Marketing Tips
Over the past month I've had a chance to listen to executive warehouse managers discuss key issues at supply chain conferences. One consistent key theme that surfaced was the need to enable sustained profitable revenue growth. Transitioning into this mode could present significant challenges to warehouse executives who have long focused on cost reduction.
The key is to understand how customers perceive value and the impact it has on purchasing decisions.
This is not hard to do.
Let's start with a definition that might be useful. The American Marketing Association describes marketing as a set of processes to create, deliver and communicate customer value and manage customer relationships. Therefore, we need to learn how to measure value so better decisions can be made about what to do and what not to do. The premise of Lean manufacturing has been to remove steps that do not create customer value. Thankfully, there are simple tools and methods to accomplish this task that require no background in marketing or research.
I heard many conference attendees describe their relationship with marketing as "they come and ask if we can do something and we tell them whether or not it's possible." I might characterize this as a "transactional" relationship. In a strategic relationship cross functional teams (marketing, finance, distribution, manufacturing) collaborate to define what's needed and what's possible. This is how the most innovative companies in the world identify product/service attributes that help them get ahead and stay ahead of the competition.
In his landmark book entitled "Managing Customer Value" Brad Gale showed a Customer Perceived Value Gap Analysis that allowed marketers to rank, structure and weigh product and service attributes (e.g. reliability, safety, ease of use, performance, convenience...price was excluded). Respondents were then asked to rank relative importance by dividing 100 points among among the attributes. Then they scored each attribute against those of competitive offerings using a scale of 1 to 10. By multiplying across, these firms were able to identify gaps where a product or service might be disadvantaged so improvements could be made or where advantages could be exploited to achieve higher margin revenues.
As Oscar Wilde once said "a cynic is someone who understands the price of everything and the value of nothing." It is the role of marketing to understand and measure customer perceived value to ensure balanced decisions are made within an organization. If there is no formal structured understanding of customer value in your organization it is important to develop one to inform your investment decisions in ways that are more certain to yield sustained profitable revenue growth.
If you are interested in pursuing this discussion further I invite readers of RetroNotes to contact me via e-mail burke@retrotech.com
