The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything (1st ed.)

Citation

Churchill, D. (2002), "The Myth of Excellence: Why Great Companies Never Try to Be the Best at Everything (1st ed.)", Journal of Consumer Marketing, Vol. 19 No. 6, pp. 526-530. https://doi.org/10.1108/jcm.2002.19.6.526.2

This book is must reading if you seek creative, interesting business strategy ideas! It is easy to read and full of excellent examples. The authors “knew” consumers wanting price and quality desired the lowest price available, the highest quality product, value‐added services, and fun shopping. Wrong! They “knew” firms should try for excellence everywhere. Wrong again! Five key transaction elements are identified: price, product, access, service, and experience.

A values‐based market strategy based on listening to customers is recommended. Research stakeholders, align responses, emphasizing consumer views regarding the element to dominate in and the element to be differentiated (most marketing strategies use demographic/psychographic data), create a values‐based business culture, analyze competitive factors, and develop a plan to reduce costs and increase profits. Excellence in everything is unlikely. Even if possible, communicating a clear value to consumers would be difficult.

Imagine Tiffany’s discounting jewels. Confused buyers would question jewel quality. Their reputation would suffer as price reductions conflict with customer values. Superiority in more than a primary and secondary element wastes billions, achieving goals unimportant to consumers. Many advertisements are not understood or meaningful to consumers, signifying these firms do not understand their customers. Too many advertisements focus on price and product at the expense of customer‐service training, which balances the message on both content and context. Then, relationship building is emphasized over sales and values are emphasized over value.

Today’s customers, “instavidual”, want relevance, respect and transactions “their way”. They want values, not value. Choices change quickly, fast food one meal and prime rib the next. Human skills are critical. Develop personal, caring relationships that reflect the consumer’s personal values. The transaction context (values surrounding doing business) is more important than content (product/service value). Consumers want products/brands closely related to their attitude, behavior, and lifestyle. Clarity and certainty are key values, but human values like trust, honesty, respect, ease, and courtesy are much more important. Many firms achieved success only to find Wal‐Mart better understood consumers and put them out of business.

Wal‐Mart’s honesty and understanding of consumer values is shown in Wal‐Mart’s values and how well they treat customers. Target stores compete effectively by dominating on trendy products and differentiating on price. Wal‐Mart dominates on price and differentiates on product.

Consumers want to find it easy, save time, get a reasonable price value, have prompt delivery, interaction when they want, the ability to shop any time, to be respected, and to have their preferences known. No wonder Internet businesses like eBay, Amazon, etc., are so successful! To implement this strategy, use the scale (5 = market domination; 4 = positive differentiation from competitors; 3 = industry average) and evaluate your firm on each key element:

• •

  price;

• •

  product;

• •

  access;

• •

  service; and

• •

  experience.

You must not score below 3 in any category or your business will soon be at risk. Surprise! A perfect score is 5, 4, 3, 3, 3. Wal‐Mart has it: 5 – price leader; 4 – quality product selection; 3 – service, access and experience.

Aim for market domination in the primary element your target consumers value most. Aim for positive differentiation from competitors in the element of second most importance. The remaining elements need to be at industry average, realizing industry average will change continually as consumer expectations change.

Consumer value = performance in all five areas. More specifically, their research on these elements is described in the following subsections.

Price

Consumers want consistent, fair, honest prices and pricing policies; with less concern for getting the lowest price. Ignore their needs/values, or surprise them with surcharges and you will lose them. Often, pricing is less important than quality, shopping ease, and service. Wal‐Mart’s every day low price strategy is successful. Consumers want to save money on sale items, buy quality brands at lower prices, and build personal relationships based on trust. Online shoppers value the lowest price and will search for it.

Competing on price:

Level III Agentry + Dominate (5) = Seek

Level II Consistency + Differentiate (4) = Prefer

Level I Honesty + Meet (3) = Accept

Product

Consumers want customized items meeting their individual needs. Innovative products inspire consumers to believe product differentiation. Online consumers want top quality. Being out of stock is a serious error. Retail buyers prefer consistent good quality choices to offering one top quality choice. Firms compete on quality (good, better, best); depth (choices within product lines); and breadth (broadest assortment of product lines). Quality must be consistent with the price.

Online shopping makes dominating on product depth very difficult as stores cannot compete with online stock levels.

Competing on product:

Level III Inspiration + Dominate (5) = Seek

Level II Reliability + Differentiate (4) = Prefer

Level I Credibility + Meet (3) = Accept

Access

This is “location, location, and location”. Access has a psychological side – a consumer’s perception of their ability to find item(s), and purchase quickly and easily, interacting only as they want.

Consumers want comfort, affiliation, a sense of connection, layouts easy to navigate and buy from, and solutions meeting their needs. They have less concern about location. Physical access features location, cleanliness/well maintained, price visibility, convenient hours, and getting in and out easily after buying. Psychological access includes consumers seeking a community of people like themselves. Thus, psychological access can align with the experience element.

Competing on access:

Level III Solution + Dominate (5) = Seek

Level II Convenience + Differentiate (4) = Prefer

Level I Ease + Meet (3) = Accept

Beware – apparent access via automated systems frustrates consumers by limiting their access to people answering questions.

Service

Consumers want individual recognition, respect, and courtesy. Unique products/services and fun are usually a lower priority. Service involves people interacting and emotions. Service is something a company is or embodies. There is pre‐sales service – timely, sincere “May I help you?” and responding effectively to consumer questions; there is transaction‐level service at the time of sale, like suggesting compatible items/other sale items, offering expert cashiering/packing/gift wrapping; and post‐sale service – knowledgeable, caring people resolving problems to a consumer’s satisfaction.

Return policies are critical. To dominate on service, firms must excel in all three areas. Great service creates satisfied customers and can only be defined by them. Service offers great returns because it is seldom done well and consumers expect more. Key issues for online shoppers involve credit card security and hassle‐free, unconditional‐return policies.

Competing on service:

Level III Customization + Dominate (5) = Seek

Level II Education + Differentiate (4) = Prefer

Level I Accommodation + Meet (3) = Accept

Service and experience are less tangible than price, product, and access. They involve how you offer, while the latter three are about what you offer. Service is how you feel about the firm after completing a transaction, and is easier to measure; experience is a consumer’s perception of feelings about him/herself after completing a transaction.

Experience

These are feelings a customer has for doing business with a firm (internal) and fun (external). Courteous, respectful interaction is key. Staff should dress properly, speak well of the firm/products/services, treat customers as special, and respond in positive ways to their concerns. Internal and external appearance and atmosphere should be attractive. Using pleasing music helps. External factors affect a customer’s first impression. How a customer is treated provides the “lasting” impression. Unresolved conflict sends a buyer away, probably forever. A range of acceptability exists for consumers at any price. Buying the “best” is not important to most consumers, who prefer consistent good quality. Substituting entertainment for value is not a winning, long‐term strategy. Consumers (75 percent) stated that courteous, respectful employees were most important to them. Another 66 percent want to be treated as valued customers.

Competing on experience:

Level III Intimacy + Dominate (5) = Seek

Level II Care + Differentiate (4) = Prefer

Level I Respect + Meet (3) = Accept