What is the core of marketing? How do experts do marketing?

Today we look at it from a completely new perspective - customer asset management.

What is customer assets?

Simply put, it is the total value of products purchased by a customer from a merchant throughout his or her lifetime. In other words, it is the sum of the value of the merchant’s future profitability of its customers. Usually, we discount the total value into the current net present value.

What is Client Asset Management?

It specifically includes four aspects:

1. Managing customer needs (demand management);
2. Managing customer behavior (scenario management);
3. Managing customer relationships (relationship management);
4. Managing customer perceptions (brand management).

Below, we will explain them one by one:

1. Manage customer needs (demand management)

There are many ways to manage customer needs (or customer demand management).

We introduce three methods here:

1. Major customer needs

The needs of major customer categories are macro customer demand management.

We recommend a classification approach:

1. Leading demand: future incremental market;
2. Create demand: current incremental market;
3. Meet the needs: current stock market.

This is a common method we use at Grayscale Cognition. Because we focus on growth, we pay special attention to the incremental market. This is too general, so let’s give some examples.

1) Leading demand cases

When Musk entered the automotive industry, Tesla electric vehicles were leading demand, hybrid electric vehicles were creating demand, and gasoline-powered vehicles were satisfying demand.

Because it is future incremental demand (the current demand has not increased significantly in the short term), Tesla's stock price has hovered around US$200 for a long time after 2012, and people are not optimistic about it in the short term.

Recently, Tesla's market value has exceeded US$320 billion, exceeding the combined market value of the second-ranked Toyota Motor, the third-ranked Volkswagen, and the fourth-ranked Honda. This is a typical case of leading demand.

2) Create demand cases

When Ele.me was founded, the national market size of takeout according to statistics was only 100 million. Obviously, takeout is an existing demand, but compared with the catering industry as a whole, it is still extremely niche.

Last year, the national food delivery market reached a size of 550 billion yuan - this is a typical case of creating demand.

3) Satisfy demand cases

Yangjixing Stinky Mandarin Fish did not make any major innovations in its dishes, but simply established itself as a single-product signature store in an existing stock catering market.

The number of stinky salmon sold increased from dozens per day to more than 3,000. This is a typical case of meeting demand and standing out from the competition in the existing market.

2. Small customer needs

Small category customer demand is meso-level customer demand management, and we usually use the STP method.

STP : refers to market segmentation, target market, and market positioning.

Let’s take Ramen as an example:

1. Step 1: Traditional instant noodles are segmented by price range as the main market segmentation, usually divided into: container instant noodles, high-priced bagged noodles, medium-priced bagged noodles, low-priced bagged noodles, etc. This is the simplest instant noodle market segmentation based on price dimension.
2. Step 2: Which target market does Ramen want to enter? In terms of price, it wants to enter the high-end market; in terms of product form, it wants to break out of the above four market segments.
3. Step 3: What is the market positioning in the high-end market? It wants to make a high-end Japanese ramen that can be eaten at home.

From the perspective of the instant noodle market at the time, this was leading demand; but from the perspective of the catering and takeout markets at the time, it was creating demand.

Why do you say that?

Because there is Rishi ramen available for dine-in dining in restaurants, the price is more expensive than Chuan ramen, but it has a very good customer base, and it is almost fast food, so it is easy to replicate.

Therefore, the demand for Ritsu Ramen is a mass demand in restaurant dine-in, the demand for take-out is a niche demand, and the demand for retail is even more niche. Develop the retail demand for Riji Ramen, which is the current incremental market.

Summary: When Ramen said that they started their business, they also consciously or unconsciously used the STP method (perhaps they will not necessarily admit it).

Among the four segments of the traditional instant noodle market, it integrates the strengths of catering, take-out, and retail, creates new customer demands, and breaks away from the traditional instant noodle market structure. Its target market is the new high-end healthy instant noodles, and its market positioning is high-end Japanese ramen to be eaten at home.

When managing the needs of small categories of customers, the STP method is still a meso-level method of market analysis, which is more commonly used in traditional industries. If the company has strong Internet attributes and customer behavior data, it will often adopt customer behavior analysis, customer experience analysis or customer decision analysis.

For example: When an Internet company wants to grasp the customer needs at the meso-level, it can use the following figure to do a simple customer behavior analysis.

If you look at these data, you will know where your customers spend their time every day? Where are we going to reach our target customers?

3. Target customer needs

Target customer needs are micro-customer demand management, and the KANO model is a very useful tool.

How was the WeChat product created?

1) WeChat has product life cycle management. Due to too many customer demands, not all functions can be developed in a short period of time. Instead, there is a relatively long life cycle management.

2) KANO model analysis should be performed when developing each version.

The KANO model is shown in the figure below:

Let’s do a simplified global version of the WeChat KANO model analysis:

We further transform the KANO model and derive a product demand matching model:

When we launch a product to the market, the practicality of this product demand matching model becomes even more powerful.

