Focus Group Moderator – a window into the how’s and why’s of your customers. Focus groups are the most popular type of market research for a reason. They can be a relatively inexpensive way of getting the details of how and why customers prefer certain products and choose not to buy other products. It’s true that quantitative market research can provide solid numbers and percentages, but often the first step in market research is exploring what the customer is thinking. The trick to quantitative market research is that you typically have to have a pretty good understanding of what the customer is thinking and then you can provide the categories and eventually learn exactly how many customers fall into each category. For the company that is conducting their first market research project it is often more important to understand the how’s and why’s as a first step that may lead into a quantitative research project such as a telephone or web survey.

Over a decade ago Starbuck's went from a niche market in Seattle to become a household name.   They did this by selling extraordinarily high quality, $3 cups of coffee in a world where a cup of Folger's coffee cost 20 or 30 cents a cup.

Now it appears as if there may be an end to how much money people are willing to spend on coffee.  US sales have slowed significantly for Starbuck's coffee as consumers reduce spending on luxuries like specialty coffee in the face of a weak economy and rising prices for food and fuel.  Other companies seem to believe that they can take a piece of the premium coffee market as Starbucks reduces the number of stores that serve their goods.   An interesting example is the fact that McDonalds now sells an iced "Premium Roast Coffee" for a fraction of Starbuck's price and I have to say that it tastes pretty good.   I wonder if their sales will grow the market overall or if they are taking some purchases that would have gone to Starbucks or other premium coffee businesses?

Are there similar examples of premium products in your market?   Are there indications that the current conditions may be changing the balance of power in these categories and could they represent a risk or maybe even an opportunity to your business?

Chris Hawkes

I'm not saying that the US car manufacturers are small business.  They're not, they're very, very large.  However, I think that small companies can learn something from the miscalculations that Ford and GM have made in recent years.

While Detroit was making a name for itself as the large expensive SUV manufacturers, they forgot to watch the growing consumption of gasoline growth and the flattening of oil producers output.     Additionally they evidently didn't worry about the dramatic increase in sales of gasoline-burning cars and motorcycles in emerging markets such as India and China.  Sales of large cars or SUV's have tanked while sales of Vespas (small gas-efficient motorcycles) and bicycles have been growing dramatically and Detroit is left with brands that are the antithesis of small fuel-efficient cars.   So automotive manufacturers that have brands which represent fuel-efficient cars, such as Honda and Toyota are setting sales records.

I believe that there are some parallels that can be drawn between the auto industry and the various payday loan companies that are currently making a killing.  They charge a great deal of money for short-term loans, to help the growing ranks of cash-strapped consumers, make it to the next payday.   The threat for  the auto industry was based on the demand in the free market, while the payday loan business is currently threatened by legislation, which may limit the charges that they can demand.

Are there any threats like this in your business or industry?   It's a good idea to keep an ear to ground to hear what might be coming your way.

By the way, we just put out our first e-book! Go to our home page and take a look at our 35 page e-book on business planning.

Cheers,
Chris Hawkes

Harvard Business Review had a great review of The Long Tail by Chris Anderson. Mr. Anderson posits two theories:

First, the variety of merchandise is increasing significantly thanks to the world wide web. As the costs to merchandise additional SKU’s decreases because there the products are either digital, or because physical products don’t need to be displayed in a storefront.

Like Apple’s iTunes store, which has millions of songs, podcasts, television shows and movies

which are stored on hard drives, physical products can now be converted into digital images and can still be sold anywhere around the globe and the merchandising costs are minimal. Search and recommendation tools significantly simplify the shopping process for customers.

The second theory has to do with the demand curve of unique or niche products. As transction costs are reduced, the customers with unique preferences are willing to pay more money for niche or specialy products. Digital products can be stored on inexpensive hard drives and the cost of storing and digitally merchandising these products approach zero.

The attached graphic is taken from a recent Harvard Business Review book review (try saying that 5 times fast).

If you want to read the full review, here is the address:

http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article....

The hard part is figuring out how these theories can be applied to your business.

