“Do You Really Want To Understand Your Customer?”* Presented by Peter Hayashida & Lynn Maikke...

““Do You Really Want To Do You Really Want To Understand Your Customer?”*Understand Your Customer?”*

Presented by

Peter Hayashida

& Lynn Maikke

*Alan S. Mitchell, Journal of Consumer Behavior, September 2002

AbstractAbstract

“Our whole approach to consumer understanding – how we go about achieving it, for what purposes –

makes a seller-centric, command and control ideology of marketing.

Successful companies are breaking free of this ideology, and reinventing

market research in the process.”

Rethinking Our ApproachRethinking Our Approach

• Our current approach to consumer understanding is a hangover from the past

• Our rethink needs to embrace: the place of market research in modern business its purpose the type of understanding it seeks its approach to the consumer

Place Place and and PurposePurpose

• Marketing lives and breathes two core functions:matching supply and demandconnecting buyers and sellers efficiently and

effectively

• Both functions are critically dependent on consumer understanding

The Wealth-Creating ProcessThe Wealth-Creating Process

Market Research

Product Design

Making MarketingConsumer Purchase

A Closer LookA Closer Look

Market Research

Product Design


Matching Connecting

Purpose of MarketingPurpose of Marketing

• In theory:the purpose of marketing is to understand

consumer needs and meet them

• In practice:the real role of marketing is to reduce corporate

risk and protect investments

Steering the SupertankerSteering the Supertanker

Market Research

Product Design


Matching Connecting

A ‘God Quest’ ApproachA ‘God Quest’ Approach

• The quest for ever more perfect information in the hope that perfect information will lead to perfect decision-makingparalysis by analysismore information is not the same as better

information

PushPush vs. vs. PullPull

• When marketer push takes over consumer pull, the driving purpose of consumer understanding shifts:From

identifying and meeting consumer needsTo

control and predictabilitypersuading, influencing, or manipulating

• It shifts the real focus of market research from customer to companybrand narcissism

Type Type and and ApproachApproach

• Type of knowledge and understandingknowing ‘that’knowing ‘about’knowing ‘how’

• Knowing ‘that’ and knowing ‘about’ are a scientific type of understanding

• Approach to market research the researcher is an

active subject the researched is a

passive object

• Divided relationship is the same whether the researched is a rock, a rat, or a consumer

Stimulus-Response MethodologyStimulus-Response Methodology

Scientist

Rat AResponse

1

Data TheoryRat B

Rat C

Response 2

Response 3

Data

Data

Practice

Stim

uli

The Consumer as a RatThe Consumer as a Rat

Marketer

Consumer A

Response 1

Data TheoryConsumer

B

Consumer C

Response 2

Response 3

Data

Data

Practice

Stim

uli

Is consumer understanding a Is consumer understanding a universally good thing?universally good thing?

• Marketers turn to market research and consumer understanding to achieve matching and connecting Supertanker characteristics of traditional marketing processes

means marketers often miss their target The ‘God’ Quest has many flaws Scientific method misses other forms and dimensions of

knowledge Brand narcissism and the push side of marketing is often

counterproductive Unlike rats, consumers have minds of their own and are aware of

marketer manipulation, which undermines TRUST

Sisyphian MarketingSisyphian Marketing

The Emerging AlternativeThe Emerging Alternative

• Essence of good marketing: finding out what your customer wants and providing it for them– In early days of industry, there was no cost-

effective way of letting mass consumers talk to companies

– Brands invented as surrogates for trust– Advertising designed to tell consumers what

they want

• “Clean slate” approach– Tackle the problem at its source by actually

seeking consumer needs; change:• The place of consumer understanding

• Its purpose

• The type of understanding sought

• The way firms approach consumers

The Emerging AlternativeThe Emerging Alternative

Cats and SupertankersCats and Supertankers

• Marketers need to act more like a cat chasing a mouse and less like a supertanker– Don’t try to “understand” the mouse in an

intellectual way• Focus on one signal that matters (movement)

• React in real time– Rely on nervous system, instincts and reflexes

– Abandon “God-quest” approach of theorizing, understanding, predicting, planning and executing

How To Do That?How To Do That?

