blogs.csuglobal.org/KUPsansSourcer

US Airways has reversed its decision to charge for in-flight beverages because the extra revenue has not been worth the negative passenger reaction.  In a February 23, 2009 story by Dawn Gilbertson in The Arizona Republic (http://www.azcentral.com/business/articles/2009/02/22/20090222biz-usairwaysdrinks0223.html), Andrew Nocella, US Airways’ senior vice president of marketing and planning, said, “It’s such a minor issue in the grand scheme of things but was having a large impact on the perception of our brand.  We just came to the conclusion that it was distracting our passengers from all the other things we were accomplishing, in particular our great on-time performance.”

It surprised me when US Airways made the decision to charge for beverages because it did seem so at-odds with its brand.  If US Airways had a clear positioning strategy based on how it is differentiated in the marketplace, the decision to charge for beverages would have seemed at-odds to Nocella, too.

You see, a company’s overall positioning strategy is called its brand’s value proposition.  Value propositions answer the question: “Why should I buy your brand instead of your competitor’s?”  Winning value propositions answer that question in one of five ways:

1) Because buying my brand gives you more for less.

2) Because buying my brand gives you more for the same. 

3) Because buying my brand gives you more for more. 

4) Because buying my brand gives you the same for less. 

5) Because buying my brand gives you less for much less. 

So, how US Airways differentiates and positions its brand in the marketplace dictates the US Airways value proposition—fly with us because we give you more than the competition (which includes Southwest Airlines) for less; or, fly with us because we give you more than the competition (which includes Southwest Airlines) for the same; or, fly with us because we give you more than the competition (which includes Southwest Airlines) for more; or, fly with us because we give you the same as the competition (which includes Southwest Airlines) for less; or, fly with us because we give you less than the competition (which includes Southwest Airlines), but for much less.  And, everything US Airways does should resonate with—not contradict or conflict with—its value proposition.   

Southwest Airlines differentiates itself in the marketplace along the lines of product, services, people, and image—by being more efficient, more fun, and cheaper than its competition (which includes US Airways).  Differentiating itself thusly, Southwest has positioned itself as the no-frills, low-price airline.  So, Southwest Airlines has chosen and operates on a “less for much less” value proposition—that reflects the full mix of benefits upon which the Southwest brand is differentiated and positioned.  And, everything Southwest Airlines does resonates with—does not contradict and does not conflict with—its value proposition.

Southwest Airlines is very clear on its value proposition; apparently, not so US Airways.  By charging for in-flight beverages when competitors like Southwest do not, US Airways was not giving its passengers more—not for more, not for the same, and not for less.   By charging for in-flight beverages when competitors like Southwest do not, US Airways was not giving its passengers the same.  By charging for in-flight beverages when competitors like Southwest do not, US Airways certainly was not giving its passengers less for much less.  By charging for in-flight beverages when competitors like Southwest do not, US Airways was giving its passengers less for the same or more.  That’s a value proposition at odds with any airline’s brand and that’s a value proposition that won’t fly!

If you have a Liberal Arts background, you might recall Maslow’s Hierarchy of Needs. Abraham Maslow proposed it in his 1943 paper, “A Theory of Human Motivation.” In a nutshell, it describes a set hierarchy of human needs and contends that our basic needs must be met before we can seek to satisfy successively higher needs. One typical depiction of Maslow’s theory is a five-level pyramid—-the lowest level is biological needs, such as food and shelter; the second level is safety; the third level is love/community/sense of belonging; the fourth level is status/esteem; and, the top-most level is self-actualization. The idea that one must have the first four levels of physiological need satisfied before one can address the psychological level rings true on an intuitive basis…which would a homeless person who hasn’t eaten in a couple of days think is more important, shoplifting a can of tuna or participating in a panel discussion on the finer points of situational ethics?

So, what has all this to do with marketing? Why, it’s fundamental to marketing! Are you attempting to engage your targets—-prospective or current-—at the wrong level of their hierarchy of needs? Are you trying to sell a car to someone without a driver’s license; a Cadillac to someone with a used-Volkswagen budget? More essentially, do you provide services to clients, but your business model is suited to meeting the needs of customers (or vice versa)?