Know thy customer,
Chris Hawkes

I would say that there are a number of traits that are typical for a good entrepreneur:

Toleration of Risk – The willingness to wager some or all personal assets on the belief that there is an opportunity to provide a greater value than is currently available and customers who are willing to pay for the improvement.
Persistence - Courage to believe that there is a better way and that the product or service will sell itself once the potential customers learn about it.
Creativity - An ability to come up with clever workable solutions. An unwillingness to accept that the status quo is the best solution.
Confidence – Having a strong belief in their capabilities and the chances of success.
Ability to Make Decisions – The ability to make good decisions quickly. In many businesses there is a requirement to make good decisions on-the-fly and accept the risk of not doing a great deal of homework – but rather by trusting their gut instincts.
Ability to Motivate Others – An empathy for the employee’s feelings and needs. An ability to communicate the necessity of providing a service to customers that is different from what the market already delivers.

But remember that approximately 50% of all businesses fail within the first 4 years. The list above are characteristics of an entrepreneur. I think that the difference between any entrepreneur and SUCCESSFUL entrepreneurs is that successful entrepreneurs also have an ability to accurately gauge how valuable their product is to the mass market (or to put it another way - they understand where the breaking point is in a cost/benefit analysis.

Chris

In marketing, a "whole product" is a generic product (sometimes called the "core product") augmented by everything that is needed for the customer to have an truly superior experience.    From the customer's standpoint, this means simplifying the process, wherever possible, to ensure that there is s sustainable reason to continue purchasing from the same company - hopefully a truly compelling reason to continue to purchase from the same company again and again.  

The generic product is what is usually purchased at the store, or physically shipped to the customer.   While the ‘whole product' is the family of support, service, training, relevant and timely user information, and any additional accessories or complementary additions which make that product stand out as a wonderful experience.    It's really the "they've thought of everything" phenomenon.   In some cases even a product failure or a service requirement can be used as a way of enhancing the relationship with the customer.   "Batteries not included" is the antithesis of a whole product experience.

There are a number of great companies that can be cited as providing a wonderful "whole product experience".    Apple and Lexus are two companies that come to mind immediately for me:

Ø    Did you know that one of pledges that every Lexus employee makes is that they will treat all customers, as they would treat a guest in their home?   Sounds bit silly, maybe, but walk into a Lexus dealership just to see how it works.

Ø    Another great example of the Lexus commitment to quality, at the introduction of one of their cars several years ago, Lexus engineers realized that 3000 of their first cars had a minor mechanical problem.    They sent a group of executives and a mechanic to EACH owner's house, and while the executives gave the owner a gift for the inconvenience, the mechanic repaired the car in the owner's driveway!

Ø    Then there is Lexus' nationwide database.   So wherever you travel, the local mechanic will be as up to date on your car as the mechanic who performed the last service himself.

Ø    Rumor has it that one of Apple's measures of success is, one minute after they started to use it any new product, that the customer wants to call their friends and tell them "Guess what I just got!"

Jiffy Lube - is another example of smaller business (albeit a franchise) that has dedicated itself to providing superior service by meticulously engineering the customer's experience from the time you drive you car up to the store, and an employee hustles out to point you to the bay that will be vacated first, to the final inspection, to ensure that you know and understand everything that was done with your car, just before you drive away.   In just a few short years Jiffy Lube has turned an activity that didn't seem to have much rhyme or reason to me (and the disdain of my ignorance of the automotive mechanisms that propelled my car down the road, was nothing that the mechanics felt any inclination to conceal  - even though I was the schmuck paying their wages!).   Somehow in the last several years Jiffy Lube (and other companies like them, maybe) have completely changed this experience.

