The truth of user marketing: heavy users are the least loyal, and the money of middle users is the easiest to earn

Everyone chases after heavy users, thinking they can get more orders, but heavy users are very savvy and can better understand the cost-effectiveness of products and make choices, and are the least loyal. The people who make the most money are middle users . They cannot analyze the product independently. You can make full use of this "ignorance" and become a brand they trust.

I first came to China in 1981 and know China very well. Whenever we talk about marketing , we always start with consumers.

Your customers are your number one asset

The purpose of a business is to create and retain customers, and marketing is the starting point of the strategy. Your customers are your number one asset, the source of all your cash flow, the source of all your growth, and the co-creators of your company’s reputation and your brand identity.

For example

About 35 years ago, there was a problem with Johnson & Johnson's product Tylenol. Some people were poisoned after taking it. Johnson & Johnson did not hide the fact and withdrew all the medicines. Then we redesigned and relaunched the brand, and the market share was even higher.

Why is this so? Because consumers trust the Johnson & Johnson brand, they feel at ease. The CEO of Johnson & Johnson said at the time:

◆ The brand value of a company is the net present value of all the accumulated trust you have won from your customers through your past marketing efforts.

If a person is poisoned to death because of choosing your product, how many companies will withdraw this product? Maybe Baidu's Robin Li can learn something.

Johnson & Johnson has a so-called creed: customers first, employees second, community service third, and shareholders last.

◆ “A corporate credo that puts customers first and shareholders last ultimately benefits both groups.”

——Jim Burke (former CEO of Johnson & Johnson)

What exactly is marketing?

◆ Develop strong customer insights to respond to customers’ stated and hidden needs ◆ Use these insights to launch competitively advantaged products and services ◆ Create value by branding, distributing and communicating these products and services to customers ◆ Capture value through profitable pricing

If we break down marketing, the starting point is customer insight, second is how to go to market, and third is the five decision areas: brand, product, communications, pricing and distribution.

Premium: The Starbucks Example

Starbucks represents a company with a premium strategy. Its price has nothing to do with the quality of the coffee. It’s mainly about the experience and atmosphere in the store. People need a safe place to relax and socialize .

It became a desire, no matter where in the world. The founder describes it as the third space in life, similar to a square in a community.

Value: Southwest Airlines Example

Traditional airlines compete by adding more functionality and features, so they keep offering higher prices. Southwest Airlines has found a value-conscious market segment for whom less is more.

Southwest has drastically reduced costs and prices by only flying short-haul routes because you can change pilots quickly, which keeps costs lower.

Brand building: the Lexus example

Toyota realized that brand extension had its limits and needed a new brand to target the luxury car market (without the Toyota name), so Lexus was born.

But it also requires new dealers, new retail designs, new sales methods and a completely new buying experience, because top consumers will not buy Toyota-branded cars.

Product: Example of Volkswagen Beetle

In 1998, Volkswagen re-launched the Beetle with a retro design, full of 1960s nostalgia, which attracted many customers to Volkswagen dealers.

But after they went there, they found that the Beetle was very small and not practical, so they bought Passat, Jetta and Golf there. This is a successful example of combining product strategy and competitive marketing strategy.

so

Brand and product policy is not just about the functionality of the product, but also about the service, process and experience.

Spread: The Vodka Example

The communication strategy of vodka is to establish a differentiated brand personality. The way they differentiate in the category is not through taste, but through brand personality.

All vodkas are clear and white, and brand personality can be a key source of differentiation. They used a word- play campaign to capture the attention of the youngest group in the market, using the word Absolut.

The advertising campaign has captured the attention of the younger market segment for 20 years.

Pricing: Walmart Example

Walmart is not like a regular retail store that chooses certain products to have specials every week to attract customers. This is confusing and costly because if you want to manage inventory, it is very difficult to predict how much consumers will buy if the inventory of special products is very hard to predict.

Walmart implements a convenient everyday low price strategy, suppliers' promotional expenses are evenly distributed over time, turnover costs are very low, inventory is predictable, and everyday low prices further reduce Walmart's cost structure, making prices very transparent.

so

The basic principles of pricing policy: price = customer value + cost structure + competitor price + company strategy . These four factors should be taken into consideration.

