It’s a very old adage and it is rolled around by companies and consultants the world over. Even my favorite Management and Marketing guru Peter Drucker has a good quote relating to it:
Marketing is the whole business seen from the point of view of its final result, that is, from the customer’s point of view.
But how many companies actually live and breathe it? More fundamentally, how many companies actually know who their customer actually is? And, are they right? Because if the customer is king, but we’re not clear who the customer is, then we’re almost certainly going to make a pretty poor job of serving that king!
The customer is king; the consumer is king?
It appears that in the consumer goods world there is a clear, implicit belief that the consumer is the customer. Indeed, from the responses to this question posted on LinkedIn, it appears that the words consumer and customer can be used interchangeably. Indeed Drucker’s seminal quote) was used for the purpose of justifying the value of consumer-centricity. The word switch from consumer to customer is made almost subconsciously in many posts here, which leads me to conclude that the words are completely synonymous in the minds of many in the industry. When we say the customer is king – what we often mean is ‘the consumer is king’.
And what is wrong with that? This is the consumer goods industry after all! We know that consumers are important – and that not satisfying them is likely to lead to a very short-lived brand. Isn’t all this semantics? Isn’t it, as one post on the LinkeIn thread suggested, that consumer-centricism lies the heart of true marketing? Well – let’s see what happens when businesses become too consumer-centric, by way of a case study.
Why do you need to know who your customer really is?
Consumers in one market like to drink beer at parties: so they need lots of stock at home at one time. A brand decides to corner the party market and launches in only a jumbo 48 pack. They launch it at a discount to the market because in research consumers expected to pay less for a bulk pack, but they had also made it a premium quality brew as the target consumer was planning to serve at upmarket events. Needless to say they researched heavily with consumers and created a brilliant communication message which they leveraged through all available media.
So far, so good, but what happens when it is presented to the trade? Well – it gets rejected by most customers. Retailers are disappointed with the lower than average margin, and the fact that it trades down other premium beer buyers on a bottle to bottle comparison. Once the buying team is finally bought off, it is rejected by the store operations team as it doesn’t fit on the racking, and given its relatively low rate of sales it will only get one facing: the equivalent of two units per store. If only they’d thought about the retailer as well as the consumer eh?
Three weeks in the product isn’t selling. Junior managers are dispatched to stores to see what is happening. The product is listed, they report, at the right price. But nothing is happening. Nobody could spot the problem, until one bright young manager observes the shoppers. 82% of them have baskets. Even those with trolleys buy only a few items. Following some shoppers back to the parking lot, she observes that there are very few cars, but lots of free courtesy buses. Then it clicks. The pack is way too big to carry home on a bus.
We Three Kings?
The story is exaggerated, but only a little. Perhaps there was a time – fifty or sixty years ago, when complete focus on the consumer was ‘good enough’. Trade was relatively weak and highly fragmented, so big national brands could easily call the shots. And for many household goods the ‘housekeeper/mom/consumer’ controlled what went in and out of the family. But things have changed. Trade consolidation has given retailers power, and that means brands need to serve this customer too. Shoppers are much more influential, and behave differently and are influenced by different things than that which influences consumers. If all we do is focus on them as consumers, we will miss much of the opportunity to learn about them, to connect with them, and to influence them.
Consumer marketers, don’t fret. The consumer is still king of kings: without consumption brands die, it is as simple as that. But brands must be configured to ensure that they serve all three customers. Branding models may still have the target consumer at their heart; but should also reference what the brand delivers for shoppers and retailers.
Shopper Marketers. The shopper, as the newest king on the block, is most often the one who gets neglected. Ensure your colleagues and peers know the difference between the shopper and the consumer, and how this varies by store type.
Customer managers. Your customer is a king too. Brands that don’t serve retailers will struggle to get to shoppers and therefore to consumers. But we mustn’t make the mistake of serving this king to the detriment of the others, or the detriment of the brand. Just because it is good for your retailer, doesn’t mean it is good for the brand.
The customer is king, but the consumer goods industry has three kings: the consumer, the shopper, and the retail customer. Marketing must move on to a marketing approach which recognizes the need, and indeed the opportunities which come from marketing to these three customers in an integrated manner. Feel free to contact me if you would like to learn more about how to build brands which work for all three customers; and to use this to drive phenomenal growth and better investment returns.
Image courtesy of Flickr user: AliWest44