In about twenty minutes and for less that $40, Jiffy Lube has a list of a couple of dozen things that they check each time that I go in for service.    Some important things like liquid levels, belts, filters as well as a number of mechanically insignificant, but bothersome items, such as wiper blades, tire pressure and even the functioning of all of my lights.   To make the experience a little nicer they even spiff-up my car by cleaning the windows and giving the inside a quick vacuum.      Once it's all done they call me by name, (as I'm helping myself to some of their free popcorn and reading a magazine in their waiting room) and on a computer they walk me through each one of the items that they checked, and inform me if anything out of the normal was noticed, and what it might indicate.   Then they show me any parts that they recommend that I consider replacing, walk me out to  my car and physically run me through the list again, making sure that all of the caps are on correctly, that the car actually did have oil put into it, close the hood, clean off any oily marks that may have been left on the hood and even open my door for me.    Somehow they do all of this without making me feel like a dork for not knowing all about these things already.    They even give me a little sticker on the top inside corner of my window reminding me when I was last in, and when I should come back to visit them - something that I appreciate because as I get older the time just keeps going faster and faster, and I don't want my car to run dry of oil and shutter to a stop one day because I had other things on my mind. I consider this to be a great example of creating a "whole product experience" - and one that doesn't cost nearly as much as a Lexus.    The point is that this process was obviously designed not to make the mechanic's job easier, or more convenient, but instead to look at each step of the process from the customer's standpoint and ask how it could be simplified, speed up or simplified to make our busy lives just a little bit easier.     And I believe that they've done a wonderful job of it, and that's why they get my $40 every time that I look up at that tag on my window and realize that I'm already 500 or 1000 miles overdue for an oil change.

RELEVANCE TO YOUR BUSINESS?  Even if you're not in the business of selling cars or changing oil, there are almost certainly ways that you can appreciably simplify your customers' experience to make it easier, faster or less expensive for them.    If you can, I'll bet that they'll notice and appreciate your efforts.    Keep thinking about things from your customers' standpoint and look for opportunities to make their lives easier.   I'll bet your competitors are!

Chris Hawkes has been an HP market researcher for nearly the last dozen years and regularly blogs on his website at Market Research 101 and frequently guest regularly on the Product Development and Marketing Association website as well (http://blog.pdma.org/)

In order to advertise your product in a way that communicates with your target customer, you need to understand their problems and make sure that you're delivering a solution.   Small businesses often deliver similar types of products, however what they choose to emphasize, communicates a great deal to their customers. 

How many attributes can be attached to one brand (for many small companies their company name is their brand)?   The simple answer is not as many as we wish we could.   Are you going to have the fastest service, the cheapest price, the most reliable product...that's for you, the owner of the business to decide.   However, it's important that you provide on your ‘brand promise' and it's probably more important that your brand promise is something that a reasonable portion of the market cares about.    Let's think about a few brands and what they focus on: 

Baja Fresh Mexican food - in their ads, they focus primarily on how fresh and organic their ingredients are - for a small but growing population that cares about how healthy their food is, and is at least somewhat skeptical about digesting man-made chemicals.   They could choose to focus on how delicious their food is, and although that's a portion of their advertising, it doesn't seem to be as much of a product differentiator because so many restaurants claim to have great tasting food.   They could have talked about the broad range of dishes that they serve, or that they had a number of low calorie dishes, but they have chosen to highlight their organic ingredients and seem to be doing very nicely with that brand positioning.

Domino's Pizza - their focus seems two-pronged  to me and includes fast delivery of very inexpensive pizzas.    Again they could have focused on a number of other attributes, but they seem to talk a great deal about how quickly their inexpensive pizza can find its way to your doorstep.  Other pizza companies focus their communications on the taste of their pizza, the quality of the ingredients or on a specific type of pizza that they serve (such as deep dish pizza).

Maverick Convenience Stores Their advertising seems to be a little bit less focused that some company's.    It seems that a great deal of their focus is aimed at "mavericks" or renegades who see themselves as going against the popular culture.    Their advertising seems to include having reasonably priced products for a certain type of individual - maybe a group that might be likely to have Fu Manchu moustaches, enjoys a good NASCAR race and disdain the pretentiousness of drinking "designer beers" that cost well over $1 a bottle, and instead drink domestic "honest beers" that cost closer to $8 for a half-rack.   Maverick seems to do a good business in the Western states where the word maverick implies strength and a strong sense of independence.

When you are designing your flyers, billboard or even radio or television spots, make sure that you think through the various product characteristics and which ones you can claim as your competitive advantage, make sure that you take your competitors' positions into account.