 Knowing whether or not you are targeting customers or clients (or both) is critical to developing effective engagement, service, and retention strategies. Think Wal-Mart for customers and Nordstrom for clients. Sure, they both sell clothing, but Wal-Mart caters to customers and Nordstrom caters to clients. What’s the difference? Wal-Mart shoppers pretty much know what they want and are fine with helping themselves, as long as they get the best price. So, Wal-Mart has designed everything around the self-serve, low-cost model. Nordstrom shoppers, on the other hand, demand knowledgeable and personal service, and are more than happy to pay for it. So, Nordstrom has designed everything around the full-solution, quality-at-any-cost model. Wal-Mart would eat into its tight margins if it hired consultative sales professionals to engage shoppers one-on-one; Nordstrom would go out of business if it left its shoppers to fend for themselves (without access to tailors for custom-fitting). Neither model is better nor worse on its own; each is just designed to meet a different set of expectations.

The Wal-Mart and Nordstrom examples are fairly obvious and straight-forward. The model that is right for you might not be so obvious. In fact, it might not make sense for you to use a single model all the time for all your customers/clients or products/services. However, you can easily determine the appropriate set of expectations by building your own Customer/Client Hierarchy of Needs. Then, you can easily design an effective model to meet that set of expectations by building your own Product/Service Hierarchy of Needs.

First, “map” your customers/clients and products/services on the two hierarchies—-at what level on the Customer/Client Hierarchy of Needs is each of your customers/clients and at what level on the corresponding Product/Service Hierarchy of Needs are they doing business with you? Then, analyze your customers/clients and products/services according to their relative positions on the hierarchies, noting where they line-up/match/connect or don’t. You want to consider three things in particular:

1) Do you have any customers/clients buying at one level of products/services, but being supported and/or marketed at a different level? As a general rule, costs and revenues rise with each level on the hierarchies. So, funding support or marketing tactics appropriate to a customer/client at the highest level on the Customer/Client Hierarchy of Needs, when they are actually buying at the lowest level on the Product/Services Hierarchy of Needs, is a waste of resources. Worse, you probably have a customer/client buying at the highest level on the Product/Services Hierarchy of Needs or a marketing campaign that could generate sales at the highest level on the Product/Services Hierarchy of Needs, that is getting short-shrift as a result or your misallocation of resources.

2) Which customers/clients have potential for buying products/services at higher levels? What would it take to get (and maintain) customers/clients higher on the Customer/Client Hierarchy of Needs, so you can sell them correspondingly higher on the Products/Services Hierarchy of Needs?

3) Are there levels of customers/clients and products/services that are partially populated or entirely empty? In other words, do you have gaps in your customer/client base (market sectors you have not tapped) or in your products/services offering (lines of business you have not developed)? Both gaps represent potential revenue/growth.

Thereafter, the sky’s the limit! You can extend market and account penetration by evolving customers into clients. Or, you can maximize margins by driving client relationships down to customer relationships (reserving consultant-level resources for clients). Or, you can survive industry shifts by changing your operational mentality from product-based to solutions-based. Or, you can reevaluate and hone your lines of business and, in the process, identify customers/clients/offerings that should be divested. Whatever the engagement, service, or retention strategies you end up developing, you will be most effective if you first use the underlying principles of Maslow’s Hierarchy to identify your targets’ needs/expectations.

This first appeared August 3, 2006 on Kup & Sourcer’s Percolating blog.

Have you or has anyone else in your company used that whine from childhood when a business partner let down one of your customers?  Well, you can be certain your customer doesn’t care whose “fault” it is, they just want you to fix the problem–-or at least act as though you care about it.  When you ignore an opportunity to aid a customer, even when you didn’t create the situation, you hand that customer your future to do with as s/he likes…and s/he probably will like to crush you.

I recall clearly a national florist who pulled the old “it’s not my fault” routine on me some years ago.  After rushing a friend to the airport to catch a plane to her father’s funeral, I stopped at the florist to arrange for a fruit basket to be sent to the family.  I was living in New Mexico and the funeral was in a small town in Florida.  The florist didn’t have a shop in that small town, but did belong to an international consortium with member florists there.  I thought instead of flowers, fruit would be appreciated as my friend and other family members all gathered at the widow’s home.  It was springtime and as I selected the fruit basket from a catalog I told the florist (more than once), “Remember, my friend and her family are Jewish and mourning the death of her father, please do not to send an Easter basket.” 

Well, wouldn’t you know, a big, bright basket of fruit was delivered to the widow’s home right after the funeral–-with a colorful Happy Easter pennant sticking out of the top, no less.  I know, because when I called Florida the day after the funeral, my friend was nice enough to tell me about it. 

I called the florist and asked for the person with whom I’d placed the order; the person I had asked face-to-face to make certain the fruit basket was funeral-appropriate.  When she got on the line she immediately began the old I-cannot-control-the-shop-that-actually-does-the-delivery-more-than-a-thousand-miles-away routine.  No “I’m sorry”; certainly no “Let me try to make it up to you.”  Just, “It’s not my fault.”

