»The most effective Way to Success is to create
it« LVH | | | BELIEVE | while others
are doubting. |
| PLAN | while others
are playing |
| STUDY | while others
are sleeping. |
| DECIDE | while others
are delaying. |
| PREPARE | while others
are daydreaming. |
| BEGIN | while others
are procrastinating. |
| WORK | while others
are wishing. |
| SAVE | while others
are wasting. |
| LISTEN | while others
are talking. |
| SMILE | while others
are frowning. |
| COMMEND | while others
are criticizing. |
| PERSIST | while others
are quitting. | | William
Arthur Ward, American Writer
1921–1994) |
Market
Success |
In
marketing there are just four measurable elements of success:
|
| - Profitability, |
| - Market Share, |
| - Customer Satisfaction and |
| - Customer Retention. |
|
| 1.
Profitability: |
| The very reason businesses exist is to make a
profit, or generate more revenue than they pay out. Profitability may
be increased by reducing overhead and the cost of goods sold - or by
increasing the price to the buyer. But prices can
only be raised so much. Per the laws of price elasticity, as prices
rise, unit sales tend to decline. And so does Market Share. |
|
| 2. Market
Share: |
| Is an important measure of success. It is
important to marketers since the greater the share, the more stable the
brand's performance is in the marketplace. A product with 63% market
share is a force with which to be reckoned. A product with 3% share is
vulnerable to a variety of market factors such as competitive pricing,
promotions, loyalty to better-known brands and more.
Financial managers understand the impact of Profitability and Market
Share. But concepts such as Customer Satisfaction and Customer
Retention are softer items and tend to be treated as lesser by those
managers. Yet, the long term success and growth of a brand is highly
dependent on them. |
|
| 3. Customer
Satisfaction: |
| Doesn't appear on a balance sheet. It can't be measured
in euros and cents or in pound sterlings and pennies. It's measured by
the customer's feelings about a brand. Does the brand deliver its
promise? Is it a good value? Does it bring status to the owner? Is the
customer generally happy with the product? Customer Satisfaction begets
repeat purchases, loyalty, word-of-mouth advertising and, of course,
long-term profitability via Customer Retention. |
|
| 4. Customer Retention: |
| Is the final
measure of marketing success. It is closely tied to Customer
Satisfaction, Profitability and Market Share. A
satisfied customer is likely to remain loyal to a brand, thus enhancing
market share over the long-term, as new customers are acquired.
Retained customers increase the profitability of a brand. In the course
of acquiring new customers, retained customers' purchases can be
counted on for continued profit performance. It's widely known that it's five
times more expensive to acquire a new customer than it is to keep an
old one. Few business organizations focus on all
four elements of marketing success, probably because they're difficult
to balance and manage as separate items, yet they're strongly
interdependent. The four
elements of marketing success are reasons enough for financial managers
and marketing managers to gain a better understanding of one another's'
disciplines and work toward the common good of their companies.
|
Marc Levitt |