Know Thy Customer,
Chris

Beware the market research company that does all types of market research.     Most companies don't actually do all types of Market Research at all, least not well.    And the few that actually do conduct all types of research and do quality jobs of them all, tend to be very, very high end companies with very large staffs and with prices that are not reasonable for most startup companies.    Those companies spend money like IBM - full service groups, or like the SAP implementation.  

The smart way for smaller businesses who have decided to conduct some inexpensive market research to verify a few assumptions in their business model to ensure that they're not headed in the exact wrong direction.    The challenge is that to get the most from your research dollars you need to find a market research company that already understands the product or services that you intend to offer, and they've conducted research with similar deliverables before (so they, with your pocketbook, are not reinventing the wheel).  
It's actually not that difficult to find a small market research firm that 1) knows your industry and 2) specializes in the type of research that you need to conduct.. However it's very important if you want to get the most out of your research dollars, and find a partner who really cares about providing quality, actionable information.   Often times these smaller companies will take a personal interest in learning more about your business, your competitive situation and put together a much broader and better research presentation than a much larger company who feels that their impressive credentials more than make up for the homework that they don't have to do.  

For my startup I'll find a smaller company that really does want to become a partner and help you through any research projects that might come up.   If you have any trouble finding such a company, send me an e-mail and I'll do a little bit of homework on your behalf to help you find a few appropriate market reseach vendors that that fit the bill.  

Chris Hawkes
Chawkes@MarketResearch101.com <a href="http://www.marketresearch101.com">MarketResearch101</a>.  

Credibility is an issue for all businesses, but it's especially critical for a small business (or relatively unknown company - especially in what most consumers believe to be a mature product market where there is very little if any differentiation between one company's products and another.    If I told you that IBM or another big name company provided the highest quality of PC uptime and the fastest service options available, you'd probably believe it.   You might guess that the cost would be ridiculous, but you probably wouldn't argue the possibility that IBM could deliver on those claims. After all, IBM was the company that originally invented the PC after all (at least the PC that could run multiple software packages on one PC).     

An egg company, Eggsland Best.   They have an advertising campaign to convince egg consumers that Egglsand Best eggs, and their eggs only, are somehow endowed with special nutrients and vitamins - and they don't take the time to explain (at least not to my satisfaction,) how this happens.   It's just presented as a fact and we aren't supposed to simply take their claim at face value and not wonder how this magic came to be.   advertising their eggs as being better than the competition's eggs.  

Not wanting to believe that they're telling us a bold-face lie - that could easily end them up on the wrong end of a class action lawsuit, I tried to imagine how they could enhance the quality or characteristics of their eggs.  Do they have a special breed of chickens that naturally produce eggs that naturally have these beneficial qualities?.   Are they injecting these vitamins into the eggs somehow?    Or are they pumping their chickens full of some type of drugs that cause the chickens to produce these magical eggs?   Whatever it is that their scientist are doing to those poor chickens, it's probably something that I don't want to know about it.   But I probably don't want to eat their eggs either - and I'm pretty sure that wasn't the response that they were hoping to evoke..

My point is simply that credibility has to be earned, it cannot be bought with a few slick commercials, the invention of some spiffy new terms, or even a spiffy little stamp on your eggs that identifies that as special.    I simply don't believe that it works that way for most consumers.  

When you make claims about your business, or your products or services, check with a few people to see if they sound reasonable, and if the explanation that you give puts most people's minds at ease.    If they don't, you probably need a better explanation or to dial back what you're asking your customers to believe.   If you come out with a claim that is ridiculous, or that is judged by your target customers to be ridiculous - you're definitely not doing yourself any favors.   In fact you're likely doing damage to your reputation.    Be careful what you claim and provide some supporting information if people aren't really convinced.    Don't stretch too far or you may damage the most important assest that you have - your company's good name.  

Know Thy Customer,
Chris Hawkes  

I'd thought that toilets were pretty much a commodity product and that most were purchased primarily on price.    But on a recent trip to Tokyo, Japan I experienced something that completely changed my mind - the Toto, "Washlet," toilet seat.    

