Effective Management Course

Author: Peter Drucker
Publisher:
Publish Date: 2006-02-01
Features: Regardless of what kind of business it is, its value creation is closely related to customers. To talk about creating value, one must first consider the needs and perspectives of customers. To create value for customers, one must first understand their needs or what value they see in the products. Otherwise, if one doesn’t understand customer needs, how can they create value for customers? A company’s customers are usually of more than one type. Different customers have different values. This is an extremely complex issue, and only customers themselves can answer it. Management must not guess on their own; they must personally engage with customers and systematically find the answers.
The next question is: How can one truly understand customers’ needs? A feasible and effective method is through research and surveys. The term "research and surveys" may sound easy but is difficult to execute. Despite the difficulties, Walmart has gone to great lengths to conduct research to understand customer needs or the value of products they prioritize. Since its inception, Walmart’s sales and revenue have continuously increased. This does not mean they are smarter than others, nor does it imply that their growth has shown customers continuously supporting them. To satisfy customers and create as much value for them as possible, Walmart believes that good methods and solutions cannot be ordered from the headquarters office; they must be conducted store by store, department by department, customer by customer, and employee by employee. Conducting comprehensive research regularly is indeed a key factor in Walmart’s continuous leadership.
Walmart has a store in Panama City, Florida, and another five miles away in Panama City Beach. However, these two stores have entirely different retail product mixes and customer bases. They are completely different types of stores—one is designed for beach visitors, while the other is a more typical Walmart store serving the city’s residents. Walmart strives to place a retailer in charge of each store and trains other retailers to become department heads in the stores. Only by having on-site retailers take on management responsibilities can the retail product mix truly meet customer needs, as they are the ones who face customers all year round.
Sam believes that management personnel must listen to the opinions of frontline staff and conduct extensive research. He emphasizes categorizing customers and studying those in different regions, with varying preferences and habits. Regarding buyers, especially senior ones, he says, "We have buyers like this in Bentonville, and I always remind them that their real job is to go to the field to investigate residents’ needs. Otherwise, if you have a supply disconnected from the specific customers of each store, you’ll end up with a stack of unsold work boots, work clothes, and hunting rifles in the Panama City Beach store, where customers actually need water guns, fishing rods, buckets, and shovels. Meanwhile, the city’s Panama City store will be filled with dusty beach supplies that don’t sell."
In addition to Walmart’s approach, there are many other methods to investigate customer needs, especially with the advancement of information technology, which enables businesses to conduct better research and gain a deeper understanding of their customers.