[M’s Opinion] No. 13 Customers and businesses cooperate in creating value – Era of Collaborative Marketing –
Jan. 09, 2014
Yukihiko Uehara, Professor of Global Business,
Meiji University Professional Graduate School
“Customer-building” is the key to business strategy
My main areas of research are “Marketing” and “Business Strategy”. That is to say, my research endeavors to answer the question, “Which management strategies lead to a company’s success in a market?” Business strategy consists of three important elements: “Money-building” (Finance), “Organization-building” (Management), and “Customer-building” (Marketing). All three of these are indispensable for a company’s success but “Customer-building” is the most important in my opinion. After all, no business can survive without customers and at the core of marketing lies “customer-building”. To put it another way, “customer-building” involves creating demand. The important point here is that “actual demand” encourages a business to grow. Let’s take a measure being employed by the current government to see an example of this. Collectively termed “Abenomics”, the government is using monetary policies to get capital circulating around the market, and fiscal policies to promote public investment and so on. However, these policies do no more than hope for the creation of “fictitious demand” while more money circulating around only creates the appearance of growth. So, the question that follows is what is necessary to realize real growth from “actual demand”? The solution lies in “building and maintaining a relationship with customers”.
Creating “actual demand” in the case of activating a shopping street
In how to “build and maintain a relationship with customers”, Let me show the case of activating a shopping street. In recent years the number of vacant stores in shopping streets has been increasing in local towns and cities in
How to build business-customer relationships
In “collaborative marketing”, value is not what only businesses can create; they are expected to work with customers to create it. Here, the question lies in how businesses and customers can build and maintain relationships with each other. In the case of the shopping street, communication and interaction were established between the two as the result of setting up a “concierge”, but how about in the case of a regular company? Let’s take an example of a furniture store. Once you purchase a piece of furniture, you only start to appreciate it after you put it somewhere and start using it. Of course, this means that the “delivery” is necessary and it is reflected on the price as an additional product value. However, one furniture store decided to start selling knock-down furniture so customers could assemble it at home after arranging their own transportation to have it delivered. By specializing in selling products, the furniture store was able to achieve lower prices, and also created a new relationship with customers. Another example is that a construction equipment maker installed sensors in each piece of equipment and set up a network so information could be transmitted back to them when a trouble occurs. As a result, they were able to grasp the situation real-time while communicating with the customer. This represents another form of “cooperation”. Also, when a musical instrument manufacturer who had previously categorized electronic pianos under electronic musical instruments reclassified them as pianos in response to customer feedback, their customers were able to shop more easily. A major textile maker, too, accepting requests from customers, is now selling what they had formerly marketed as lens cloths successfully as facial towels. All these examples contributed to higher sales as a result of value created by businesses and clients building relationships together.
From “Gesellschaft” to “Gemeinschaft”
In economics, price is determined by the equilibrium between supply and demand. What we call market mechanism, binds people together to form “Gesellschaft”. However, in marketing, you lose autonomy if you only rely on market mechanism. This is another major reason why businesses may want to form a “Gemeinschaft”. In marketing theory, there is an “attribution theory” which says that consumers attribute the reason for purchasing a product to a few select factors. If consumers attribute their reason for purchasing a product to its price, a business becomes weaker. Businesses worn down by price wars are examples of this. It is important for businesses to prevent the customer from chasing to lower prices by offering them something more attractive. For example, royal customers are said to constitute 30% of leading supermarkets’ customer bases, with all those customers attributing their reasons for purchase to factors other than price. For this reason, not only supermarkets but all businesses must try to convert more “royal customers”. To achieve this, instead of fully relying on market mechanisms, it is necessary to develop “relationships” into the market. This can also be thought of as introducing interaction between buyers and sellers, with a “Gemeinschaft” being born from this. Marketing for which a business lives a long life should aim to build “Gemeinschaft” with their customers.
Marketing for Japanese farmers
Recently, one issue receiving a great deal of attention is the Trans-Pacific Partnership (TPP), in particular the effect it may have on the agricultural industry. The movement towards free trade by abolishing tariffs is a world-wide movement and in my opinion it’s already too late to debate whether to join or not. If something is no longer valid, it should be knocked down and built up from the bottom. Every
I would also like to make a final proposal to “become more intellectual”. Japanese people have traditionally aspired to live “high income, high expenditure” lives. This is a short-sighted operation where people work outrageously hard in search of a high income, leaving no room for them to their intelligence. By switching to a “low income, low expenditure” style of living, people are able to lead a more comfortable, affluent life and the opportunity to harvest knowledge and interact with large numbers of people. However, a community supporting each other is needed before we can achieve this kind of lifestyle. This coincides with the above-mentioned marketing theory. Business and customers need to cooperate in order to create “actual demand” and interaction is indispensable to build relationships. I believe that one way we can realize this community is through adoption of a “low income, low expenditure” lifestyle.
Professor of Global Business
Meiji University Professional Graduate School
Topics of research Marketing theory, Strategic management theory