The Washlet, as it's name implies, takes care of the dirty work of going to the bathroom.    After the toilet-user has done his or her business, there is a "cleansing wand" that, with the push of a button, extends out of the underside of the toilet seat a couple of inches and sprays the buttocks area with a warm pulsating mist of water.  The type of spray, the target of the spray (ladies), the water temperature and the water pressure can all be adjusted.   The seat is also heated with an adjustable thermostat.   Once the cleaning is done, a temperature adjustable flow of air that dries the users bottom.   One version of the Washlet even purifies the air along the way to make sure that the air stays sweet smelling.  

Washlets run between $800 and $1900 dollars and the top of the line model actually opens the lid as it's approached and closes the lid after the person leaves.   Toto claims to have sold millions of Washlets all over the world.   They also state that over half of the homes in Japan have at least one Washlet.  

The reason that I think that is an interesting product is that there really isn't a great deal of technical innovation involved.    There are a number of tasks that have to be done very, very precisely, but most of the technologies have been around for quite a while.    The real breakthrough in this product is in identifying a target market (Japan) that is very sensitive about germs and cleanliness and identifying a task that they wish could be automated - to the tune of many, many Yen.   I don't know enough about the history of Toto and the Washlet, but I would be willing to bet that this wasn't done based just on someone's hunch, I'll bet that they conducted quite a bit of market research to understand what would work and what wouldn't work.     And then they must have placed models in a number of places to have people use them in their own home in order to get a real read on how it really worked out for customers in the long run.  

The Washlet wasn't a simple product to bring to market either, in fact Toto had to create a line of special distributors for their products (mostly higher end home stores with high- touch sales and service capabilities).    Knowing that a standard toilet seat costs well under $100 and the thought of having a toilet seat clean your backside automatically is a very, very foreign concept, they've implemented a trial program through most of their dealerships (which is a program that must have some interesting terms in order to motivate the dealers to sign up for customers returning used toilet seats).  

This is an example of a product that could have been shot down for a million different reasons, but someone at Toto believed in the concept and kept pushing through a great many challenges to launch a very unique and expensive product to great acceptance in the marketplace.  

Know Thy Customer - Very, Very Intimately
Chris Hawkes

A number of factors have combined to cause radio advertising sales to decline for the last several years in the United States.    But a number of  radio stations are fighting back by including newer advertising methods that cleverly incorporate the web, or even "mini-sites" to collect targeted customer information and provide incentives for customers to visit your business.    They can provide streaming ads for visitors of the website, e-mail ads to regular listeners and other ways to reach a much more targeted customer than what they could do in the past.     And the regular decline in their ad revenue means that they're more willing to work with smaller companies than ever.  

Technology is also allowing radio to alter their advertising to reach smaller geographic areas than they could do before - when a typical radio broadcast would cover a very large area, often wasting an expensive advertising message on customers who were too far away from the business location to seriously consider their services.  

If you're a small business struggling with how best to reach your customers, you might call a local radio stations and ask about some of their newer advertising options.     They're hungrier for business than they've been in a long time.   As one radio executive put it,  " The web will play a big role in how radio will be rejuvenated, because radio isn't in the broadcast business; it's in the entertainment business. "  

When it comes to advertising you have to know your options.
Chris Hawkes

In order to advertise effectively, a company must know how many of their customers, or potential customers fall within a standard population of 1000 people (or some measure of likelihood of bumping into one).    The reason that this is so important is that some companies are fortunate enough to sell products that are used or consumed by essentially the entire population, while other companies are truly looking for a needle in a haystack.  

Before you put together an Advertising campaign, consider carefully how many people in the general population might be interested in your category of product.    This knowledge will help you identify what advertising mediums might be best suited to reach these customers, and how much of your efforts my be completely wasted on a group of customers that are either not interested or financially unable to purchase your product.  

Let me use a couple of examples to make my point:  

Fast Food - If you are selling fast food, your potential customer incidence rate is very, very high - at least in the US.    I believe that the latest numbers show that the average American eats fast food, on average, twice a week.   And further, most of these decisions are made within two hours before they are actually ready to eat - so many of these decisions are made on impulse.   Which is why many fast food restaurants tend to sponsor radio commercials right around meal times.    Now you're probably saying that it's possible that a small minority of people eat fast food very, very frequently and the rest of the world may not eat fast food very often at all.    That may be true - but there is a very small minority that has sworn off fast food entirely and stick to their vow.    So, the incidence rate of fast-food eaters is still very high, although there is undoubtedly a wide variability of the frequency of eating fast food.    So this would lead me to believe that a very broad based advertising campaign might make sense for a standard fast food restaurant.  

