Mind Over Marketing
Understanding your customer requires a break from the functional mind-set, says Ross professor.
ANN ARBOR, Mich.—Market research, focus groups, and analytics are useful tools when setting marketing strategy. But really understanding one's customer requires a break from the confines of the standard marketing function. Marketers need to ask probing questions that explore multiple issues around the way consumers act: Why do they buy our product instead of someone else's? Why do they behave the way they do? What are they thinking when they compare us to the competition?
John Branch, Michigan Ross lecturer of marketing and strategy, focuses much of his research on the mind of the consumer. In addition, he researches international marketing, particularly in emerging markets. He shares his expertise with senior managers and executives in the executive education program Business Acumen for High-Potential Executives, next offered March 27-April 5.
In the following Q&A, Branch illuminates the value in going beyond functional thinking. He advocates a "broader gestalt" approach to solving a business challenge, especially when it comes to the intangibles.
A lot of your research focuses on the thought process of the consumer, really getting into the consumer's mind to better position your product or service. How does a company create that kind of culture?
Branch: The idea is to force the manager to step out of the traditional, functional way of thinking. Instead of thinking about business through a marketing lens or finance lens we suggest a new mindfulness, a new logic, and a new approach to thinking about business problems. Professor Ray Reilly, who developed the Business Acumen program, created a model that includes things like how to think about business problems through the lens of the consumer, or through the lens of the investor, or the lens of the employee. You can see it's less about the function and more about the broader gestalt approach to a business problem. That's the context for my piece. In my one-day session I walk participants through a series of exercises so they stop thinking about the consumer from a marketing perspective and start thinking about how customers actually behave. Why do they behave this way and how do they think? What is the makeup of a consumer? That's how you tap the mind of the consumer. The hope is that a manager will make better business decisions if they're taking into account these multiple perspectives that are not functionally oriented.
So this isn't about market research.
Branch: We hardly even mention the word marketing. We're getting them to ask questions. What are consumers thinking about this? Why are consumers buying our stuff instead of someone else's stuff? We don’t often ask that question. What are the factors that go into that?
What companies serve as good examples of this thinking?
Branch: I hate to sound cliché but I think Apple is really good at it. A legend has built up that Apple doesn't do market research, it doesn't really understand customers, but it pushes the envelope and directs customers to this or that new realm. Well, I think that's a bit of a hagiography. In reality, Apple really understands its consumers well. It has focus groups and strong links with consumer groups. All of these Apple prophets will give you tons of information about how they think and why they love Apple products. Yes, Apple has an incredible engineering and design team, it has incredible programmers, and Steve Jobs was a visionary. But what Apple really does is develop their stuff with the consumer in mind. The consumer is at the heart of everything they do. I would say many of the big consumer packaged goods companies like Kraft, Unilever, P&G, and Nestle also are good at probing the mind of the consumer. They develop products that take the pain out of our lives. You wouldn't think spots on our dishes are painful, but the fact is they came up with jet dry and actually convinced the dishwashing machine manufacturers to add dispensers for this product. That's really incredible, but it's because they understand consumers don't want spots on their dishes.
Another example is SC Johnson, which makes the Glade plug-in scents. You have this little heating element that heats oil and the smell dissipates better in the house. But then people complained because they were out of the home at work 10 hours a day and the thing is running the whole time. Now the plug-ins have motion detectors so they only activate when somebody goes by. This is thinking like a consumer, getting into the mind of the consumer so that what you are developing will resonate better.
You've done a lot of work internationally, so how is it different in some overseas markets, where so many multinationals have got it wrong, or at least the failures have been magnified?
