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India Knowledge@Wharton | Pitching to the right customers is key

India Knowledge@Wharton | Pitching to the right customers is key
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First Published: Mon, Jun 02 2008. 12 06 AM IST

Illustration by Malay Karmakar / Mint
Illustration by Malay Karmakar / Mint
Updated: Mon, Jun 02 2008. 12 06 AM IST
Fuel-guzzling cars, pharmaceuticals that get bad press and foods made with trans fats: All marketers, from time to time, confront products that, for whatever reason, become difficult to sell.
Illustration by Malay Karmakar / Mint
When that happens, marketers need creative ideas to tide them over until the market returns or the company is able to change strategic direction, according to Wharton faculty and marketers. “From the individual marketer’s point of view, there are times (when) you feel selling something is impossible. But if you think more about it, there are so many different kinds of customers out there. You just need to find them,” says Wharton marketing professor John Zhang.
If customers are not buying, it is, more often than not, an indication that a company is targeting the wrong people. “We all know the saying about one man’s trash being another man’s treasure, and you just need to find the man who treasures your trash,” Zhang quips.
To find that man, a firm must study its market and customers, figure out why its product is or is not clicking with certain segments, and decide what buttons it can push to get targeted customers excited. “Believe me, going through a systematic, rigorous process of segmentation, targeting and positioning—an age-old marketing approach—is much easier than finding a man who loves your trash,” Zhang continues. “A selling job is always difficult if you don’t really know your customers well and if you simply make projections based on your own experience and intuition.”
When a product or service becomes a tough sell, it is because customers have obvious objections to it, says Wharton marketing professor Stephen Hoch. The goal, therefore, should be “to frame an offer to get rid of the objection”.
For example, in response to concerns about high fuel prices, a car dealer can offer free petrol to move SUVs off the sales lot. However, Hoch says, that will work for customers who object to SUVs because of the price of petrol. It won’t work for customers who have turned against the product based on concerns about the environment.
According to Erin Armendinger, managing director of Wharton’s Jay H. Baker retailing initiative, consumers are often ready to indulge themselves when marketers are able to get their message through.
“Even a product that is a little bit bad for you—like clothing you don’t actually need—is not about need. It is about wants and desires,” Armendinger says.
Company connects with developing world artisans
Can a company make money from the work of impoverished people in the developing world without taking advantage of them?
For Patrick Byrne, the answer is a qualified yes. Byrne, who spoke at this year’s University of Pennsylvania Microfinance Conference, believes he has found a way for his company, Overstock.com, to benefit while it helps developing world artisans connect with customers in the developed world.
In 2001, Byrne created an Overstock division called Worldstock, which sells crafts, clothing and furniture made by developing world artisans.
His original idea for Overstock was to cut out middlemen in the retail industry. Byrne figured his company could perform the same sort of service for craftspeople in the developing world, cutting out the importers and boutiques that often stand between them and consumers in the US.
Byrne operates Worldstock on a break-even basis, trying to simply cover costs. It serves the parent company by generating positive press and cementing the bonds between Overstock and its customers. “Somebody who comes in and buys a stereo doesn’t have any loyalty. But if somebody comes in and learns about these products and how and where they are made, they become our best customers—not just for Worldstock, but for the whole website.”
Among the wares that Worldstock sells are stools made in Peru, table settings crafted in Indonesia and carpets woven in Tibet.
When these products enter the American retail system, “they end up in upper-end boutiques that charge five times what we are charging. Some of the backlash we got was from that community. They were paying $35 (around Rs1,500) for a product that had a month’s work in Indonesia in it, bringing it to the US, and selling it for $150. We are buying it for $60 or $70 and selling it for $99,” he said.
Byrne, whose travels had left him “pretty cynical” about the role of non-governmental organizations (NGOs), began thinking about ways in which Western-style capitalism might succeed where NGOs were failing. This led him to the work of economist Muhammad Yunus, who pioneered the practice of microfinance —making tiny loans to very poor people—in his native Bangladesh. Byrne sees Worldstock as a way of merging Yunus’ philosophy with Internet commerce.
“I think we are the largest fair-trade-style organization in the world,” he said. “We are now in 35 countries. We are just about to cross $50 million in lifetime sales, of which $30 million has been paid back to the suppliers. We are trying to get the money as directly to the artisans as we can, with as few markups as possible. Our goal, typically, is to triple people’s income.”
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First Published: Mon, Jun 02 2008. 12 06 AM IST