There are several very important issues in distribution:

1. First: Single vs. Multiple Channels ? For example, Starbucks not only sells its products through its own stores, but also in Starbucks coffee supermarkets and on airline planes in the United States.
2. Do you deal with customers directly or through indirect channels? Companies like Dell directly cover end customers.
3. Selectivity vs. broad channels? If you pursue volume, you have to use a very broad network, but if it is a luxury brand, you are required to open stores selectively.
4. There are two very important issues: who does what in this channel, who will handle the physical flow of your products, and how the information on benefits circulates, and who ultimately has the control.

For example

Accor is a hotel brand. They established the digital booking channel Room key to compete with online platforms such as Ctrip and Qunar .

If you are in the hotel industry, you don't want your prices to be controlled by distributors that you cannot control. You want to have control over the prices, and Accor has achieved this.

There is such a problem

With the rapid growth of China's e-commerce industry, if you are using physical distribution channels, more and more consumers are buying online. How can you build a very aggressive e-commerce network at this time?

If you are a startup, go directly to Taobao and set up your own Taobao store, because you will not have any channel problems. But for many consumer product companies, they have to worry about how to balance digital e-commerce channels and traditional channels.

Three sentences to sum it up

◆ “We never think we are better than our customers.”
◆ “We think our customers are smart enough that we can’t just stick to our ways to be successful.”
◆ Starbucks said; “We are not operating 5,000 stores, we are operating one store 5,000 times.”

Because each one is different, they adapt to the local cultural characteristics, and their appearance and vision are integrated with the local area. This is another way to respect customers.

Positioning drives everything in marketing decisions

Now that you understand the importance of customer insights, let’s talk about customer segmentation and brand positioning.

One thing is very important: market segments are not product groups, but customer groups. Market segments must be identifiable, sustainable, attainable and profitable.

A truly good marketing plan includes not only the customers we want, but also the customers we refuse to serve because the products or services we offer are only suitable for certain market segments.

This is especially important for startups because you have just established a business and hope to have income, but if you meet all requirements, your product will have no clarity and no differentiation.

Entrepreneurs must have the courage to reject business. Not every request from a customer should be accepted. You must know who you want to serve. Defining the way you provide service is actually a way to define strategy.

The complexities of managing market segmentation are:

◆ As markets grow, they become more complex and easier to segment.
◆ Marketers often need to balance the needs of multiple segments to achieve growth and renew customers.

Every time you target a new market, you increase the complexity cost of your operations. Good companies can address multiple market segments at the same time, but they must understand the complexity cost of doing so and whether the pricing is profitable for this market segment while covering the complexity cost.

Market segmentation should only be undertaken when the additional profit gained from changing yourself to meet the needs of a certain segment is greater than the cost of complexity.

Over-segmentation sometimes occurs. Once the products are over-segmented, not only will the production cost increase, but it will also make it difficult for users, especially new users, to choose, because there are too many products and customers will just give up.

There is another side to this coin, an example of insufficient segmentation.

For example

Black & Decker is the world's number one power tool brand and is very powerful, but Black & Decker has failed to capture the demand for power tools in the fast-growing craftsman market segment.

Because when these professionals come to your home to work, if they bring the electric brand you bought but never used, it will not be good for their professional image. So professionals want different brands to give them added value in the eyes of consumers.

MAKITA is a Japanese brand. They created a new brand to meet the needs of craftsmen and quickly gained 50% of the market share.

Black & Decker also felt the need for change, so it launched the DEWALT brand and provided high-quality service support. When your tools broke, they would send you spare tools within 24 hours, minimizing the workers' downtime, so it reached a 40% share within a year.

Summarize:

It is best to be ahead of market segmentation. In addition, you need to consider what special needs the new market has, which may not be product features but service support.

You must pay attention to:

All competitors are chasing heavy users, from whom they feel they can get more orders and higher amounts.

However, heavy users are more experienced and savvy. They can better understand the cost-effectiveness of products, tend to spread their purchases among several suppliers, and are the least loyal.

We can think about this: do the big customers of each of your company bring you the highest proportion of profits? They are actually scattered.

So be careful not to over-pursue heavy user groups. The ones who make the most money are those in the middle. They know that all suppliers are not the same, but they cannot analyze the products independently.

Therefore, you can take advantage of their relative ignorance and become a brand they trust.

About positioning:

Let's talk about positioning again. You must analyze the customer segments, decide which market to serve, then analyze your competitors and provide a benefit package that just meets the needs of the segment you choose.

For the market segment you choose to serve, some benefits will be very important to choose and some will not be particularly important.

