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Customer-Oriented Company, Really

Any standard history of marketing will tell that before 50s, limiting factor for success of companies was production: “If we make it, they will buy it.” Improvements focused on production and distribution methods.

But later, not everything produced was necessarily sold. Some companies deemed that it must because of the product quality. The dogma for these companies was “If we make a good enough product, they will buy it”. All effort was concentrated on improving the quality of the products. According to the history, this product-orientation lasted until the 60s.

During both 50s and 60s, some other companies realized that even a good product will not necessarily sell itself. These companies thought that the most important aspect is sales. “Good salesman can sell refrigerators to Eskimos.” was the new mantra. Attention was put into perfecting sales methods.

The same history of marketing will also tell you that since 80s, successful companies have left production-orientation, product-orientation or sales-orientation behind, and have embraced marketing-orientation where customer is in the center. It seems clear to me that this last point is not really true. Unfortunately, marketing-oriented or customer-centric are often just empty words.

All three aspects, product, production, and sales are all very important. Real customer-orientation means that you really put the customer first, before your profits. You have to give the customer what they really need. On the short term, it is not necessarily most profitable strategy, because it is often possible to fool the customer, and temporarily increase the profits.

For example, customers sometimes run after features they really do not need, rather than a good product. They may emphasize low price instead of ethical or environmental concerns. Customers may also prefer to buy a product that they really cannot afford, with a long-term contract which makes the product seem cheaper. These will not make the customer happy in the end, however, because they do not give the customer what is best for them. Eventually, the truth will come out.

Successful companies have taken the long-term view in at least one of these aspects. But success feeds hubris, and hubris makes the companies work more short-term on the other aspects.

For example, Apple knows how to make good products, they are in fact a product-oriented company. For them, everything else is secondary. But after the initial success, Apple has been using sales strategies that annoy the customers. Annoying customers is not easy, because historically mobile phones are, perhaps after used cars, the most popular domain for sleazy salesmen.

Nokia, on the other hand, has always put production first. In Nokia, Product Managers do not have enough power to really influence anything about the product. Ease of production drives the end result. I believe the reason why Nokia is still a production-oriented company is that the organizational genetics was formed when it was producing rubber boots to Soviet Union. Everything that was produced was sold.

To really be customer-centered, you need to be humble and patient.

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This entry was posted on Thursday, September 9th, 2010 at 7:38 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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