Vertu Cell Phones - Now I'll jump over to another extreme to make my point.    Nokia phones has a sub-branded phone that is called Vertu.    Vertu phones are exceptionally high end phones, priced between a few thousand and several thousand dollars per phone.    They are made of exotic materials, some of the higher end models are encrusted with diamonds.    Simply holding one in your hand gives you the feeling of being a titan of industry, a God among men.   They have a very unique and distinguished design, and are each handmade in England with the exceptionally fine detailing and very unique capabilities.  Each Vertu cell phone comes with a special button and a concierge service that can help you with such dire emergencies as urgently needing to know where the nearest 5 star Sushi restaurant is to your current location, in whatever city you happen to be in that day!     As their website says, "These are handsets for individuals who only accept the best".     However, adding to the exclusivity of these phones, they're also hard to find.   In all of our United States, there are only 15 states that have one or more places where you can buy these phones.    They're typically in stores that have a nicely dressed security guard and where you have to press a buzzer to be let into the store.    For a product like this, the customer incidence is much, much different than it is for fast-food.     There are probably only a few very high end magazines that Vertu advertises with - and as it should be.    I've never actually seen anyone with one of these phones, although when I travel on research I often peer through the window and wonder what the life of a person that can afford that type of artwork (and they most definitely are, artwork) must be like.  

Marketing fast food is much different than is marketing a $7000 cell phone, I agree.   However, I believe that these examples may help to demonstrate the need to have a clearly defined target customer, and to understand what he/she reads, where he or she shops and what really motivates these people to purchase.  

Is Your Ad Spending Hitting the Sweet Spot?
Chris Hawkes

"Marketing News" a publication of the American Marketing Association had an interesting story on a small family business that had begun in 1915 in Manhattan's Upper East Side, by the Obsatz family. Butterfield Market which started out as a grocery store, when grocery stores were much smaller than they are today, and quickly gained a reputation as providing wonderful service and exceptionally high quality products.     

In 1970 the latest member of the team came on board, Evan Obsatz, who realized the potential of the a small business with a sterling reputation to expand into other areas.    He also realized that the scattered brand didn't provide customers with a unified impression of what Butterfield Market really stood for.    He wanted their little store to communicate the look and feel of a exclusive, high quality experience.    His first steps were to improve the layout of the store and changed the exterior of the building to better fit the type of quality products and services that customers had come to expect.   Over the years they also expanded their product breadth by adding prepared foods and catering services.  

Then Evan realized that the brand image that they were projecting was still somewhat disjointed and "informal" because there were a number of different looks on the company's various supplemental products such as grocery bags, boxes, letterhead, logo, website even the sign on the storefront.   Faced with a great deal of reluctance to spend money on making a more consistent look and feel for the store, Evan agreed to hire an inexpensive New York design company (if you believe there is such a thing!) to create a unified brand across everything that was marked as Butterfield Market.  

Unfortunately nobody was happy with the result - because it didn't really capture the essence of the store and it's long history of quality.  "We tried doing it on the cheap and we got what we paid for" says Evan.    After a taste of what a common brand might look like, even the elder members of the family were a little bit more open to the idea of getting a getting a real brand image created.    So this time Evan asked the owners of companies who's branding he liked, and got the names of a couple of brand and image companies.   Eventually he found a brand and design house to help him develop the perfect look to represent what Butterfield Market was really all about.  

The branding and design house came up with two design options, one of which was greatly appreciated by the family and was eventually incorporated into boxes, shopping bags, uniforms and store vans and are currently working on a new website.   The response has been wonderful, from both the customers as well as all of the family members who can see the benefits of having a consistent image.   "We pride ourselves on quality and on customer satisfaction and on history, and now it's all in the brand".   

