Assorted Thoughts on Management

Profit is a legitimate goal of a business organization. Reasonable profits are required to keep stakeholders interested in running the business, and to increase the capability of the organization to serve its customers better. In that sense, customers should allow companies to have reasonable profits, because lack of resources will impair the company’s capabilities to serve customers in the future. But a business with a single-minded focus on maximization of profits will not survive. In such companies, customer interests are not accorded top priority. Customer interests are likely to be compromised if they conflict with the profit maximization goal of the company. Customers stop patronizing such companies once they realize that their interests can be compromised in the organizational pursuit of profits. Social media has made it easy for customers to convey their discontent, and hence a company must always be focused on furthering its customers’ interests – if negative online massages go viral, brands build over decades can be destroyed in a few days.

The essence of marketing is providing desired value to customers. A company cannot possibly satisfy all the customers in a market, because their needs vary. Most organizations do not have the capability to serve widely varying needs. An organization has to select customers whose needs can be matched with its capability to serve them. If it tries to serve all customers, it is sure to have some of them dissatisfied. But if an organization has selected its customers carefully, it is possible to satisfy all of them completely.

Successful companies rely on their satisfied customers to return to repurchase and recommend the company’s offerings to others. Therefore the goal of marketing is attracting and retaining customers through long-term satisfaction of their needs.

Companies understand that it is much more expensive to attract new customers than to retain existing ones. Marketing oriented companies build relationships with their existing customers by providing satisfaction.

But do customers actually want to get into relationships with the companies they buy from?