Why do customers (we) put up with inferior solutions*?

(*Thanks to someone that inspired me to write this – thanks pal)

The field of strategic marketing is organised around a central question. The question is “why do some firms persistently outperform others” This question does not presume that there will always be persistent performance differences between firms. Rather, it presumes only that it may be in some situations, persistent performance differences will exist between firms and that those differences cannot be explain by traditional economic theories of firm performance. And here comes marketing (woohoo hooray) into the picture.

A major trend of marketing in the last decade, marketers have consistently emphasised that success in the marketplace rests on the firm’s ability to attract, satisfy, and retain customers that is being customer oriented – the essence of the marketing concept and market orientation a derivation from it as a strategy to achieve sustainable competitive advantage – a cornerstone of modern marketing thought.

Customer satisfaction is the primary determinant of customer loyalty and subsequent retention and the key to creating a valuable business organization. Continued success rests on reinventing oneself in the eyes of one’s customers and to meet their expressed or latent needs. This requires a thorough understanding of customers in the marketplace and ways to use this information to take market action. The fundamental objective of this perspective is to provide superior customer value relative to competition in order to attract, satisfy and retain customers.

As such leading-edge companies increasingly seek ways to measure customer satisfaction, as means for setting strategy, growing revenues and market share. This trend has been accelerated since 1988 by the American Baldrige National Quality Award, which places considerable weight on customer focus and satisfaction.

As a result, we has seen firms advocating the provision of customer satisfaction (how many times have you heard “everything we do is from the customer’s point of view” “we place our customer on the pedestal) as it is believed that it is an effective way to improve one’s bottom line in this fast changing landscape that we live in today. Much progress has been advanced. So if that is indeed the case, why do customer accept half baked solutions even though a better alternative is available? If the above holds water, there has to be another explanation.

Is it because at that point in time a quick fix solution is preferred (believer of context)? or is it because we resist changes due to the fear of not knowing what to expect should we change – the uncertainty element or we need to learn new things (learning curve is steep)? or are we just be plain lazy? Maybe…or maybe not…

2001lock1I have a more sinister explanation (*evil eyes*)– its most probably due to higher profits through customer lock-in as a competitive tactic. What do I mean by this? Think about this.

  • · Customer lock-in acts as a shield from abrupt customer preference changes and competitive influences – making it more costly for the customer to switch.
  • · Customer lock-in has the ability to reduce the volatility of customer base and achieve higher stability of the revenue stream as compared to customer satisfaction.
  • · Business environmental uncertainty has the ability to influence the satisfaction/lock-in doctrines and its link to business performance.

Reeks of inferior solution? shouldn’t the firms provide superior customer value a means of competition instead of tying them down. So I say its not only because of the reasons cited above such as a quick fix solutions, plain lazy etc. Firms have made it a strategic direction of locking customers in.

Some examples, with many complex products such as ERP, extensive user learning is required to reap full benefits from it. This is also true with simpler office application such as Office. Most people need time and support from experts working with a new spreadsheet to learn how it works. People typically become more effective in using software as they gain experience. hmm….doesn’t this then become switching costs caused by learning.

My view is that the impact of learning costs on a brand’s competitive position can be tremendous. Consider the struggle of Sun’s Star Office against Microsoft Office. (I wont talk about network effects here – just learning). Star Office an excellent product – why did it fail to over throw MS office? Don’t think its due to being an inferior product more likely its due to user’s switching costs and of course the IT department doesnt help (they are control freaks)  and also due to the fact that they are am certified in Microsoft blah blah blah not Staroffice – I rest my case.

More recently, seen the cool Mac VS PC advertisement? Steve Job knows this really well. In order to compete with MS, he has to convince new customers that Apple is no different from PC. “Whatever you can do in PC, Mac can do it better” was its selling message. Kudos to its communication strategy team. Apple not only convinced its existing loyal customers that Apple is a great product but have made them evangelists. Making every loyal Apple customer is brand ambassadors in promoting apple. Well done! A picture speaks a thousand words.

 machug1

Apple has a great solution here – its simple, works right out of the box and its simply beautiful and of course its way cool to be associated with Apple. Brand gurus would tell you

People do not buy products but images associated with products

Apple has done a wonderful job here removing some of the lockin tactics employed by Microsoft – (one of which have helped in this removal is the Mac Vs. PC advertisements)

Concluding…This suggest that the important question is not that of which mode of explanation is a more appropriate one, but rather that of the conditions and/or context under which a given mode of explanation is most appropriate. no?

Feel free to offer your views by commenting.

P.S. Ever wondered why Doctors, lawyers, accountants are all professions but managers not? hmm…

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