Six Sigma Marketing: You Can’t Pound a Nail with a Screwdriver

Several writers have commented on Six Sigma Marketing. The major thrust of these comments is focused on how to apply Six Sigma to Marketing. And, while making Marketing and Marketing activities more efficient, Six Sigma Marketing must focus on making Marketing more effective – actually acheiving sales and market share objectives.

Six Sigma Marketing is all about integrating the disciplined, data driven principles of Six Sigma with Marketing’s focus on revenue growth and market share. This integration has as its core the idea of value – creating and delivering the highest quality at the best price. Value has been shown to be the best leading indicator of sales and market share growth.

Six Sigma Marketing accordingly, requires a new set of tools not resident in either Six Sigma or Marketing. In other words, applying the tools of Six Sigma to Marketing will not do the job. You can’t pound a nail with a screwdriver. You have to learn how to use a hammer.

Six Sigma Marketing requires the jettisoning of much of the conventional wisdom surrounding both Six Sigma and Marketing. Chief among the ideas that have to change is the reliance on customer satisfaction as the principle metric. Satisfaction has little, if any, linkage to changes in sales and market share. Consequently it makes little sense to rely upon customer satisfaction as the strategic goal since it does not impact either sales or market share. Customer value does.

Market Value Solutions has been practicing Six Sigma Marketing for about ten years and experiencing significant successes. The tools of Six Sigma Marketing are powerful and provide a clear guidance for growing sales and share. No longer does Marketing have to be agenda driven or based on company lore. Six Sigma Marketing is driven by the voice of the market (VOM) and not the VOC (voice of the customer).

In subsequent blogs I will be discussing several other points of departure between Six Sigma Marketing and Six Sigma and Marketing as it is currently practiced.

For more information on Six Sigma Marketing contact Dr. Eric Reidenbach at Eric@marketvaluesolutions.com or call 601 213 4849. Dr. Reidenbach is the author of the soon to be released book, Six Sigma Marketing, to be published by ASQ’s Quality Press.

 

Pricing Problems Are Often Hidden Value Problems

At a recent meeting of manufacturers, a question arose regarding the importance of price. One participant bemoaned the need for reducing price to stay competitive. He argued that competition was compelling him to reduce price and this, of course, was hurting his margins. When asked why price cutting was the only option he replied, my product is a commodity. It is undifferentiated from the products of my competitors. There was a lot of head nodding, indicating the apparent universality of the issue.

What to do? The quick answer to those not in this situation is simply don’t get into this situation. Once you fall into the commodity trap it is extremely difficult to get out. You have taught your customers that there is no difference between you and your competitors. The only thing that can differentiate you is price. This starts a downward spiraling falling further and further into the commodity abyss. I asked the gentleman who brought up the subject how frequently he talked with his customers. Do you clearly understand what it is that they value? Did he understand what the specific critical-to-quality factors were? Could he prioritize them in terms of importance to the customer? He offered a couple of answers, each of which was contested by the other participants. While there was unanimity about the nature of the problem, there was no unanimity regarding the nature of the CTQs and their importance. In other words, there was considerable doubt as to whether this manufacturer, or any others present for that matter, really understood their customers!

Value is defined as the quality of the product or service relative to the price of the product or service. Too often, companies that think they have a price problem really have a value problem. Think about it. When customers want a price cut they are actually telling you that they do not think that the quality you are providing is worth the price you are charging. Is this a pricing problem or is it, in actuality, a value problem?

The commercial banking industry is a classic example of an industry that has actually managed itself into a commodity position. With little differentiation among offerings, be they checking accounts, credit cards, savings accounts, mortgages, etc. the only variable left to manipulate is price or rates. They have taught the banking public that there is no difference among banks – a bank is a bank is a bank – similar to pieces of corn or other commodities.

Understanding how customers define quality and value is critical to non-price competition. These CTQs will not be limited solely to product or service characteristics. They will include such factors as ease of order placement, order confirmation, on-time delivery, repair capabilities, technical support, correct billing etc. Too often these factors are overlooked because some organizations, especially manufacturers are very product oriented and not customer focused. The point is, these are customer defined CTQs and not the guesses of internal personnel. Some people will tell you that some information is better than none. Some information, especially if it is erroneous, can be worse than none.

Two questions: What are your customers key CTQs and what is their order of importance?

For more about this subject see: www.marketvaluesolutions.com.