The Business Book

(Joyce) #1

266


must be kept high for a long and
happy marriage between producer
and end user. The founder of
Selfridges, Harry Gordon Selfridge,
advised: “Remember always that
the recollection of quality remains
long after the price is forgotten.
Then your business will prosper
by a natural process.”
In the early 1980s, industries
first quantified the impact of
product quality on profitability
through studies such as PIMS
(Profit Impact of Market Strategy).
Before this time, “quality” was not
usually a high priority for industry
leaders, but as research continued
to show the clear link to profitability,
product quality became an
essential factor in strategies for
attracting and keeping customers.


Paying a premium
Even though a company may not
have the biggest share of the
market, it can still generate the
biggest profit if its customers
perceive the product quality to be
so high that they are willing to pay
more for it. In the smartphone
market, for example, Apple’s iPhone
has a relatively small share but
garners around 50 percent of the
profit. Making a desirable product


and building an emotional
experience around it can be enough
to make customers love you—so
much so that they are prepared to
pre-order, wait, and line up. This is
demonstrated most clearly in the
fashion world, where customers
willingly suffer the indignity of
scrambling for limited-edition
handbags or shoes, or—in the case
of luxury brand Hermès—wait
years for a bag. However, for most
businesses this is the exception.
Customers expect providers
of goods and services to do
everything possible to win them
over and keep them happy through

MAKE YOUR CUSTOMERS LOVE YOU


Customers are willing to line up
for bargains, such is their loyalty to
particular brands. In Italy, shoppers
wait outside a Burberry store in Milan
on the first day of the sale.

The Likert scale, created by US psychologist Rensis Likert in the 1930s,
is designed to measure attitudes. The five-point scale offers responses to
a statement, and participants pick the response they most agree with.
Considered a good way to get customer feedback, the scale has been
criticized for giving skewed results due to its forced set of choices.


all the stages of the buying process.
Although acquiring new customers
is always an important part of
marketing strategy, more income
is usually generated by existing
customers. These customers
will continue to buy the same
product or service, or may begin
purchasing other products from the
same provider. The business world
has come to recognize that some
customers are more profitable
than others, and it pays to woo
profit-inducing customers and
entice them to spend more.
In online retail, repeat purchase
can be encouraged by email
campaigns tailored to the buying
history of the customer. In the
mail order or direct mail industry,
mailings with special offers or
cross-selling promotions for
complementary products serve
a similar function, while in a store
the astute involvement of the sales
staff can directly provide an
emotional rationale for an additional
sale, though they are also a cost to

Strongly
agree

Agree Neither agree
nor disagree

Disagree Strongly
disagree
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