I was so angry with the way the florist handled–-rather, didn’t handle-–the situation, I made a point of telling everyone I knew about what happened.  Because the florist was a national chain, I told people all over the country.  I told people at the global Fortune 50 company for which I worked.  I told people at the two professional societies I was active in.  I told friends.  I told family.  And, I kept telling people for months.  And, so did my Jewish friend who’d received the Easter basket on the occasion of her father’s funeral; when she learned the florist did nothing about the mix-up, she told her friends, her coworkers, and her family, all over the country.

Eventually the shop closed.  Now, I know I didn’t single-handedly put it out of business.  In fact, I had nothing to do with its failure; the people at that shop earned failure for themselves.  And, the chain itself is still in business, so who knows if any of its other locations even felt a pinch.  But, I am certain I helped a number of people choose a different florist the next time they bought or wired flowers or fruit.  And, I know I will never, ever use that florist again, not anywhere.

So, it might not have been the florist’s fault, but that florist sure as heck paid the price for refusing to care.  What do you suppose your customers would do if your supplier, delivery service, or other business partner messed up something and you just said, “It’s not my fault”?  Can you afford to find out?

This first appeared August 11, 2006 on Kup & Sourcer’s Percolating blog.

Ask any chef, carpenter, artist, IT professional, you-name-it, and they’ll tell you the right tool–-used the right way-–is the key to a successful result.  It seems that many companies forget this fundamental truth, throwing not only the wrong communications tools at customers, but also in the wrong way.  I guess they think they’re being leading-edge or considerate (”Look at all the cool choices we’re giving you!”).  But usually they are just annoying customers to the point of losing them.

Take email and websites.  Electronic communications are immediate communications.  So, if you aren’t going to respond within, oh, two hours, then you’re not using the tool right.  Your customers email you or use an online form because they want an immediate response.  When a company takes days to get back to an electronic inquiry, they’ve usually already lost to a company that is more responsive.  And, what about customers without access to the Internet?  Be sure whenever you market your electronic communications you also include other tools; don’t leave ”unplugged” customers out in the cold.  

Another example is voicemail and auto-attendants.  The phone is a personal medium; you speak to people on the phone.  When your customers call you–-and, hey, you gave them your phone number-–they expect to speak with someone.  Forcing customers to trudge through endless choices for this department or that problem category isn’t using the tool as it was intended, nor as people want it to be used.  And, certainly, forcing customers to leave voicemail so you can get back to them (when it’s convenient for you; so sorry it might not be convenient for your customer) isn’t what they expect when they pick up the phone to call.  The only happy ending to that scenario is an almost-immediate call-back, no more than two hours delay. 

Whatever communications tools you use, make certain they are appropriate to your audience and that you put in place the back-end support structures to make the tools work effectively.  Otherwise, you will not enjoy the success these tools promise.  It’s no different than trying to drive a screw with a hammer or fold egg whites with a fork.  Can you say “exercise in frustration”?  Well, your customers can probably say, “I think I’ll try the competition!”

This first appeared August 18 ,2006 on Kup & Sourcer’s Percolating blog.

Welcome to Blogs @ CSU-Global Campus and my blog, KUPsansSourcer.  Most of the content here will be copies of submissions I’ve made to Percolating!, a media and marketing blog by Kup & Sourcer.  I’m Kup, but I’m blogging here sans Sourcer.  Kup & Sourcer brews up custom communications.  Percolating! is the Kup & Sourcer “idea factory” that we offer clients for percolating communications solutions.  What I offer students here is a ”contemplation corner.”  A better understanding of business in general—and marketing in specific—should percolate here!

Here’s a Percolating! piece from August 2006 entitled “What is Marketing and Why Should You Care?”  I welcome your comments and questions!

This morning I came across a lecture I developed a few years ago for a community college e-commerce class.  Surprisingly, it’s still pretty relevant/current.  If you want a marketing primer–or refresher–this might be worth your five minutes of reading.

What is marketing and why should you care?  Consider the following quote (attributed to that ever-wise Anonymous): “There are three kinds of companies: those who make things happen, those who watch things happen, and those who wonder what’s happened.”  Consider also this old Chinese proverb: “If we do not change our direction, we are likely to end up where we are headed.”  As the world spins forward in the 21st century, there is not only change, but an accelerating rate of change.  Companies often fail to recognize that their marketplace changes every few years, if not more often.  It has always been the case that last year’s winning strategy may become today’s losing strategy.  But, the evolution of the Internet and enabling technologies make marketplace changes faster and easier.  As Anonymous observed, there are two kinds of companies: those who change and those who disappear.  By exploring marketing and its role in the ever-changing Ecommerce word, you have a better chance of anticipating and adapting to market changes that affect your business.

