authors of Marketing Management, argue the important of understanding marketing concepts for today’s professionals: “The first decade of the 21st century challenged firms to prosper financially and even survive in the face of an unforgiving economic environment.  Marketing is playing a key role in addressing those challenges…Thus financial success often depends on marketing abilities.”

Consequently, marketing gives individuals the ability to understand how to locate these opportunities and what to do with them when you find them.  According to the American Marketing Association, marketing can be defined as an organizational function and a set of processes for creating, capturing, communicating, and delivering value to customers. However, the simplest definition is that marketing is about understanding and satisfying customer wants or needs.

In fact, there are times when customers do not know what they want or desire. Marketing then becomes that linchpin in the process of finding a solution for the consumer.  Traditionally, marketing has been defined in terms of four variables described as the marketing mix, or the 4 Ps: product/service, price, placement, and promotion.

https://www.youtube.com/watch?v=NQzYclR8ufM

In fact, the marketing mix is the controllable set of activities that entrepreneurs use to attract or respond to the needs of their target market.  In essence, entrepreneurs attempt to create value for their customers.  Value relates to the customer viewpoint, not that of the business.  Value relates to the benefits the customer perceives they are getting in exchange for their purchase of the product or service.

Business experts Donald Lehmann and Russell Winer point out that inaccurate information or incorrect analysis often leads to poor decisions about marketing a business product.  This flaw can hurt a business attempting to make a profit.  In fact, understanding competition is a point most executives miss.  Some of the questions executives should ponder include: 

  •       Who are my competitors?
  •       What are the competing product features?
  •       What is their positioning strategy?
  •       What markets do they currently own and their future?
  •       How do you distinguish your products from those of your competition?
  •      How do consumers make this distinction in products?

In today’s global markets, organizations cannot operate with a ‘trial and error’ mentality.  In fact, what worked yesterday is no guarantee that it will be successful in the future.  Business professionals who are less knowledgeable about marketing and marketing forces are a liability to organizations that aim for sustainable success.

Successful entrepreneurs understand how to tap into their target market instead of random selling.  Why should the expectations be any lower for today’s professionals?  Therefore, savvy professionals seek to understand and implement effective marketing strategies. 

Please discuss the value of understanding marketing concepts for professionals based on your own work experience.

© 2013 by Daryl D. Green

Customer Value Perception

group problem-solvers

Organizations should think strategically when creating value perceptions of their products or services.  In fact, they should seek to establish a formal tiered system where possible. Strategic leaders have a long view on value creation. 

Strategic thinking is defined as ‘the generation and application of business insights on a continual basis to achieve competitive advantage.’ In fact, strategic thinking focuses on value creation by enabling a provocative and creative dialogue among people who can affect a company’s direction. 

Marketing expert Ken Favaro maintains that putting value creation first gives businesses two advantages over their competition in driving for profitable and sustainable growth: the first is capital and the second is talent. In fact, he argued that successful value creators never suffer from capital shortage. 

Yet, this process shouldn’t be done in a vacuum. Customers and all members of the supply chain should provide input so that the expectations are clear. Businesses that pay more would get more benefits (i.e. certain perks, discounts, etc.). Therefore, the value proposition would be enhanced. 

However, being strategically conscious about these business relationships isn’t simple.  Value must be understood and sought out.  Value is viewed as the perceived experience and worth gained from a product or service.  

Organizations should make their product clear to customers; some businesses need to introduce a tiered system, based on value-added services.  For example, if I want cheap fast food, I go to McDonalds.

Therefore, my expectations are lower than going to a five star restaurant.  Customers are very understanding when the seller’s value proposition is clear.

 https://www.youtube.com/watch?v=uTOcdjf7X74

Favaro further suggests that putting value creation consistently first requires leadership skills, discipline, and perseverance. He further challenged organizations to demand higher standards from managers who would jeopardize these business relationships.

Mark Johnston and Greg Marshall, authors of Relationship Selling, discuss that perceived value is in the eyes of the customer and varies.  They further argued that customers expect and deserve consistency in the way an organization’s value-added message is put forth.  Therefore, sales professionals’ biggest challenge is selling value. 

Discuss the concept of custom value perception from your own professional experience.

 

© 2013 by Daryl D. Green

 

Closing the Sale

group problem-solvers

Closing the sale is a vital attribute for a good salesperson. However, most people have had to convince someone about something, which is similar to closing a sale. When you persuade someone to accept your position, you are applying a good pitch and sale. You have built trust.

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that rapport, trust, and mutual respect inherent in a long-term relationship take off some of the pressures with closing a sale. Therefore, we all have a little bit of salesperson in us!

We do not know the customer’s price threshold where he is willing to purchase. Johnston and Marshall further argue that the customer will seldom buy a product based only on a presentation, despite how well it is done. Knowing this missing information, I would ask the customer if he or she has a price range in mind. This would better assist the salesperson in tailoring a solution to the specific need.

The authors also explain that customers will develop objections to various aspects of your proposed solutions, even if there is a long-term relationship. In fact, an objection is simply a customer’s concern with some aspect of your solution to his or her need.  This can include price, delivery time, terms of agreement, or a myriad of other components.

According to Johnston and Marshall, there are nine basic strategies for dealing with customer concerns: (1) question, (2) direct denial, (3) indirect denial, (4) compensating for deficiencies, (5) third-party endorsements, (6) bounce-back, (7) defer, (8) feel-felt-found, and (8) trial offer. The most confrontational strategy is direct denial.

Although there is no magical pill for closing a sale, there are some fundamental components to a successful sale close. A great sales pitch should explain the value proposition; showcase the advantages and benefits of the product/service; enhance the customer’s knowledge about the company, products and/or services; and create an unforgettable experience.