Let’s focus on “defensive interests”, which means that consumers cannot see the difference in products, but it does not mean that this interest is not important.

For example

Airlines don't advertise by saying: We had one crash in the past, and another airline had two.

Because they don't want to remind consumers of negative things. Safety is a very important benefit, not a differentiating factor, and safety cannot be used for marketing.

VS.

Another company that regards safety as a key benefit is Volvo . About 30 years ago, Volvo discovered that in middle-class and above families in the United States and Europe, it is often the mothers who pick up their children from school, and safety is a very important key benefit.

So Volvo developed a marketing campaign that differentiated its cars on the basis of superior safety, but only for the segment with children.

Volvo recently made a statement that they would continue with the theme of safety, saying that by 2020 no one would die from riding in a Volvo car, and even suicide would not be possible in a Volvo car.

The positioning should be clear. A brand must have a clear positioning because positioning, and your positioning statement, drives everything in your marketing decisions.

For example

Avis Car Rental says:

◆ "For business people who need to rent a car, Avis will provide you with the best service because our employees are the owners of the company."

That is to say, if employees also own shares in the company, they will provide very good service. This is not the case with other large car rental companies. Their employees are just working there as part-time workers. I think this is a very living statement.

VS.

An example of a weak positioning statement: UNICEF,

◆ “For those who make a lasting difference, UNICEF advocates for the rights of all the world’s children, and we have the power, knowledge and resources to accomplish this mission.”

Do you find it convincing? It's just a very vague statement that doesn't make people feel excited at all, so it's ineffective.

There are also many pitfalls when it comes to positioning:

◆ Under-positioning: Everything for everyone ◆ Over-positioning: Targeting too small a potential audience, an unattractive niche ◆ No positioning: This means your competitors have positioned you, and your customers are completely confused about what you stand for

Great companies are passionate about solving their customers’ problems

Objectives of customer management:

◆ Get and keep the right customers.
◆ Target different customer groups based on their sophistication, willingness to pay and lifetime profit potential.
◆ Align marketing investments and service levels based on lifetime profit potential

In the evaluation of market segments, it is necessary to introduce the concept of lifetime customer analysis to decide which groups should be focused on and how much service should be provided to them.

You need to identify who your customers are, sort each customer according to their lifetime value, sort the interest rates provided to you by the customers, and differentiate them on their lifetime value.

Of course, you still need to interact with these customers, so you should collect information about them so that you can learn from them and meet their specific needs.

The third point is to develop some customized solutions to meet his key interests. Not all consumers want a relationship, and not all consumers deserve a relationship.

You need to get their permission first, especially if the customer is price sensitive. Marketers must understand which customers are truly looking for long-term relationships and which customers are just looking for transactional deals.

Key success factors for customer management:

1. Many people who manage companies are only interested in making money, and they are not interested in customers. The best companies are passionate about solving problems for their customers and win back customers every day.
2. Their organizational structure is centered around customer groups, not products. Their recruitment , training, and incentive mechanisms are all customer-driven.
3. Customers should appear on the company's dashboard. They must have measurement indicators and use these indicators as a measure of the health of the company's business.

Examples of Customer Driven Companies:

◆ We are responsible for our products until they are thrown away by our final consumers.

--Matsushita

Panasonic was founded about 55 years ago, before environmental sustainability became fashionable, and they said that we must be responsible for our products until they are thrown away by the end consumer, not just sold to distributors.

◆ We believe that service is all the behaviors and reactions that customers think they are buying.

——Smith, founder of FedEx

We think of FedEx as delivering packages, but no, they have to satisfy customer needs, and they do so through their actions and reactions. The customer's perception is the reality, not what you do.

Further reading

John Quelch: Social media has exploded, but marketing has never fundamentally changed

Many people say that e-commerce heralds the disappearance of "distance" and "place" in modern market management and marketing, however, this is not the case.

Even as more people go online, they still prefer to seek information close to them: reading news about their community or country, participating in social networks of friends and family, and purchasing goods from local and national retailers.

Therefore, for many marketers, virtual space is only a supplement, rather than a complete replacement for physical space. Of the tens of thousands of queries that Google performs every day, one in five searches is location-related. Because smartphones connect businesses and consumers.

Even with the explosive growth of social media around the world
Facebook is more about strengthening similar relationships. Marketers can make good use of this neighboring friend model.

