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Learning effective customer analysis from Roger.A. Formisano


This is the second article on the learning on specific aspects of Strategy from Roger.A. Formisano. The learning is from the book on "Manager's Guide to Strategy". The importance that should be given to customer service and understanding of customers is very obvious now. Based on some conceptual inputs from the book, this article deals with certain basic aspects of doing effecive Customer Analysis in some detail.

Introduction

There are some authors who are very sharp in their explanation of complex concepts. Roger A. Formisano is one such. The book "Manager's Guide to Strategy" deals with several aspects of Strategic Management. In the first article on this series of two articles, we had discussed the basics of Strategy, Business Idea and Goal setting in some detail. The reference is to the article on the inter-related concepts of strategy and business idea.

Any individual customer or group of customers today have a tremendous choice. They are the king(s) in the market. They can create wealth for business organizations or make them incur a loss at any time. The rules of the game in every business have changed totally. There is evidence that those organizations that have adapted themselves admirably to the changing tastes of customers have done very well. Such case studies are quite illustrative.

The quotes from the book are direct and simple. For example, the author talks about the five steps in Customer Analysis. These six steps are a) Who are our customers? b) Why do they buy from us? c) Who buys from competitors? c) Why do some buy from competitors? d) Can we meet the needs of those buying from competitors? e) How else can we create value for our customers? In this article, we will deal with these five steps.(page 71)

Who are our customers?

Every the organization has to decide who its customers will be. Geography is a very important consideration. For example, only the MNC companies can afford to pump in crores of rupees into high decibel advertising on electronic and print media. Of course, online advertising is now relatively easier and less costly. Be that as it may, the decision to go for a national launch is always left to the organization. Or, it could decide to be present only in specific markets and not go national immediately. Each organization does analyze the relative position of the competitor and how long it can withstand the counter moves from the competition.

The best example of this can be seen from the strategy of a small company manufacturing the Aachi brand of ready-made mixes. It is now drawing up a road map to enter the North Indian market with a different mix of the same products that will cater to the tastes of customers in that part of the country.

Why do they buy from us?

Answers to this question is always complicated. Market research can indeed help. The author talks about three instruments commonly used. These are point-of-sale communication, customer surveys, and focus groups. (page 75). This is increasingly used by small brands in India. Mambalam Iyers is a strong pickle brand in Chennai and most parts of Tamil Nadu. It has reportedly used the sales girls in the retail outlets to get accurate information on what satisfies the customer and what features need to be improved. The big brands also depute even MBA interns to do consumer surveys in many areas. Many MNCs use MBA students to find out the pulse of customers in rural and semi-urban areas through both structured and unstructured methods of research.

Who buys from competitors?

This is a very interesting question. The answers are complex. In the Indian context, the price of the product does matter to a large extent. "Cheap and best' is often a phrase that we get to hear in many middle-class homes. People settle for cheaper substitutes when their purchasing power is not adequate to buy better-branded products. A lot depends also on personal preferences. For example, it is often seen that several offices going youngsters ( more so, the IT crowd) like to buy the Peter England brand that is somewhat cheaper but with a wide range and acceptable quality.

Why do some buy from competitors?

There are Let us look at several Indian examples. Goli Soda is a famous branded item, now available in parts of Chennai. It is quite interesting to research why many do not go in for this brand of vada pav. This author did a bit of research near a famous hotel near the Goli Vada pav outlet in Coimbatore. Those who ate in the famous branded hotel had their stomach full, as the evening varieties were very good. The ambiance was fine too. Vada pav was still not an item lodged firmly in the minds of any average Tamilian. It is a fierce "either-or" market and the sellers of smacks like the bajji or bonda, available at just Rs.,5 apiece gave the outlet fierce competition. The outlet did have some repeat customers but the minimum price of Rs.25 did keep customers away. So, when the cheaper substitute is available, a branded product suffers. Sometimes people are wedded to brands. Many in Tamil Nadu are wedded to the TVS brand name. Hence they buy only TVS automobiles.

Can we meet the needs of those buying from competitors?

This may be possible in the vegetarian restaurant business, for example, to some extent. However, if the competitor builds a niche that is difficult to match, this process becomes very difficult. For instance, Murugan idli shop has many distinct products that are sold even during lunchtime. They are unique and it is difficult to copy these items like the chili powder soaked idli.

Nevertheless, in the refrigerator business, Voltas has come from nowhere and is now stunning the market with its range of products. Haier is another example. They have literally dislodged Whirlpool from its undisputed position. Samsung is another big company here. Hence, when the product features are seemingly better, the customer will simply lap up the new product. This is one sure way of doing it. The success of One plus the cell phone brand is a recent example. People will come back to a particular brand if they see that the brand has improved and it has features that they thought were missing in that brand for a while. The customers buying the Bajaj range of motorcycles is the best example of this proposition.

Similarly, it is possible to meet the needs of those buying from competitors by simply milking the existing market with improved old products and totally new products. The Good day brand from Brittannia was exactly one such product. Customers came back to the company.

How else can we create value for our customers?

Some three decades ago, Business India was the number one business magazine. The publishers of Business Today had a challenge of overtaking Business India. They adopted different strategies to attract the customer. The magazine had an attractive design.

Business Today also sought to be different when it ran intensive stories and ones that had in-depth conceptual inputs. For instance, it had special issues on HR, Strategy, Customer Focus and so on. The magazine went on to the vital "this and that" proposition of the average business professional. Even today, it dominates the market. Business Today is one outstanding example of how a business can add value to its customers.

The customer should feel great and should feel totally at home. The ITC group of hotels does this with a fierce dedication. The foreign tourists are attracted by the value proposition of this brand called the Welcome group. The recently introduced private sector Tejas Express is another example. The train has already made profits. When customers see the benefits, they do not mind paying the extra for such benefits. One five star property called Heritage at Madurai has tried to create a natural habitat and a hotel that serves the traditional food as well. The synch in terms of culture and modernity has reportedly been a big success among foreign tourists who flock to the city every time of the year.

Conclusion

The aforesaid discussion covered some basic concepts of customer analysis in some detail. When the slowdown ends and the economy is in better shape the examples will become more pronounced for us to draw more lessons from. Customer Analysis is an art that can be perfected with practice.


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