Customer Responsiveness Essay ⋆ Business Essay Examples ⋆ EssayEmpire

Organizations compete in their markets basically in two ways: By offering products and services at lower prices than competitors do and by offering better products and services than competitors do. In the first case, an organization relies on cost leadership business strategy and in the second case on differentiation business strategy. An organization that can outdo its competitors in terms of lower price or differentiation stands to gain competitive advantage.

Charles Hill and Gareth Jones, in their text on strategic management, describe customer responsiveness as giving customers what they want, when they want it, and at a price they are willing to pay so long as the organization’s long-term profitability is not compromised in the process. Customer responsiveness can thus be understood as the ability of an organization to take action to identify their customers and react to their needs and wants in a way that will satisfy them. Consequently, customers learn to attribute more utility to the products and services. For example, an automobile company trying to develop customer responsiveness can build cars to order for individual customers, letting them choose from a wide range of colors and options. In doing so, it strives to be better than its competitors and aims to gain competitive advantage.

The purpose of customer responsiveness is to develop customer loyalty—preference of customers for an organization’s products and services so that they continue using them. When an organization is successful at creating customer loyalty it can charge a premium price that the customers are willing to pay for that something extra they get and that they do not get elsewhere.

Organizations that provide superior customer responsiveness pay attention to several aspects such as customer response time, superior design, superior service, and superior after-sales support. Customer response time is the time it takes for the product to be delivered to the customer. An organization that takes less time to respond to its customers reaches them earlier than its competitors. In this manner, that organization gains on time beating its competitors and gaining competitive advantage. Superior design and service backed by superior after-sales support is another way organizations try to serve their customers better than their competitors do. For example, mobile phones have evolved from being simple communication device to becoming sophisticated, multiple-feature gadgets, responding to customers’ needs as time went by. Those mobile phone companies that have succeeded in offering better mobile phones with more features have consistently outrivaled their competitors. As they did so, they were able to charge a premium price that their customers are happy to pay.

An organization striving to develop customer responsiveness has to start by identifying what its customer needs are. This calls for keeping customers at the forefront when designing products and services. The top management of an organization plays a critical role in creating commitment to customers within the organization. They may design the mission statement of an organization that puts customers first. This gives a clear signal to the employees inside and the customers outside of the priorities of an organization.

When an organization tries to provide customer responsiveness outside it has to take several steps inside. For instance, a company trying to develop customer responsiveness may design newer products with new features that it thinks will serve customers’ needs better. It will have to manage its internal processes in such a way that they are attuned to serving customers’ needs better. This will require added emphasis to quality and innovation.

When an organization builds products and services around customer needs and wants, the process is called customization. In the example of the automobile company that builds cars keeping in view their individual customer needs, it is trying to customize its cars to satisfy the unique requirements of its customers. Customization usually results in increasing the costs of production, forcing the company to raise the prices. So long as customers are willing to pay those higher prices, customization works. When the costs become prohibitive, companies have to find other ways. This may involve better and faster production methods that save on costs.

Organizations that operate internationally may choose to consider each of their country markets as separate market segments, adapting their products and services to suit the local preferences of customers in those market segments. This approach, often referred to as the polycentric approach, involves customizing the marketing mix in each market segment in order to meet the unique needs and wants of customers in those market segments.

Bibliography:

Janet Godsell, Alan Harrison, Caroline Emberson, and John Storey, Customer Responsive Supply Chain Strategy: An Unnatural Act? (Taylor & Francis, 2006);
Ricky W. Griffin and Michael W. Pustay, International Business: A Managerial Perspective (Pearson Prentice Hall, 2007);
Charles W. L. Hill and Gareth Jones, Strategic Management: An Integrated Approach (Houghton Mifflin, 2008);
Mital, “An Empirical Analysis of Factors Influencing Customer Responsiveness to Mobile Advertising,” Journal of Database Marketing and Customer Strategy Management (v.15/2, 2008);
Michael E. Porter, Competitive Strategy: Techniques for Analyzing Industries and Competitors (Free Press, 1980).

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