How P&G gained market share through customer knowledge

When the Romans first declared that the voice of the people was the voice of God — vox populi vox Dei, they were referring to democracy as a form of government. Centuries later, corporations across the globe have embraced the adage in letter and spirit, albeit in a different context — that of customer knowledge.

The need to focus on the customer and be responsive to the demands of the market has long been recognised by organisations, the best testimony being the emergence and sensational growth of the advertising industry. However, globalisation and technological revolution have transformed the dynamics of business and with it, the definition of customer and market knowledge. Today, being a market-driven organisation entails developing a culture of constantly listening to the customer, analysing competition and defining strategies that fulfil existing, anticipated and even unanticipated needs of the customer. Customer relationship management has given way to a new paradigm — customer knowledge management. For world-class organisations operating in the knowledge economy, market and customer intelligence is a core competency and a fundamental source of competitive advantage.

Leading through listening — caselets: Virtually every success story in today’s corporate domain is an example of how customer knowledge shapes competitive business strategy.

- When P&G, the world’s largest consumer goods company, decided to extend its products to the lower income customer, it sent out research teams to spend weeks in the poorest of homes in developing countries. The study yielded valuable insights, which guided the company in developing a range of budget products, which went on to gain huge slices of market share.

- Amazon.com, the world’s first e-retailer of books, gained competitive advantage by evolving into a forum for book lovers to share knowledge. It manages customer knowledge by providing services like book reviews, access to order histories of all customers and product recommendations based on prior orders. Amazon has been rewarded by more than 70% repeat orders from its customers.

- Mahindra & Mahindra’s SUV, Scorpio, has been an exceptional success in national and international markets. The positioning of Scorpio as an economy SUV was based on the results of extensive market visits and customer needs analysis. The customer requirements identified were translated into product specifications for the new vehicle. Customer teams were consulted at every stage of design and development. ‘BBC on Wheels’ voted Scorpio the “Car of the Year” soon after its launch.

- The dramatic transformation of Indian Railways from a white elephant to a profit engine in less than two years has captivated the attention of academic and corporate institutions in India and abroad. The launch pad of this turnaround was not any high-end technology but the humblest of all information devices — the passenger feedback form. Data from these forms were computerised and diligently analysed to pinpoint the expectations of customers from the Railways. This was backed by a study of the best railway systems over the world, and benchmarking with other transport modes like roadways and airlines. The result was a complete makeover of trains, stations and railway services to make them passenger-friendly. Needless to say, customers responded with enthusiastic support.

Conclusion: Listening is fundamental to the success of any relationship. Today the customer is no longer a beneficiary, but a business partner in every sense. Effective listening, coupled with strategic initiatives, can ensure a happily-ever-after end to this partnership.

Suresh Lulla is managing director of Qimpro Consultants, founder of the BestPrax Club, and chairman of the IMC Quality Awards Committee. In 2005, he was awarded the distinguished alumnus award by the Indian Institute of Technology, Bombay, in recognition of his achievements in quality management consultancy.