Why Customer Participation Matters

Why Customer Participation Matters Description

This is an MIT Sloan Management Review article. Most managers know that listening to customers makes good business sense. Businesses have much to gain from actively seeking and encouraging customer participation, which the authors define as getting customers to provide constructive suggestions and share their ideas on how to shape product and service offerings. Yet many companies only pay lip service to this idea.Rather than encouraging customers to share their views about the company and its products with managers, the authors found, companies tend to focus on encouraging customers to take part in spreading positive word of mouth. Yet word of mouth is only one type of voluntary behavior that customers engage in. Moreover, it indicates only what people on the outside are saying, not how companies can improve their offerings or what customers may be looking for. The authors, who conducted surveys of customers as well as interviews and roundtable discussions with senior executives in a variety of industries, found that both customer word of mouth and customer- to-business interactions are associated with a customer's propensity to buy more of a company's products and services. While not all satisfied customers become repeat buyers, encouraging them to provide feedback and suggestions helps tie them more closely to the business. Companies can even recapture defecting customers simply by contacting them and encouraging them to participate. In addition, customer-to-business interaction is often more malleable than customer-to-customer word of mouth and more readily within the control of management. In a study of customers of a global bank, the authors found that customers who purchased the most were individuals who participated and engaged in much word-of-mouth behavior. High participation/ high word-of-mouth customers were the most loyal and attached to the brand; customers who did not participate tended to be the least valuable, the least loyal and the least attached to the organization regardless of whether they spread positive word of mouth. The implications of the findings are that fostering customer participation can be very valuable and that companies are better off emphasizing customer participation over word of mouth (as opposed to the reverse), because it creates more customer "stickiness"(as in greater attachment and commitment). Nevertheless, the authors say, the two approaches should be seen as two sides of a coin, working both internally and externally to build financial value for companies.

Case Description Why Customer Participation Matters

Strategic Managment Tools Used in Case Study Analysis of Why Customer Participation Matters

STEP 1. Problem Identification in Why Customer Participation Matters case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of Why Customer Participation Matters case study

STEP 3. Industry Specific / Porter Five Forces Analysis of Why Customer Participation Matters case study

STEP 4. Evaluating Alternatives / SWOT Analysis of Why Customer Participation Matters case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis Why Customer Participation Matters case study

STEP 6. Recommendations Why Customer Participation Matters case study

STEP 7. Basis of Recommendations for Why Customer Participation Matters case study

Case Analysis of Why Customer Participation Matters

Why Customer Participation Matters is a Harvard Business (HBR) Case Study on Sales & Marketing , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Why Customer Participation Matters is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Why Customer Participation Matters case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Why Customer Participation Matters will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Why Customer Participation Matters case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Sales & Marketing, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Why Customer Participation Matters, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Why Customer Participation Matters case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Sales & Marketing Solutions

In the Texas Business School, Why Customer Participation Matters case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Why Customer Participation Matters

Step 1 – Problem Identification of Why Customer Participation Matters - Harvard Business School Case Study

The first step to solve HBR Why Customer Participation Matters case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Mouth Word is facing right now. Even though the problem statement is essentially – “Sales & Marketing” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Mouth Word, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Why Customer Participation Matters.

The external environment analysis of Why Customer Participation Matters will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Why Customer Participation Matters case study. PESTEL analysis of " Why Customer Participation Matters" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Why Customer Participation Matters macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Why Customer Participation Matters

To do comprehensive PESTEL analysis of case study – Why Customer Participation Matters , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Why Customer Participation Matters

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on Why Customer Participation Matters

Government policies have significant impact on the business environment of any country. The firm in “ Why Customer Participation Matters ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Mouth Word is operating, firms are required to store customer data within the premises of the country. Mouth Word needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Why Customer Participation Matters has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Mouth Word in case study Why Customer Participation Matters" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Mouth Word in case study “ Why Customer Participation Matters ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Mouth Word in case study “ Why Customer Participation Matters ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on Why Customer Participation Matters

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Why Customer Participation Matters ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Mouth Word can compete against other competitors.

Government Scheme & Subsidies Impact on Why Customer Participation Matters

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Why Customer Participation Matters case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on Why Customer Participation Matters

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Mouth Word needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Why Customer Participation Matters

Social Factors that Impact Why Customer Participation Matters

Technological Factors that Impact Why Customer Participation Matters

Environmental Factors that Impact Why Customer Participation Matters

Legal Factors that Impact Why Customer Participation Matters

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Why Customer Participation Matters case study. PESTEL analysis of " Why Customer Participation Matters" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: Why Customer Participation Matters case study solution