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Oraganizaional Behaviour

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Submitted By piyush
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Understanding and Managing Customer Perception
By Dagmar Recklies
This article first appeared in Effective Executive, ICFAI University Press, July 2006
|“It has never been more difficult to win – and keep – business through product and price distinction.”[1] |

In today’s globalising economy competition is getting more and more fierce. That means it becomes more difficult for products and services to differentiate themselves from other offerings than ever before. Not only is the number of competitive offerings rising due to globalisation of production, sourcing, logistics and access to information. Many products and services face new competition from substitutes and from completely new offerings or bundles from industry outsiders. Since product differences are closed at an increasing speed and many companies try to win the battle for customers by price reductions, products and services tend to become commodities.
On the other hand, customer behaviour becomes more hybrid. On one hand, customers are increasingly price sensitive – searching for bargains at marketplaces like ebay or buying their groceries at discount markets. On the other hand they enjoy branded and luxury goods. One and the same person may plan a weekend trip with a no-frills airline and a stay at a five-star-hotel.
In the result, customers have a wider choice of often less distinguishable products and they are much better informed. For many offerings the balance of power shifts towards the customer. Customers are widely aware of their greater power, which raises their expectations on how companies should care for them.
Bringing it all together, it becomes ever more difficult to differentiate a product or service by traditional categories like price, quality, functionality etc.
In this situation the development of a strong relationship between customers and a company

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