For example, I am a city commercial bank, and I advertise our products as "deposit and loan business". That's bad, because this is the "public perception and necessary demand" of the banking industry, which is equivalent to saying only "industry selling points". Then the functions of this kind of product are homogeneous, and it is obviously difficult to impress customer needs.

Let’s summarize the management of customer needs:

Managing customer needs is divided into three categories: macro, meso and micro:

1. Macro customer demand management: What is being competed for is the entrepreneurial vision, and what is being seized is the position in the industrial chain. The best competition is to stay away from competition, so the incremental market is the top priority.
2. Meso-level customer demand management: What is being competed for is the integrated capability that connects the upstream and downstream. What are the market segments in the business vision? Which is the merchant's target market? How do businesses position themselves in this target market?
3. Micro-customer demand management: The competition is about product demand matching ability and team execution ability. What exactly do customers need in each version of our products? What do customers want? Which ones are known to the public? Which ones are known to the minority? In the next version, what strategic trade-offs and combinations will we make based on customer needs?

Apparently:

• Meso-level customer demand management is currently the most widely used by traditional enterprises;
• Macro customer demand management is strategic marketing, which is a great test of the entrepreneur’s vision and perspective.
• Micro-customer demand management is the specialty of product managers in Internet companies.

2. Manage customer behavior (scenario management)

Many product-based companies have deep misunderstandings about products and needs. I think if the product is good, there must be customer demand. If there is demand, it will definitely sell well. If it sells well, there will definitely be income and profit.

In fact, this is not the case. There is a missing medium between the product and the demand, called the scene.

For example: The Boston Symphony Orchestra is one of the world's most renowned symphony orchestras.

Since it is so famous, the product must be good, the customer demand must be real, and the tickets must be easy to sell. However, this is not the case.

The Boston Symphony Orchestra conducted a customer survey and found that as many as 40% of the audience never came again after coming once. This data is really shocking. What is the problem?

Are these audiences not the target customers and have low musical literacy? Still don’t understand? Or did you not perform well during live performance? Or does the concert hall architecture inhibit vocal performance? Or is it that our brand is not well-known enough and people don’t know our position in the industry?

Finally, after in-depth customer visits, we found that these customers mainly drive, and there is no parking lot around the performance venue, which leads to a poor customer experience - this is the main reason.

This case shows that the chemical reaction between products and customer needs is completed in a certain "scenario".

In this scenario, in addition to the product itself, customers will also exhibit behaviors that are unique to the scenario. These behaviors will increase or decrease the customer experience, and thus have a positive or negative impact on the final transaction.

Some customer needs can only be stimulated in specific scenarios.

For example: in a movie theater setting, popcorn is a high-desire consumption; on the contrary, if you leave the movie theater setting, popcorn suddenly becomes a low-desire consumption.

Isn’t it amazing? The influence of scenarios on behavior and needs is so great!

There are usually three ways to manage customer behavior:

1. Customer Behavior Map
2. Customer Experience Map
3. Customer Decision Map

These three maps are all based on specific scenarios and will not be discussed in detail here.

We provide another tool model (scenario demand matching):

We attach great importance to and recommend the productization of small scenarios in large industries.

What is the productization of large industries and small scenarios? ——A single breakthrough in solving a customer’s specific problem in a specific scenario.

And this single point:

1. Can squeeze into the importance and priority sequence of customer decision-making;
2. Customers have a willingness to pay;
3. It is common in this industry;
4. Easy to form standard products.

This kind of large industry and small scene application is a typical customer behavior management.

3. Manage customer relationships (relationship management)

Traditional enterprises lack the technology and means to manage customer relationships. They usually focus on traffic, build channels, carry out promotions, and strive to realize multi-time and multi-batch traffic monetization.

Internet companies are very different. They have technology, tools and means. They have daily, monthly and annual active customers, which are particularly envied by traditional companies.

We recommend two types of customer relationship management:

1. Customer mind share

Customer mind share is actually the sedimentation and classification of customer assets.

After a period of operation, we can divide our customers into three categories:

1) Mental pre-sale customers (high probability customers)

Simply put, they are loyal fans of the brand. When this type of customer consumes, they are far more likely to buy a specific brand than ordinary consumers.

2) Random traffic type customers (low probability customers)

Simply put, it is to intercept traffic, convert sales, and strive to increase the average order value. This type of traffic may be undifferentiated customers, ranging from 60 years old to 6 years old, so the conversion probability is the least efficient among these three types of customers.

3) Probability-triggered customers (medium-probability customers)

That is, under certain scenarios or triggered by certain conditions, customers will increase the probability of purchasing a certain merchant's products.

To sum up, it is the picture above. There is a lot of content, so I won’t explain it in detail.

2. Customer Relationship Marketing

Here, we introduce a method - RFM model:

• R (Recency): the time of the most recent consumption;
• F (Frequency) is the consumption frequency within a period of time;
• M (Monetary): The amount of consumption within a period of time.

With these three dimensions and data, we can classify and sort customers according to the importance and priority of the relationship.