Without a doubt, the online services sector has seen the most explosive growth in the social media space. Social networking sites rose to prominence because they were able to create a unique, enveloping user experience that no product offline could truly rival.

It’s also important to note that almost all of the content is user-generated, although some comes from advertisers.

YouTube has hundreds of millions of visitors each month, and Facebook is the most trafficked website in the world by minute. One of the attractions of social media and social networking is that people can make new friends and connect with people wherever they are.

However, one study found that the average Facebook friend is in the same metropolitan area; for teenage users, 90% of their Facebook friends are in the same area.

Another study found that people use Facebook more to strengthen existing or geographically close friendships than to connect with more distant friends.

Another analysis echoed the nine-region approach by dividing the country into seven regions based on 210 million Facebook profiles connected to friends.

Within these areas, local clusters are very strong, while extra-regional connections are rare. In other words, for most users, friendships based on social networks still retain a strong local character.

Marketers can put this neighborly friend model to good use. As consumers continue to share their retailer preferences, product reviews, and online promotions through social networks, the geographical concentration of connections among friends can make it easier for businesses to target consumers based on where they live and coordinate offline and online marketing activities .

There is very little active interaction between people and businesses in the virtual space. Social media has not completely changed marketing.

One might think that consumers would have similar views of online and traditional advertising, or that they might be more favorable toward online advertising. Actually, it is not.

For example, the fact that Burberry has over a million fans on Facebook sounds impressive. However, in the virtual space, there is very little active interaction between people and businesses.

A Pew Research Center survey found that among consumers who use the Internet to research or buy music, cell phones and homes, 5% or less post ratings of the products online after purchase. 7% of Americans use the Internet as their primary social communication tool, yet they feel confused and conflicted about that sense of connection.

These people are mainly men aged 25-30. Although they also use electronic devices for entertainment, "many people think it is good to take a break from the Internet." If this burnout sets in, the first thing to give up is the connection with the business and its brand.

Some people point out that social media will revolutionize marketing. How profound is this change? I think it is impossible to give a definitive answer for many reasons:

First, social media does not change the main purpose and principle of marketing, which is to get and keep customers by satisfying their needs.
Second, social networks amplify the potential importance of word-of-mouth recommendations from customers, as marketers have long recognized the impact of word-of-mouth advertising.
Third, Facebook, Twitter and other social media, like print and broadcast media before them, must rely on paid advertising or sponsorship from marketers to cover their costs.
Finally, marketers have long been leveraging emerging media while still retaining existing media. Television did not kill newspaper advertising. Direct mail boosts rather than cannibalizes retail store sales.

It can be seen that the practicality of social media has not revolutionized marketing, but it can improve marketing - for example, in market research, new product development, customer interaction, brand positioning, customer targeting and content creation.

From another perspective, marketers face a double challenge: they do not have as much control over social media as other online or traditional media, while the coverage and frequency of consumer word-of-mouth publicity are dramatically amplified.

A particular concern is that consumers trust their peers more than marketers. 90% of internet users trust recommendations from people they know, while 70% trust opinions posted online by strangers.

Good marketers increasingly understand that any mistake can spread around the world almost instantly, so they monitor what is said online about other brands.

Trends are rarely black and white. Location still matters on all levels, which presents new opportunities for marketers.

Experts and observers are always quick to point out the changing business environment and predict the demise of old ways of thinking: the digital will replace the physical; the global will replace the local; the new will replace the old.

But as we have seen, trends are rarely so black and white, and a tilt toward one does not always mean the demise of the other.

In some cases, we see ourselves as global citizens, satisfying our needs with brands that offer the best value for money, regardless of the country of origin; at the same time, we join the local community where we live and support local businesses and local products.

The cost of not getting it right is extremely high. For years, Wal-Mart lagged behind Carrefour in China and still has relatively few joint venture stores there. Carrefour is seen as having an outstanding record in local adaptation.

The forces of globalization have not yet reached the point where location becomes irrelevant. Individual nations remain the organizational structure of the world's population. Even the most global of people spend most of their time in a small geographic area.

The more interconnected the world becomes, the more we want to emphasize localization. This trend brings opportunities for marketers. At the local level, barriers to market entry are minimal, and many consumers are happy to give local suppliers a chance.

Global marketers, for their part, can take advantage of the efficiencies of economies of scale and scope that come with globalization and offer products and services tailored to the differences in consumer preferences between communities, between cities and rural areas, between developed and emerging economies, and between one continent and another.

On all levels, location remains important.