About Marketing Today

To achieve the highest Vine Market productivity you should have some background knowledge in marketing and sales. That is why, we have taken the opportunity to touch on some appropriate issues. Without providing a complete presentation of marketing theory, we have chosen to emphasize those areas of which understanding is vital in order to excel in your use of Vine Market.

Competing for Customer Shares

Today more and more businesses are reevaluating their usual marketing and sales routines. Probably the most important change in marketing thinking is the shift from pursuing a greater market share to competing for a larger customer share. This issue can be considered the fundamental in the new One To One marketing strategy. Good customers are an asset which, when well managed and served, will bring lifetime value to your company, and this is what businesses are competing for nowadays.

One To One Marketing

The founders and ardent supporters of the One To One Marketing paradigm, Don Peppers and Martha Rogers, say the following:

”The basis for one-to-one marketing is share of customer, not just market share. Instead of selling as many products as possible over the next sales period to whomever will buy them, the goal of the one-to-one marketer is to sell one customer at a time as many products as possible over the lifetime of that customer’s patronage. Mass marketers develop a product and try to find customers for that product. But one-to-one marketers develop a customer and try to find products for that customer.”

One-to-one marketing concept may be best summarized by its extreme contrast with the mass marketing concept. We shall briefly consider the main distinctions further.

Share of Customer vs. Share of Market

To do profitable business nowadays you need to focus your efforts on the share of the customer, not market share. Until the arrival of powerful computers and appropriate software there were no possibilities for marketing professionals to closely follow each of their customers. Now you must store and use any conceivable piece of information about each of your customers in order to increase your shares of customer businesses and to remain competitive in the rapidly changing market.

Economy of Scope vs. Economy of Scale

It will be more and more important to increase the scope of your relationships with each customer. This is the only way you can overcome big companies driven by economy of scale, whose main advantages are mass production, mass distribution, and mass media. Economy of scale manages to diminish product costs significantly and this has always been important for a consumer. The only way out for small companies is relying on economy of scope: i.e. once you have gained a customer you should develop such a relationship with him that it would be impossible for any competitor, no matter how large he is, to entice the customer away.

Individual Customer vs. Average Customer

Your customers are not uniform and it does not need to be argued that every customer favors personalized treatment. Now that you have the technological facilities to manage each customer individually, you should seize this opportunity in order to run a competitive and stable business. Here are simple recommendations, but following them can significantly increase your future income.

• Differentiate between your customers to find the most profitable and prospective and treat them accordingly. Some of them are worth more to you than others.

• Accurately analyze your costs and profits. You will find that it is often more profitable to do your best to retain your existing customers than wasting money, time and other resources on acquiring new ones. Careful analysis will also show the customers who have negative lifetime value for you so that you will not spare great resources on them; you may even consider how to dispose of them.

• Provide individual incentives for every customer. Some customers should be offered a special discount, some may want to be included in elite customer clubs.

• Whenever possible customize your products and/or services for each customer. This will secure your customers and prevent them from switching to other brands. Pay special attention to developing and customizing your services that surround product distribution and support. From now on, the significance of personalized services will be perpetually increasing. It will be a major competitive tool, especially when the quality of products is rather similar.

• Engage your customers in a dialogue. Encourage the customer’s desire to respond by any possible means. Listen to customers attentively. The dialogue promotes the development of close customer relationships. Remember that the major point is that a delighted customer is a real asset to your company. You can be assured of his loyalty to your products, even if you charge more than your competitors.

Using External Databases

It is evident that one-to-one marketing requires vast amounts of personally tailored information in order to build deep and sincere relationships with each customer, one at a time. The modern level of technology is making it possible to manage huge databases containing personal customer data. Commercial databases containing all conceivable types of information are widely available. Some companies compile such databases from publicly available records, some companies store their own customer records and then sell these data for profit. These databases can be used with a great benefit, especially for attracting new customers.

Gathering Exclusive Data

Efficient use of external databases is profitable and reasonable. However, because the same databases are usually available to your competitors, you should not seriously expect a commercial breakthrough if relying solely on their use. The answer lies in the gathering of your own exclusive data based on the history of your relations with your customers. Store every piece of valuable information - amount of purchases, method of buying, seasonal preferences, etc. You should pay special attention to psychographic data - it is very doubtful that you will ever find reliable psychographic data in any commercial external database.

Segmenting Customers

The One To One marketing concept implies an individual approach to every single customer. In achieving this ultimate goal the process of grouping your customers into independent, exclusive portfolios becomes extremely important. You should group customers:

• To increase the efficiency of one-to-one marketing.

• To make customer management as simple as possible.

• To eliminate the possibility of several managers being in charge of the same customer.

• To simplify managing large amounts of data.

• To target your marketing activities more precisely.

And last but not least, if your company has not already adhered to the idea of individual customer management, then grouping customers would be a major step in this direction.

You should choose grouping criteria very carefully, in accordance with your current business operation. Hopefully the following sections will give you some introductory tips for deciding on the appropriate criteria.

Customer Profit Criteria

You should first consider grouping your customers in accordance with their value to your company. The customers with the highest projected lifetime value should certainly be singled out for special treatment. These are your best customers and they should be treated accordingly.

This type of grouping can also identify your worst customers, so that you can possibly dispose of them. However, take care to release them only if you are absolutely sure about their negative lifetime value.

Prospect Criteria

Prospective customers should be distinguished, but they shouldn’t be managed uniformly. They can differ considerably and should be assigned to different groups. Some prospects have more potential than others; some prospects come by referral of your current customers, and so on. Each group should be treated differently. In general, remember that sometimes prospects are worth more effort than your current customers.

Demographic Criteria

You can group your customers according to the following demographic variables: age, gender, family size, income, occupation, education, religion, race, nationality etc. Demographic variables are the most popular bases for distinguishing customer groups, because the consumer’s preferences are often associated with demographic variables. Another reason is that demographic variables are easier to measure than most other types of variables. You can buy commercial databases that contain demographic data on a huge amount of potential buyers.

Though demographic and psychographic data can be extremely helpful for understanding your customer preferences, you ought to gather and handle personal information very delicately. You should not only obey special laws regulating this kind of business, what is of course important, but you should also respect and properly protect private data on your customers.

Psychographic Criteria

Psychographic criteria divide customers on the basis of social class, lifestyle and personal traits. People within the same demographic group can exhibit very different psychographic profiles. The discipline of psychographics believes that there are certain values and life-styles that lead people to choose particular types of products.

If possible, it is worth it to take into account personal traits of character. For instance, a person can be friendly or hostile, determined or hesitant, active or inert, etc.

Feel free to use any psychographic characteristics you consider appropriate. It really does not matter how you would classify this or that criterion. For example, it is not so evident which groups to assign the following very useful criteria: buying methods, hobbies, political affiliations, travel preferences, and so forth, but often such criteria can help you later to understand better your customers and to develop reliable, responsible and profitable relationships with them.

Geographic Criteria

Geographic criteria help to differentiate customers by their place of living or operating. The following variables are used most often: country, state, city, zip code, street, neighborhood, language region.

Other Criteria

Some criteria can be formed on the basis of other customer characteristics. For example, often it is reliable to group customers in accordance with their previous behavior, because there is a high probability that people will not change their style of behavior. In this case distinguish regular users and occasional users, enthusiastic users and indifferent users, etc. You can also group customers by their source, e.g. brand switchers, recent win-backs, new users. You can also classify them according to the different benefits they seek from the product and so on.