Consistent branding probably isn't as critical in all businesses, but for this high-end specialty grocery store it was probably more beneficial for the clientele of this type of a business.    Now Butterfield Market has a solid identity across their entire business and a consistent image that can more easily be leveraged to other locations and now they are considering expanding out to additional locations.    Their new brand image should help to communicate their emphasis on quality as they venture beyond their initial starting place.  

Chris Hawkes

Portions of this blog entry are taken out of a recent WSJ article by David Brooks article called “Demography is King”.    His article was primarily about politics, although as I read it, it was clear to me that there are learnings to be taken from Demography and that apply just as well to getting your business noticed and tailoring your advertising at the group(s) that are most likely to consider purchasing your products.

  The first point that David made was that. people have become much more segregated in the last several decades, by things such as wealth, particular activities, education levels and the types of magazines and books that we read, as well as the type of television shows that are watched.  Fifty years ago 80 percent of American television viewers tuned into watch Milton Berle every Tuesday night.   Doctors and lawyers lived on the same street as the truck-driver – their children played together.    Only 7% of Americans had a college degree.

  Demographic groups have begun to act more like tribes or cultures and the effects can be seen everywhere we look.     Imagine that you go to attend a pro-wrestling event.    What kind of products do you expect to be advertised there?    What kind of beer do you expect to be served there?   Budweiser would be a pretty good guess, maybe Coors.   And there’s probably some Jack Daniels floating around also.   The situation is very different if you go to a play or a musical – that’s a more formal event, where most men have on a jacket and maybe a tie and the beverages that are served are more likely to be wine or micro-brews.    I’ll even bet the cars in the parking lots are very different from one activity to another.     There are probably many more differences too – from education levels, to types of sports, to the neighborhoods that they live in, and the types of restaurants that they frequent.    I’m not saying that this is a perfect split – it’s definitely not, but I think that it probably holds true for Pareto’s 80%, or somewhere in that range.

  “But how does this help me with my marketing efforts”, you might be saying?    Well, a knowledge of the demographics of your customers, and how those demographics spread out in your area, can be a big advantage when it’s time to allocate your advertising dollars – and maybe even your advertising medium, and the copy that goes into your advertising.   For example, imagine that you’ve started a restaurant that serves mostly organic foods and vegetarian dishes.    This type of restaurant might tend to interest kids primarily in the 20s, who prefer tie-dye and Gypsy dresses.   They’re probably a bit ‘crunchy’, play Ultimate or Golf-Frisbee, or at least have friends that do.   One medium might service this restaurant very well, while another medium should be used to get connected to work-at-home mother who spends most of her time in a monster SUV, shuttling her kids from soccer practice to baseball practice and then to country club to cool off and get a nice meal.     

I realize that this is a pretty easy example, but there can be vast difference between different groups of people.    However, there are ways to test your theories.    Change-up your advertising periodically and always keep track of who’s biting and who’s not (you can do this by advertising in one neighborhood or through one newspaper for a certain period of time).     If you hand out coupons you can put in a code so you’ll be able to track down exactly who used the coupon and what area of town they are from.    It’s actually not too difficult to do – just start paying attention to the advertisements that you get and guess what kind of approach they might be using to market their business.  

A key business driver is identifying your target customer and targeting them as precisely as possible (while keeping you mind open to the possibility that you may have missed a target, or identified one that isn’t that interested in your products).  

Know Thy Customers,
Chris

Once a person knows something, it's hard to remember what it was like to not have that knowledge (or know-how).     In the book Made to Stick by Chip and Dan Heath, they describe the way that many companies suffer from the ‘curse of knowledge' syndrome - where a company's representatives believe that their product category is allocated much, much more customer mindshare than it actually receives.     The effects of this syndrome come out in a number of ways:   those who speak to the customers use acronyms and technical jargon that the customer couldn't possibly know unless they worked in the same industry.    Or those people who write the messaging and product literature use terminology assuming that the recipient can automatically convert the product specifications into customer benefits (which requires thought and understanding at the least - and in many cases it just goes over their heads and the mention of such terms was squandered time and probably caused customer frustration).  

