ABSTRACT
Customer focus and demand is the first of our six building blocks for supply chain management. In Chapter 3, we said that customers create demand. Marketing and sales personnel and advertising agents might argue that, through advertising and promotion, they create demand. It is true that marketing will create interest and might initially generate some sales. But no matter how clever or entertaining advertising and other forms of promotion might be, unless the product is wanted or needed by the customer, demand will soon evaporate. A customer could be a consumer (end user), retailer, wholesaler or a distributor, but ultimately the demand for a product or service is determined by the end user. An example of promotion creating interest can be seen in two West End shows opening on the same night in London. Although both might have similar-sized casts with well-known ‘stars’ and have the same type of promotion, one will run for several months and one will close after a few weeks. Whether a show is successful or not will be determined by the number of people who buy tickets for the show – in other words, customer demand, based on reports of critics and word of mouth. Why one was a success and the other a flop will be due to customer perception of the show, not on the quality or amount of promotion. Indeed, the flagging show is likely to have more money spent on advertising than the successful show. The same applies to any product or service; advertising and other forms of promotion can arouse initial interest, but if the product does not closely meet customer expectation, marketing alone cannot sustain demand. Our rule of thumb is that unless a product or service meets 80% of customer needs, the customer will be lost. Why only 80%? Should we not be aiming for 100%? The answer is yes, but it might not be economically feasible for us to exactly meet every customer’s needs or expectations, even if we knew exactly what they wanted. As customers, if we always received services and products that met 80% of what we wanted, taking into account the price, most of us would be reasonably satisfied. Organisations know this, and instinctively strive to give their more important customers service at a greater level than they do to their less important customers; and the less important customers, either through necessity or lethargy, accept the rules of the game, providing the service or attributes of the product do not fall too far below what they want. Airlines do not hide the fact that first class and business class passengers get priority at check-in, better service and food in flight, and even a better choice of movies than do economy class passengers. In reality, the reason people travel business class is for more leg room and to be able to sleep on long-haul flights rather than for the quality of the food or the choice of wine. When was the last time you checked the menu before buying an airline ticket? Economy class
passengers, all of whom would prefer to travel business class, trade off service to reduce their cost. Although economy class passengers will have limited expectations, none the less, if their perception of the service experienced is poor, they will, often without complaining, simply go to another airline for their next journey – even if it means paying a little more. Likewise, business class and first class passengers don’t always complain; they simply go elsewhere. The lesson here is that customers do not have to give a reason; they just fade away.