With data support, we can use different relationship marketing strategies for the four types of customers ABCD mentioned above.

For example: we open Meituan Takeout, and a merchant you frequently visit sends you a targeted red envelope. This is a typical relationship marketing under the application of RFM.

4. Manage Customer Perception (Brand Management)

Recently, there has been a small hot topic on social networks that has sparked a lot of discussion.

Regardless of whether the above views on Huawei and Xiaomi are correct or not, let’s first extract the underlying logic behind them: What is the relationship between brand and product? Do consumers buy brands or products? How do brands make customers willing to pay higher prices?

1. Brand has three layers of connotation

1) The value of the product

Solve problems, genuine goods.

2) The value of character

Identity recognition and emotional connection.

3) The value of flow products

All walks of life, social status.

This requires a few more words: In the perception of consumers, there is an industry contempt chain. To be a good person means to take advantage of the situation and find a relatively advantageous social position (to occupy the uppermost position in the contempt chain as much as possible).

Based on these three types of values, we have refined a brand grid (this is just a sample for easy implementation). Let’s explain them one by one:

2. Brand Grid

1) What is a signboard?

I am XX beef noodle, my signature dish. Can potential customers know at a glance what products this store sells? Does it meet my needs?

2) What is quality?

Hefu Lamian says: one pound of bones equals three bowls of soup - this is a typical example of promoting the quality of a product.

3) What is fame?

Local specialties such as Shandong green onions are typical famous products.

4) What is image?

The above is it. For the target customers, they can tell at a glance which company such a large billboard belongs to. Moreover, children have emotional identification and like to eat more.

5) What is experience?

Haidilao, no need to say more. I don’t know if this product is the best. But everyone loves to go there. It has a large customer flow and a high turnover rate, which is well known.

6) What is tonality?

Both of them sell roast duck, why is the average customer spending on Dadong’s restaurant much higher than Quanjude’s? This is because Dadong claims to serve dishes with a sense of artistic conception, and the environment, plating, etc. are also premium items that target customers are willing to pay for.

7) What is a standard?

First-class companies set standards, which are not industry production standards but customer decision-making standards. For example, Ma Xiao Waimai said: White-gill shrimps are the cleanest ones. This is something that the middle class in Beijing who want to eat crayfish but are afraid of heavy metal pollution will understand. This is called decision-making guidance.

8) What is a category?

Huawei’s main marketing strategy is that it is the camera phone that best suits Chinese aesthetics, while Xiaomi’s main marketing strategy is that it is the most cost-effective phone. Both of them pioneered new categories of mobile phones at the time. Category is the customer decision-making path and the industry education cost.

9) What is an entrance?

This is a favorite tactic used by Internet companies. It is simple and crude. Once successful, it will form a network effect or a natural monopoly.

For example, Alipay and WeChat Pay are both traffic entrances that Alibaba and Tencent have been competing for. They are high-frequency, in-demand, can distribute traffic, and have big data value.

To summarize:

Brand management has three layers of connotation:

1. Product Value
2. The value of character
3. The value of flow products

What merchants sow, they reap. At different levels of connotation, customer repurchase rates and customer willingness to pay a premium are very different.

In addition, there is another classification method for brand management, which is divided into: product and brand. Products are investments, and brands are cash.

• Product: including customer experience and customer cognition;
• Brand: It includes two aspects: traffic guidance and decision guidance.

5. Summary of Rules

Marketing experts are a group of people with strong customer insight. They can see the customer's LTV (lifetime value) at a glance and manage customer assets based on this LTV, which is specifically reflected in four aspects:

1. Managing customer needs (demand management)
2. Managing customer behavior (scenario management)
3. Managing customer relationships (relationship management)
4. Managing customer perceptions (brand management)

Customer demand management: There are three categories: macro, meso and micro. The matching of product and demand (which we call PDF) is obviously more effective than product-market matching (which many people know as PMF).

Customer behavior management: You can use professional tools such as customer behavior maps, customer experience maps, and customer decision maps, while large industries and small scenarios are strategic-level tools that are desirable but unattainable.

Customer relationship management: eventually establish and settle three types of customers: high probability, medium probability, and low probability. You can use the RFM model to implement precise relationship marketing for different customers.

Customer perception management: is to create the core value of the brand. This kind of value includes three connotations: product value, character value, and flow value. Different brand values ​​correspond to different customer willingness to pay and different levels of repurchase rates.

In a large number of business practices, we found that traditional companies with sufficient market budgets and heavy advertising are particularly good at 1 and 4, while Internet companies that have grown rapidly from 0 to 1 and hardly spend a penny on hard advertising are particularly good at 2 and 3.

However, whether it is a traditional industry or an Internet company, they all have to face an essential question: What is the essential difference between marketing and sales?

• Sales means merchants take the initiative to find customers.
• Marketing means customers actively come to merchants.

How can a company that doesn’t have a large amount of organic traffic coming to it call itself a marketing expert?

Author: Cao Sheng

Source: Grayscale Cognition Society (ID: HDrenzhishe)

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