The challenge for Marketing is to take dozens or hundreds of product specifications, sort through them with the customer's needs in mind, prioritize them, and then provide the customer with a short list of the most customer-critical benefits of the product.     Everything else that is mentioned is likely to confuse or frustrate the customer - possibly making them believe that this particular product must be made for someone with much more technical knowledge or more complex technical demands.

Tappers and Listeners - This is a great example of how the concept of the ‘curse of knowledge' can play out.    This was tested in a research study several years ago.   A group of people were given a common song and asked to tap the song to another person and to guess how many of the people would be able to guess the song, based only on the rhythm and timing of the tapping.   Tappers (who had the song going through their head as they tapped,) guessed that the receivers would identify the song correctly 50% of the time.   In reality guessers only got it right 3% of the time!   Simply stated, once a person has an understanding of something - it's very, very difficult to remember what it was like when they lacked that knowledge.

The point here is to ensure that anyone who has contact with the customers should constantly strive to ensure that they're not letting technical terminology or industry jargon get into the customer communication.   Doing so, may very well be worse than simply not communicating - it may communicate that the specific product being discussed is inappropriate for that particular customer. 

It's All About Customer Knowledge,
Chris Hawkes

There is a fast growing movement to improve the reputations of many types of companies to have customers perceive them as doing more than just selling products and making a profit.    A growing number of consumers like the idea of giving back something to the less fortunate - especially in the US where our standard of living is so much higher than the vast majority of other people on this planet.   The creation of the term "cause-related marketing" is attributed to American Express, and it was coined to describe efforts to support locally based charitable causes in a way that also promoted business.

The term that has evolved is "Cause Marketing" or Cause-Related Marketing both of which terms refer to a type of marketing involving the cooperative efforts of a "for profit" business and a non-profit organization for mutual benefit. The term is sometimes used more broadly and generally to refer to any type of marketing effort for social and other charitable causes.   There are now stores that sell imported products and claim that they pay a sufficient price to ensure that the employees of their suppliers are paid a "fair wage" or a "livable wage"

Before you tune-out and consider this to be some new age attempt to assuage our consciences - listen to these results from a recent study: according to a 2006 study by the Cone Millennial Cause Study, 89% of Americans (aged 13 to 25) would switch from one brand to another brand of a comparable product (and price) if the latter brand was associated with "good cause". The same study also indicated that a significant percentage surveyed would prefer to work for a company that was considered socially responsible.

Here's an example of cause marketing by Pampers, which promises that each purchase of a certain type of Pamper's diapers will provide a needy American family with free diapers and also provide an inoculation for both a mother and her child.   href=http://www.pampers.com/en_US/home.do  - and click on the box labeled "Pampers the gift that gives twice"

Are your customers people who might respond to something like this?    From the research it appears that the benefits can go to anyone or any group that is considered needy - and you still get the benefits of customer's seeing your company as being compassionate and someone that they might like more of their dollars to go to. 

Know Thy Customer,
Chris Hawkes 

There are a lot of new product development research projects that I do, where one of the most important questions is “do we think that this new product will cannibalize existing sales of the same product category, or could this new product attract a new group of customers, who up until this point have not purchased this type of product" (thus growing the entire market for that type of product).

This distinction is critical to Product Marketing Managers as they develop new products – because if the new product is going to cause a new type of customer to enter an established product in a profitable way, it probably makes a lot of sense. However, there are other cases where a new product is being considered that might simply cannibalize that same company’s existing products (resulting in SKU proliferation and reduced profit margins for the company overall!) In most cases this doesn’t make much sense unless it’s a defensive move to protect the product line from a competitor stealing market share because the current product line is insufficient.  

Here’s an innovative product distribution model that forces the question about whether it will grow the market overall by bringing in new customers, or if it will simply cannibalize current sales. I was walking through the San Francisco airport a couple of weeks ago when I saw these enormous vending machines. However they were selling some very high end products (such as Blaupunkt headsets, a Sony digital camera, a number of Ipods, voltage converters) as well as products that you would more traditionally expect to see in a vending machine. The vending machines accepted credit cards and had a very impressive video display that walked the customer through the key benefits of each product that they sold.  

So what do you think? Will these vending machine