Who is the customer?

The first step towards finding out what our business is to raise the question “who is the customer?” – The actual customer and the potential customer? Where is he? How does he buy? How can he be reached?

One of the companies that had come into existence during the World War- ll decided after the war to go into the production of fuse boxes and switch boxes for residential use. Immediately it had to decide whether its customer should be the electric contractor and builder or the homeowner making his own electric installations and repairs. To reach the first would be a major effort at building a distributive organization; the homeowner could be reached through mail-order catalogues and retail stores of such existing distributive organizations as Sears, Roebuck and Montgomery Ward.

Having decided in favor of the electrical contractor as the larger as well as more stable (though the more difficult and much more competitive) market, the company had to decide where the customer was. This innocent sounding question required major analysis of population and market trends. In fact, to go by past experience would have meant disaster to the company. It would have led them to look for their customer in the big cities and the postwar housing boom was primarily sub-urban. That the company foresaw this and built a marketing organization centering in the suburbs unprecedented in the industry was the first major reason for its success.

The question “how does the customer buy?” was fairly easy to answer in this case: the electrical contractor buys through specialty wholesalers. But the question of how best to reach him was hard indeed. Even after almost ten years of operations the company is still undecided and is still trying out various methods such as salesmen or manufacturer’s agents. It has tried to sell direct to the contractors by mail or out of central sales warehouses of its own. It has tried something never attempted before in the industry: to advertise its product directly to the public so as to build up ultimate consumer demand. These experiments have been successful enough to warrant the suspicion that the first supplier who finds a way around the traditional wholesaling organization of the industry with its high distributive expenses will sweep the market.

The next question is: “what does the customer buy? The Cadillac people say that they make an automobile and their business is the Cadillac Motor Division of General Motors. But the question is whether a man spends five or six thousand dollars on a new Cadillac for his transportation or he is buying primarily prestige. The Cadillac in other words cannot compete with the Chevrolet and the Ford on cost; it may also not compete to take an extreme example with diamonds and mink coats.

Marketers must know their customers. And in order to know the customer the company must collect information and store it in a database and do database marketing. Database marketing is the process of building maintaining and using customer database and other databases (products, suppliers, resellers) for the purpose of contacting, transacting, and building customer relationships.

Ideally, a business database would contain business customers’ past purchases; past volumes, prices, and profits; buyer team member names (and ages, birthdays, hobbies, and favorite foods); status of current contracts; an estimate of the supplier’s share of the customer’s business: competitive suppliers: assessment of competitive strengths and weaknesses in selling and servicing the account; and relevant buying practices, patterns, and policies. For example, a Latin American unit of the Swiss pharmaceutical firm Novartis keeps data on 100,000 of Argentina’s farmers, knows their crop protection chemical purchases, groups them by value, and treats each group differently. A customer database is an organized collection of comprehensive information about individual customers or prospects that is current, accessible, and actionable for such marketing purposes as lead generation qualification; sale of a product or service, or maintenance of the customer relationships.