For any marketer, the goal should be to maximize profits and take actions (legal and ethical)necessary to achieve that. The key to profit maximization is knowing your customers and serving them better than your competitors do. About six months back I published on Slideshare a simple tutorial on Conjoint analysis. Despite the esoteric name and the statistical analysis involved behind this, the premise is very basic – Segmentation and Targeting. I want to go back to my previous quote from Mr. A.G. Lafley’s book Game Changer,
As you work to better understand the WHO, you’ll discover that people use your product for different reasons. They may have different occasions for when and how to use it; differences about what they think is a good value, and what they are willing to pay. One size does not fit all.
Marketing is about finding those reasons, occasions, usage scenarios and hence what the customer is willing to pay for. If there is no congruence between what the customers value vs. what a marketer charges for and how much do the customers value the offering vs. the price a marketer charges, they end up missing out on profits. The loss comes from:
- Foregone profit from lost sales – because the marketer is charging for the wrong factors or simply pricing it wrongly
- Forgone profit despite large sales because the marketer is not charging for things that customers value
There is nothing more fundamental and relevant than segmentation and targeting. But this message is getting lost in the noise created by fads like “Free”, “freeconomics”, “economics of abundance vs scarcity”. It does not matter what market you operate in, what services you provide and what your marginal costs are, the basics of marketing remain the same.
Lose sight of your “WHO” and their reasons you lose.