5 marketing tips from a rice merchant in ancient China

Good stories are hard to come by. I was lucky enough to come across with this simple yet insightful story when doing a research on Relationship Marketing. The story was told by Dr Christian Grönroos, who is a pioneering academic in the subject of Relationship Marketing.

“In a village in ancient China there was a young rice merchant, Ming Hua. He was one of six rice merchants in that village. He was sitting in his store waiting for customers, but the business was not good.

One day Ming Hua realised that he had to think more about the villagers and their needs and desires, and not only distribute rice to those who came into his store. He understood that he had to provide the villagers with more value and not only with the same as the other merchants offered them. He decided to develop a record of his customers’ eating habits and ordering periods and to start to deliver rice to them.

To begin with Ming Hua started to walk around the village and knock on the doors of his customers’ houses asking how many members were there in the household, how many bowls of rice they cooked on any given day and how big the rice jar of the household was. Then he offered every customer free home delivery and to replenish the rice jar of the household automatically at regular intervals.

For example, in one household of four persons, on average every person would consume two bowls of rice a day, and therefore the household would need eight bowls of rice every day for their meals. From his records Ming Hua could see that the rice jar of that particular household contained rice for 60 bowls or approximately one bag of rice, and that a full jar would last for 15 days. Consequently, he offered to deliver a bag of rice every 15 days to this house.

By establishing these records and developing these new services, Ming Hua managed to create more and deeper relationships with the villagers, first with his old customers, then with other villagers. Eventually he got more business to take care of and, therefore, had to employ more people: one person to keep records of customers, one to take care of bookkeeping, one to sell over the counter in the store, and two to take care of deliveries. Ming Hua spent his time visiting villagers and handling the contacts with his suppliers, a limited number of rice farmers whom he knew well. Meanwhile his business prospered.” [1]

Ming Hua’s marketing strategy demonstrates the principles of relationship marketing and its implications:  moving away from a strategy that focuses only on product and transactional relationships (i.e. selling rice to those who came to his shop) to a strategy that focuses on the customer and on value-creating and long-term relationships.

His story tells us the basic principles of Relationship Marketing that can be implemented in both B2C and B2B markets:

  1. Speak to your customers directly
  2. Develop a service system around your customers’ needs
  3. Establish a database of your customers
  4. Build partnerships and networks within the market your business operate
  5. Focus on the value-creating, long-term relationship

Even in ancient China it wasn’t enough to have a product and a shop to trade and prosper. It was Ming Hua’s unique service offering that provided his customers with an additional value. And this added value differentiated his business from his competitors.

Can you think of ways in which you could solve a problem or offer convenience to your customers?

[1] Christian Grönroos, (1996) Relationship marketing: strategic and tactical implications. Journal of Management Decision. 34(3), pp. 5 – 14. The Ming Hua story is published in this blog post with kind permission of Emerald Insight. The full journal article could be downloaded on their website at: http://www.emeraldinsight.com/journals.htm?articleid=864831&show=abstract

Image of rice seller courtesy of: www.albion-prints.com

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