The traditional image of organizations and their markets with two distinctly defined actors, the buyer and the seller, dissolves into a complex network
Gummesson (1995)
Let's consider some facts in the business world and use the example of smart phones to rationalize our discussion.
1. Big customers are getting bigger posing a threat for organizations that have to constantly improvise and produce faster solutions to the customers' needs - see the developing story of RIM.
Research in Motion is the company behind the BlackBerry product line. Research In Motion (RIM), a global leader in wireless innovation, revolutionized the mobile industry with the introduction of the BlackBerry® solution in 1999. The BlackBerry product line includes the BlackBerry® PlayBook™ tablet, the award-winning BlackBerry smartphone, software for businesses and accessories. BlackBerry products and services are used by millions of customers around the world to stay connected to the people and content that matter most throughout their day. The management of RIM prepares now to launch the much delayed BlackBerry 10 operating system in the hope of making up ground lost to Apple and their iphone line and eventually Samsung and its brand new Galaxy S 111 line.
The launch of the BB10 operating system, seen as integral to the company’s ability to regain some of the market share it has lost to its rivals, has been pushed back until the start of next year, while falling sales have led to double-digit revenue drops.BlackBerry has an 11% smartphone market share in the UK, according to Ipsos Mori data for April. Apple’s iPhone is the most popular smartphone in the UK, with a 19% share, while 15% of smartphone owners have an Android device.
Gummesson (1995)
Let's consider some facts in the business world and use the example of smart phones to rationalize our discussion.
1. Big customers are getting bigger posing a threat for organizations that have to constantly improvise and produce faster solutions to the customers' needs - see the developing story of RIM.
Research in Motion is the company behind the BlackBerry product line. Research In Motion (RIM), a global leader in wireless innovation, revolutionized the mobile industry with the introduction of the BlackBerry® solution in 1999. The BlackBerry product line includes the BlackBerry® PlayBook™ tablet, the award-winning BlackBerry smartphone, software for businesses and accessories. BlackBerry products and services are used by millions of customers around the world to stay connected to the people and content that matter most throughout their day. The management of RIM prepares now to launch the much delayed BlackBerry 10 operating system in the hope of making up ground lost to Apple and their iphone line and eventually Samsung and its brand new Galaxy S 111 line.
The launch of the BB10 operating system, seen as integral to the company’s ability to regain some of the market share it has lost to its rivals, has been pushed back until the start of next year, while falling sales have led to double-digit revenue drops.BlackBerry has an 11% smartphone market share in the UK, according to Ipsos Mori data for April. Apple’s iPhone is the most popular smartphone in the UK, with a 19% share, while 15% of smartphone owners have an Android device.
2. Customers are rationalising their product / services supplier base simply because "the winner takes it all"
3. Customers have become more product / services sophisticated due to media and communication patterns. Most arguably, any new product - brand information travels extremely fast and customers know safely more now about their future purchases
5. The cost of serving customers is no doubt increasing - we now need now more and better equipped points of sale, close to the customer
6. In this sense, suppliers and customers are developing new ways of working together - thus a need for developing relational sales-reps
However, it is also true, that suppliers are still interested principally in volume generation. Whilst suppliers are somehow interested in the potential for ‘added value’, most still do not measure account profitability.
How organiztions react to the increasing customer power?
Do we feel that the solution reflects on plain transactional marketing or shift progressively towards a relational approach focusing on the Total Value that a Customer generates for an organization?
In my opinion, management of a customer focused firm should never forget the good - old marketing recipe total customer value parameters:
TOTAL VALUE OF CUSTOMER =
[CUSTOMER LIFE TIME VALUE + RELATIONSHIP BENEFITS] X ECONOMIC RISK
In differentiating a total product / service offer compared to competition, line management has an opportunity to maximize offers to customers (e.g. the relationship benefit focus). No doubt, the relationship benefit may be at risk if the relationship goes badly. Maybe, the relationship benefit be obtained anyway, even without the relationship. However, the relationship focus increases the probability of benefit for all parts involved during the buyer - seller transaction process.
According to Pigues and Alderman (2010) there are six reasons why companies lose:
1) We do not understand the customer's perspective
2) There is not enough quantitative rigor
3) Data collected never finds its way into planning or execution
4) We rely on individual surveys versus a continuous process
5) The organization is not aligned or involved
6) There is no systematic playbook
