1. Many managers view the purpose of business as making a profit, whereas some v
ID: 416655 • Letter: 1
Question
1. Many managers view the purpose of business as making a profit, whereas some view the purpose as being able to create and maintain a customer. Explain how these alternative viewpoints could affect a company’s interactions with its customers. If a manager views the purpose as being able to create and maintain a customer, does this mean that the manager is not concerned with profits?
2. A restaurant has a great reputation as the result of providing consistent food for over 10 years. The restaurant is full every weekend and has above-average business during the week. The manager claims that the restaurant does not practice marketing because it does not need marketing; the restaurant has more than enough business now. Is it true that this restaurant does not practice marketing?
Explanation / Answer
In this world of competition when Globalization has made its way big into the industry of all kinds, it makes only more sense to retain the old customers first before spreading the wings into a wider sphere of acquisition of new customers to earn more profits. Although, it could be agree that there is an interest of many managers in the Companies to expand its geographical horizon owing to the motive of expansion of shareholder’s wealth, more sales and thereby minting more profits. However, it is to be also noted that in the long run, what really matters is how satisfied is the customer base that has retained with such Companies. If such Companies are unable to retain even such new customers for a longer period of time because of lack of loyalty towards their products or services, then in such case, the survival of the Companies shall be at stake. Such Companies would also fail to forecast more accurately the future demand for their products or services due to highly volatile customer base. The MNCs that have successfully made their marks into the world over, did not simply concentrate upon widening their customer base by venturing into newer markets, but also ensured that in whichever markets that those Companies have entered into, there has been a strong retention of the Customer base. It is to be noted that the spread of good word, Goodwill and thereby converting the words into sales, is only possible when the customers are retained consciously by these Companies.
Hence, in order to persuade the Companies that only concentrate of acquisition of new customers or view the purpose of business as making a profit rather retaining the older ones, one best way to go about it would to ask them how do they plan to ensure the newer customers go for a repeated purchase and thereby be their regular customers, if they do not have the ability to retain the same. This question shall be a thought-proving aspect for them to ensure that before they go about acquiring newer customers, they need to diligently prepare a plan to retain the same otherwise the sales and hence the profit, shall be only short-lived. While they shall be indeed able to grow their business by acquiring new customers, they shall be unable to avail their loyalty for long and without loyalty, business do not survive for long. Corporate image is built by consistency which shall be possible if such Companies focus upon retention aspect as well as their prime motive.
Therefore, it should be noted that if a manager views the purpose as being able to create and maintain a customer, it does not mean that the manager is not concerned with profits. Creation of new customers and maintenance of the older ones, is only one of the most practical way of keep earning profits for a longer period of time.
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