How should we define marketing?  Is it a set of activities done by individual firms or organizations?  Or, is it a social process?  Marketing is both a set of activities performed by organizations and a social process.  In other words, it exists at both the micro and macro levels.  Micro-marketing looks at customers and the organizations that serve them.  Macro-marketing takes a broad view of our whole production-distribution system. 

Specifically, micro-marketing is the performance of activities that seek to accomplish an organization’s objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from product to customer or client.  And, macro-marketing is a social process that directs an economy’s flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.

Let us focus on management-oriented micro-marketing and see marketing through the eyes of the marketing manager.  Keep in mind, however, that your organization is just a small part of a larger macro-marketing system, our society’s economic system.

As a business person, marketing is the most important thing you do in business today, because marketing, in all its varied forms, is concerned with attracting customers, getting them to buy, and making sure they are happy enough with their purchase that they come back for more.  (That’s the part many of us forget, that making sure they want to come back for more, or meeting expectations part.)  That’s why marketing consists of so many different activities: sales, advertising, customer service, the product itself, your pricing and discounts, reputation, strategies, and much, much more.

But, as a consumer, you should also care about marketing because you pay for the cost of marketing activities–in advanced economies, marketing costs about $.50 of each consumer dollar (sometimes more).  It also plays a big part in economic growth and development–it stimulates research and new ideas that can bring choice to consumers and result in higher employment rates, higher incomes, and a higher standard of living.  An effective marketing system is important to the future of nations.  And, that’s why macro-marketing is a discipline of its own.

Figuring out how to satisfy customers–existing or prospective–is what marketing and marketing strategy planning is all about.  So, marketing provides needed direction for production–helps ensure that the right goods and services are produced and find their way to consumers. 

The fact is, whether for lack of skills and resources or lack of time, most people don’t make most of the products they use.  (Who do you know that makes their own shoes?  Who do you know that grows all their own produce?)  Specialized production makes the high standard of living that most people in advanced economies enjoy.  And, marketing, by definition, provides needed direction for production.  Together production and marketing supply five kinds of economic utility that are needed to provide consumer satisfaction: form, task, time, place, and possession utility.  Utility means the power to satisfy human needs.

Form utility is provided when something tangible is produced.  Task utility is provided when a service is performed.  But, just producing products or delivering services doesn’t result in consumer satisfaction!  The product or service must be something that consumers want or else there is no need to be satisfied and, thus, no utility.  That is how marketing guides production–marketing decisions focus on the customer and include decisions about goods and services to produce.

Even when marketing and production combine to provide form or task utility, consumers won’t be satisfied until possession, time, and place utility are also provided.  Possession utility means obtaining a good or service and having the right to use or consume it.  Typically customers exchange money for possession utility.  Time utility means having the product available when the customer wants it.  And, place utility means having the product available where the customer wants it.  Time and place utility are very important for services, too.  Both time and place utility challenge us more and more as e-commerce technologies advance!

Simply stated, marketing provides time, place, and possession utility; and, guides decisions about what goods and services should be produced to provide form and task utility.

If you want to do some reading or add to your business library, here are some of the many great books about marketing out on the market (in fact, these are a little dated, yet still excellent):

• “Basic Marketing – A Global-Managerial Approach” by William D. Perrault, Jr. and E. Jerome McCarthy
• “Marketing for Dummies” by Alexander Hiam
• “Kotler on Marketing – How to Create, Win, and Dominate Markets” by Philip Kotler
• “Marketing Plans that Work – Targeting Growth and Profitability” by Malcolm H.B. McDonald and Warren J. Keegan

“Basic Marketing” is a true text book.  It has been used in the classroom for 40 years or so and its updates have always been timely.  “Marketing for Dummies” is much more tactical.  It’s easy to read and humorous, but I would consider it a complement to other marketing books, rather than a stand-alone resource.  “Kotler on Marketing” is a more balanced business book that has a lot of practice behind it; Kotler is an academic and a hands-on consultant who writes more captivating prose.  “Marketing Plans that Work” is like “Marketing for Dummies” in that it is more tactical, but it also is a little more thoughtful than “Marketing for Dummies.”  The website www.emarketer.com is a great up-to-the-minute resource, angled specifically at e-commerce but also with a good sprinkling of all-around marketing ”poop.”  You can subscribe to a free E-newsletter that gives you daily news, theory, and trends through the website.