Johnston and Marshall further maintain that a salesperson must clearly articulate the value proposition to the customer. Why do I need the product or service?  In fact, a salesperson must have the skill to alter the sales pitch based on the customer feedback during the call to action.  Therefore, the process starts and stops with the customer as the focus of this process.

Please discuss closing the sale with customers from your own professional experience.

© 2013 by Daryl D. Green

The World of Elance.com

global-sourcing-man-strategy

Elance.com is a freelance website that allows customers to solicit work from a variety of outsourcing services, which include programmers, designers, office support, translators, marketers, researchers, and many other disciplines. In marketing, the marketing mix consists of product/services, placement, price, and promotions.

Elance.com allows a business to post a job opening and invites freelance workers who believe they have the requisite skills for the job to make a bid. The company charges a $10 fee to each business to post a job, and also takes a small portion of what gets paid to contractors. Below is an analysis of Elance.com’s marketing mix:

Service – Elance.com allows businesses to post a job opening to freelancers at potential savings.

Placement – All transactions occur on the website.

Price – The company charges a $10 fee to each business to post a job and also take a small portion of what gets paid to contractors. It is considered low-to-medium cost.

Promotions – Much of the effort appears to be publicity and ‘Word of Mouth’ promotions.

The following questions would be asked as a marketing professional (suggested answers are also provided) when analyzing Elance.com:

Elance.com aims at two clients, employer and freelancer.  Clearly, you must know your customers. Paul Peter and James Donnelly, authors of Marketing Management, argue that successful businesses understand customer needs.

With that said, potential employers see a website that attracts over 500,000 talented freelancers.  For the freelancer, there is an opportunity to bid on 48,000 jobs, worth $480K.  It is recommended that the website be more tailored for employers and freelancers, since they have different needs. This could be done with distinct website buttons.

For potential employers, Elance.com provides ratings and tested freelancers whose profiles and ratings can be evaluated.  For freelancers, it is real-time feedback.  When Elance.com gets repeat business or new business, this is also a good indication of superior services.

 

Through the rating process and feedback, Elance.com can obtain feedback.  Likewise, freelancers get paid and get feedback.  Michael Solomon, author of Consumer Behavior, suggests that consumer response is the ultimate test of whether a marketing strategy will succeed. Therefore, Elance.com is the top freelance website that has to support a variety of consumers.

Please discuss Elance’s marketing strategy from your own professional experience.

© 2013 by Daryl D. Green

Customer Motivation

superficial-1

Customers are motivated to purchase, but not for the same reasons.  To date, most explanations of customer motivation are based on cognitive factors rather than biological factors.  At the very basic level, it is easier to apply Maslow’s theory.

Some experts believe that application of Maslow’s theory has been somewhat simplistically explained in a commercial application, especially as the same product or activity can gratify different needs. Yet, individual purchasing considerations and motivation aren’t easy to understand.  Motivation can be a combination of learning experiences, buying history, and cultural environment.

In crafting products and services for the marketplace, managers should conduct research where targeted consumers are involved in order to formulate a well-balanced marketing-mix relative to the competition. Each customer has a need.

As you know, consumers are very complex. In fact, no two people are alike. Paul Peter and James Donnelly, authors of Marketing Management, maintain that marketing research can limit the risks associated with management marketing strategies.

Let’s explore this matter. Doing focus groups on the targeted market to gather market information would be critical. For example, a new retirement development would want to follow this strategy.  Who would want to live there?

If the primary demographic was women and widows, then amenities would need to be in line with these demographics.  Michael Solomon, author of Consumer Behavior, further suggests that the specific way we choose to satisfy a need depends on our unique history, learning experiences, and cultural environment. Therefore, gathering information about prospective consumers is critical to the marketing mix. 

Please discuss customer motivation from your own professional experience.

© 2013 by Daryl D. Green

Ethical Systems in Marketing Management

magic

Businesses that are serious about good customer relationships must have good ethical systems.  Marketing and strategy are underlying principles that must be addressed for organizations selling abroad.

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that customers operating in other countries pose unique ethical concerns for salespeople and management, especially in (1) cultural differences and (2) differences in corporate selling policies.

Marketing strategist Regis McKenna explains that effective marketing is the integration of the customer into the design of the product and designing a systematic process for interaction that will create substance in the relationship. Creating good ethical systems is critical for success.

First, any meaningful ethics program must start with senior management’s behavior. In fact, ethical behavior must start at the top. Salespeople are not the only members of the sales force who face ethical concerns. Management must address significant ethical issues with (a) salespeople, (b) company policies, and (c) international customers and policies. Yet, I do think organizational culture is the cornerstone for understanding the ethical environment.

Trust is the foundation of any meaningful corporate structure.  Gareth Jones and Jennifer George, authors of Contemporary Management, maintain that when leaders are ineffective, chances are good that workers will not perform to their capabilities. Furthermore, senior managers should lead the way by example.

Second, the organization must evaluate the current corporate culture. There are both written and unwritten rules and behaviors that come into play. For example, Enron senior management demonstrated a lack of moral and ethical judgment, which played a critical role in its decision-making (i.e. breaking laws).  Therefore, one must review the organizational culture of the organization before attempting to implement an ethics program.

Last, the organization must be committed to a win-win approach. Managers should get all employees involved. Salespeople face ethical issues all the time. Their input would be invaluable. This fact has a great bearing on ethical behavior among employees. 

Companies need to have a plan for implementing ethics. However, they need to involve the workers. Typically, executives come up with a mandate on corporate policies. HR is forced to implement them.  There is little worker involvement. Yet, ethical conduct impacts everyone. Therefore, managers will get greater buy-in on new programs, such as ethical, if they are involved upfront in the process. 

Please discuss ethical behavior in organizations as it relates to the marketing process from your own professional experience.

© 2013 by Daryl D. Green