• Bar code scanning at the checkout– Collate data– Electronically send to suppliers

• Move from push to pull– Consumer needs drive production instead of

trying to predict what consumers might want• …and then trying to persuade them to buy

• Instantaneous knowledge and reaction

Benefits Of This ApproachBenefits Of This Approach

• Reduced forecasting errors

• Higher sales

• Fewer markdowns

• Less need for stockholding

• Better, faster new product development

• Increased customer retention

Similar ApproachesSimilar Approaches

• Mass customization– Embed specific customer preferences and specs in the

actual manufacturing process

• Just-in-time logistics– Parts arrive when needed; minimize inventory

• Reverse Marketing– Supplying information about products and services in

response to consumer expressions of interests, instead of via predetermined, supplier pushed “campaigns”

ExamplesExamples

““Join Me,” not “Buy Me”Join Me,” not “Buy Me”

• From implicit to explicit– When a customer tells Dell “that’s how I want

it,” the customer’s input is up front (as opposed to bar code data)

• From mass, anonymous, aggregated and sample data to named, individual and specific– Loyalty cards

• From solicited information to volunteered– Create a relationship where the customer

volunteers thoughts, suggestions, requests, etc.• True test of the relationship

• Different than asking someone to provide information about themselves or to gain permission to gather information

Power of “Join Me”Power of “Join Me”

Sample InitiativesSample Initiatives

• Loyalty schemes

• Beta-testing

• User groups

• Brand advisory groups (P&G)

• Customer satisfaction feedback

• Complaint solicitation programs

Initiative CharacteristicsInitiative Characteristics

• Overcome the subject-object divide that characterizes old-style market research

• Reverse the flow of information, replacing one-way messaging with two-way communication

• Depend on customer input – customers “opting in” rather than acting as passive targets

Agency MindsetAgency Mindset

• Because time, attention and patience are such a precious resource we will invest them only when and where we believe this investment will generate a good return

• Unlike other resources (e.g., oil during the industrial age), the consumer is the owner of information capital– If companies want access to this capital, they

must be prepared to pay for it.

Pay For It How?Pay For It How?

• Using information to create a better, cheaper product or service

• Pay up front for information and input

• Add value– P&G: encourage consumers to talk about

problem stains and cleaning problems and get its R&D team to offer advice

• Also provides firm with valuable market research

NEW CONCEPTNEW CONCEPT

• Market research as a service to the consumer

• Requires company to embrace a new role as consumer agent

• From “brand-building” to “customer relationship management”

• Embed consumer understanding into “making” of the product or service

Also Changes ApproachAlso Changes Approach

• Old– Subject-object– Marketing to and at

•New

–More collaborative

–Marketing for and with

–Recruiting customer as partner, or even “investor”

Fit with General TopicFit with General Topic

• Indicates that consumers can care about brands– Companies have to care about consumers in

different ways– Relationship building as a means to a better

bottom line

• Use interactivity to build loyalty and trust between companies and their customers– And to get better data on which to base

production and marketing decisions• Retain Steadfasts

• Maximize Loyalty Minimizers (home-base or dual)

• Find buttons for Category Contingents

• Appeal to Image Rejectors


• Brand “clubs” (loyalty schemes) build trust, product enthusiasm, and feed back important product preferences– Swatch club– Saturn family-style meetings


• Exploit consumer connects and pinpoint disconnects before they happen– Anheuser Busch beer in St. Louis– Customer service at Sony– Peanut butter – more oil and less peanuts,

terrible taste discouraged former Steadfast and made him brand-switch


• Brand hierarchies– Engaging in conversations reveal findings that

are not intuitive• Aspirational brands can be the same as current

brands for some consumers

• Pinnacle brands may not be everything to all consumers

• Connecting through “brand clubs” – feeds back important information to the firm


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“Do You Really Want To Understand Your Customer?”* Presented by Peter Hayashida & Lynn Maikke...

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