Marketing 101 usually comprises of Philip Kotler’s principles i.e. segmentation, targeting, positioning, the importance of differentiation, and the creation of a unique selling proposition. Kotler, together with Kevin Lane, David Aaker, have laid the foundation to modern marketing. However, in this postmodern world we see this foundation being challenged by new beliefs and visions.
Additionally, new consumer groups like Gen Z and Millennials bring new insights into shifting consumption behaviours. Millennials and Gen Z want brands and companies to do good for society and nature, and express this in their consumption choices. This is why Toms’ one-for-one business model and Levi’s less water collection have become so popular amongst these consumers.
- It’s more expensive to sell to a new customer than it is to sell to an existing customer.
As marketeers, we are familiar with the saying that it costs five times less to retain a customer than to acquire new one. This is a classic myth. Marketeers need to stop thinking about customer retention and start focusing on acquisition. Getting customers to buy with 100% loyalty is unrealistic; even cult brands like Harley Davidson (33%) and Apple (55%) have less loyalty than one might expect (Byron Sharp, 2015).
72% of Coca-Cola drinkers also buy Pepsi; only a small minority of people will stubbornly refuse Pepsi when ordering Coca-Cola or vice versa. This shows that consumers are promiscuously loyal, meaning that they switch between rival brands based on availability.
2. Spending more money targeting your heavy buyers will bring lucrative results
When looking at a customer base of a typical brand, we can see that it has a skewed distribution, the minority of customers being the heavy buyers while the big bulk consists of light buyers. This can also be attributed to the 80/20 rule where 20% of your customers contribute to 80% of your revenue. Hence, many marketeers choose to design elaborated campaigns to reach the 20% of the heavy buyers. However, in order to maintain and grow sales, marketeers must reach these masses rather than to focus on a select few. This is because it is nearly impossible to target light buyers without also reaching heavy buyers.
3. Offering a wide range of options can help to boost sales
The confused mind always says “no”. Students at the Columbia University conducted the Jam Experiment to see how we deal with choice. The experiment divided shoppers into two groups. One group was shown a stall displaying 24 different flavors of jam, and the other group was shown a stall displaying only 6 different flavors of jam.
30% of those who visited the stall which offered only 6 choices purchased jam as compared to 3% of the people who visited the stall which offered 24 choices.
If you cannot decrease the number of choices available, it’s easier to divide these options up. For example, instead of offering 9 options, you could position your offers in a 3 X 3 option.
4. Price-point is an important factor in purchasing
The myth herein lies that if you have the cheapest option available, you will be able to make more sales.
Present-day consumers make informed purchasing decision through their own research evaluating available alternative solutions rather than overly relying on information provided by a sales representative. Consumers are not only influenced by price, but by product quality and durability, suggesting their preference towards purchasing high quality products at an equitable price rather than searching for cheaper products.
For corporate end users, their focus is on ease of use to reduce training time and cost while ensuring a shorter but smoother implementation. Most industries are willing to trade-off paying more for a solution that would avoid interruption of work as time equals money.
In addition to your pricing, ensure that you understand your customer journey and at which point customers are most likely to make a decision and take means to improve on this point.
If you know more marketing myths, please feel free to share it with us and our readers by commenting below.