Branch: What's funny is that some of the biggest gaffes in international marketing have been committed by the same companies which we herald as the great 'mind of the consumer' companies. I think it's a mixture of arrogance, with a little cultural imperialism. I think some companies often rely on expatriates who do not fully appreciate cultural differences. I was living and working in Uzbekistan in the early 1990s when Coca-Cola launched in the post-Soviet era. That was such a great opportunity for a marketing professor. And Coke did nearly everything wrong. The price was off, the product design was wrong, the bottle was the wrong size, and consumers didn't like the flavor. Uzbeks preferred natural looking and tasting products. Instead of shooting new advertisements with Uzbeks the ads used Russian actors from the Moscow division. Traditional distribution channels didn't work because most people bought soft drinks from street kiosks. There were no grocery stores as we know them. If Coke was paying attention to the mind of the consumer in Uzbekistan then it might have launched Sprite, flavored mineral waters, or Fanta instead.
You've also focused on service marketing. How does that differ from product marketing in terms of getting to the mind of the consumer?
Branch: Service marketing still is a relatively new subspecialty that started to develop in the 1980s. A series of academics at that time realized services are fundamentally different than goods. Services have a unique set of characteristics and those create differences in the mind of the consumer. For example, services are intangible and have no physical form. In the mind of the consumer, that means all kinds of different things happen. Say you want to buy a new frying pan. You go to Target, hit the frying pan aisle, and there are 100 different pans you can touch, feel, smell, hear, and see. That triggers a certain decision-making process and things like perceived risk. There's very low perceived risk because you have the frying pan in your hand. But imagine you've just moved to town, got a new job, and you need your suit cleaned. Can you go down to Target and find a whole aisle of dry cleaners? Even if you could, you can't see, touch, taste, or feel the service before paying for it. That changes the perceived risk, the information searching the consumer does, the drivers of value, and the nature of loyalty. It changes the mind of the consumer. Another is the idea of inseparability. The Ross School is a wonderful example of this. Because of the intangible nature of the service, consumers begin to examine the service environment more than the service itself. When you are a student sitting in one of our classrooms, can you really evaluate education? Can you touch it, smell it, or hear it? Education is intangible so consumers start looking at the building, classrooms, ambience, lighting, noises, or the dress of the professor. The physical environment begins to play a much more important role because it becomes the package, the tangible thing the consumer clings to when the product itself is intangible. Why did we build a new building? It didn't change the education itself.
This intangibility and inseparability are two of the Four I's of service marketing, correct?
Branch: Yes. The third is impossibility, sometimes called inventory. Services, because they are intangible, are produced and consumed simultaneously. Your barber is cutting your hair, producing the haircut at the same time you are consuming the haircut. Therefore, there is no inventory. We cannot put a haircut in the back room and sell it later. The fourth is inconsistency. Most services are provided by people and, well, people are strange. People have good days and bad days. In school you have inconsistency from professor to professor, from campus to campus. So if you are Holiday Inn with 5,000 locations in 150 countries around the world, how do you deliver the same, consistent service in all of those locations to all customers? Thinking through the mind of the customer, they want consistent quality and the challenge in services is how to deliver that, given the very nature of services. So that's the Four I model, the four characteristics that are unique to services. It developed a distinct field when we learned that basic marketing, which is geared toward selling goods, didn't really apply. We needed to create new tools for these unique characteristics.
In Business Acumen, do the participants get the product and service flavor when learning about the mind of the consumer?
Branch: What's wonderful about our executive education programs is that in one group of 15 people you can have 15 different backgrounds in 15 different industries and it makes the discussion so rich. I often think it's better to have seemingly disparate industries in the same room because the guy from healthcare suddenly realizes that he has more in common with the woman from Starwood Resorts and you can actually learn lessons on running a hospital from running a hotel. The classroom starts to reveal these similarities. As I teach I also try my best to have war stories, anecdotes, exercises, and case studies in a variety of industries. Being an international guy I also throw in cultural differences to get people out of their comfort zones. We want to push them into thinking in a different way, not in terms of industry but culture. So I might write an exercise based in Hong Kong. The customers there are different, the economy is different, and the politics are different.
For more information, contact:
Terry Kosdrosky, (734) 936-2502, email@example.com