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Transcript of Customer Insights: Beyond Market Research Patrick Barwise London Business School 1.Differentiation...
Customer Insights: Beyond Market Research
Patrick Barwise
London Business School
1. Differentiation that matters (“Simply Better”)
2. Customer insights that matter (work in progress)
1. Differentiation That Matters
FT Review
“This is a book about marketing for people who have read too many books about marketing”.
Gary Silverman, FT
Two Marketing Myths
• The Uniqueness Myth
Customers will buy your product/service only if it offers them something unique (or cheaper).
• The “Table Stakes” MythIn today’s competitive markets, you can no longer differentiate the basics (“table stakes”)
The Uniqueness Myth: The Reality
“Customers rarely buy a product or service because it offers something unique.
Usually, they buy the brand that they expect to meet their basic needs from the category – gasoline or strategy consulting or mortgages – a bit better or more conveniently than the competition.
What customers want is simply better – not more differentiated – products and services.” - Simply Better, Preface, page X
A Textbook Well Differentiated Brand
An Even More Valuable Brand
Brand Valuation ($ bn)Source: MillwardBrown (WPP) April 2006
3.4
12.5
13.8
14.4
17.3
30.2
23.8
13. Volvo
6. Chevrolet
5. Ford
4. Honda
3. Mercedes
2. BMW
1. Toyota
The Key Concept
Differentiation that matters (to customers)
The “Table Stakes” Myth: The Reality
• The evidence from companies like Toyota, Tesco and P&G is that, through customer focus and continuous improvement, you CAN differentiate the basics
• But it’s hard work• The good news for the “simply better”
companies is that most companies still keep letting down their customers
The World’s Most Famous Car Brand
PR Triumph: An Exasperated Customer Writes
Dear Sir or Madam
My congratulations to you on getting a yacht to leave the UK on 28th November 2004, sail 27,354 miles around the world and arrive back 72 days later.
Could you please let me know when the kitchen I ordered 96 days ago will be arriving from your warehouse 13 miles away?
Yours sincerely
John Roberts
Ashley Gibbins (26), having been put on hold for an hour while trying to order a broadband internet connection, stumbled across the facility to change NTL’s recorded message while pressing the “star” key.
: Another Consumer Strikes BackSource:The Times, June 9, 2005
He left the following message:
“Hello, you are through to NTL customer services. We don’t give a **** about you, basically, and we are not going to handle any of your complaints. Just **** off and leave us alone. Get a life”.
NTL admitted that it reflected a serious security flaw in their system
Service Quality Is Not A Commodity
“The worst-performing [US mobile] carrier received 5.7 times as many complaints per million subscribers as the best”
Source: McKinsey/Better Business Bureau (2004)
The Strength of the Toyota Brand
• Toyota Corolla vs Chevrolet Prizm (same car, same plant)
• GM spends $750 / car more in incentives• Corolla outsells Prizm four to one• And keeps its price premium in the
secondhand market• The brand is the only difference between the
two products
Why is Toyota a Stronger Brand than Chevrolet?
• Over many years, US customers have found Toyota makes reliable cars that get you from A to B in good comfort, at reasonable cost, and with generally good after-sales service
• Customers’ experience with Chevrolet have been more mixed
• Toyota has been simply better at providing what most car buyers want - the basics
• Customers remember this (and tell each other):
that’s brand equity
Easy to Say, Hard to Do
«Marketing is not a specialised business activity…it is the whole enterprise seen from the customer’s point of view. »
Peter Drucker
The Practice of Management, 1954
Peter Drucker: «Most Influential»Leadership Visionary –AMA, 2003
The Key Take-Aways
• Your first priority should be to understand customers and give them what they really value (better than the competition)
• What customers really value is product and service quality, simplicity, convenience, reliability, and reasonable value for money
• Genuinely useful extra features and benefits, attractive design, and outstanding brand communications are great, but are not a substitute for being “simply better” at the basics
2. Customer Insights That Matter
• The next book (ie work in progress)• Build on “Simply Better”
• To be published by HBS Press, summer 2008
How Do Companies Learn About Customers?
1. Personal experience and direct customer contact
2. Qualitative market research
3. Quantitative market research
4. Customer database analysis
5. Learning from operations
6. Collaboration with business partners
7. Market intelligence
Customer Perceptions and Behaviour
Consumer
PerceptionsConsumer Behaviour Point of
Purchase
Distribution
Price and Sales Promotion
Brand Usage
Category and Brand
Purchase
Product/Service
Satisfaction
Category Knowledge and Brand
Equity
Perceived Need
Marketing Communications
Sought Benefits
Expected
Benefits
Experienced
Benefits
Availability
Price
Point of Purchase Impressions/ Information
Design/ Packaging and POP Comms.
“Would You Definitely Recommend This Airline to a Friend?” (%)
Source: Holiday Which?, Spring 2005
Rank (out of 58) 1 Singapore Airlines 826 Virgin Atlantic 609 easyjet 5116 Ryanair 4032 BA 3134 American Airlines 2946 Air France 1851 Thomas Cook airlines 1557 Iberia 10
Stages of Innovation/Improvement
Customer
insights
Generating new ideas
Selecting promising ideasDeveloping selected ideas
Launching proposed improvementsImproving existing operations
Explore radical innovations
Improveexisting offer/activities
High-Tech High-Touch
Qualitative/High-Touch vs Quantitative/High-Tech Methods
Bridging the Empathy Gap
• Personal experience and direct customer contact• Ethnography, metaphor elicitation (MR vs DIY?)• Talking and listening to customer contact staff
Understanding the Drivers (Existing/Lapsed/Potential Customers)
1. Dissatisfaction with the brand (vs competition) – usually the basics; customers’ top priority
2. Satisfaction with the brand (vs competition) – also usually the basics but also add-ons
3. Dissatisfaction with the whole category – usually the basics; potential source of significant comp. advantage– can also explore potential add-ons, but usually more marginal– drive the market
The Organizational Context
Values Responsiveness Performance
Source: Simply Better, p 157
MarketSensing
The Key Take-Aways
• Use all the ways of learning about customers (high-touch/high-tech)
• Drivers of dissatisfaction (and satisfaction) with the brand and the category
• Insights that don’t lead to improvement achieve nothing