The Internet of Things (IOT), which we cover in one of our What’s Next? boxes (see Chapter 8) offers some promising consumer benefits. IOT connects devices (your sprinkler system, coffee pot, thermostat, and more) to the Internet. From there, the devices get smart — so for example, your sprinkler system sees there is a 90% chance of rain today and so it doesn’t water the lawn for the next three days. Yet there are tradeoffs as consumers lose privacy. This short (less than 3 minute) Bloomberg video can be assigned to students or shown in class to stimulate discussion. It might work well with Chapter 8 as you discuss Product or in Chapters 7 or 19 where we dig more deeply into privacy.
Jeff Bezos: ‘Market Research Doesn’t Help’
Yahoo Finance recently ran the article titled “Jeff Bezos: ‘Market Research Doesn’t Help“. The catchy title makes it look like Bezos doesn’t believe in the value of market research but that’s not actually what he’s saying. Bezos’s claim is that market research isn’t always the best source for innovative product design. When talking about the development of the Amazon Echo family of devices, Bezos said, “If you had gone to a customer in 2013 and said ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said ‘No, thank you.’”
The article is a short one but it’s point is well taken. Consumers are generally great improvers but terrible innovators. If Apple had asked cell phone users in 2007 what they wanted to see in a new phone design they would have described something very similar to the existing models from RIM, Nokia, and others. Nobody would have suggested a device lets you make calls but also lets you fling brightly colored birds into a pig-infested structure. With that understanding, ask your students why bother with market research if consumers aren’t good at innovating? Maybe it’s product research that’s not valid but other forms of market research have value? Could product research still have value given the issues mentioned? The answer is yes and it depends a great deal on the process. Rather than ask people what they want or need, good product researchers will study how people use existing products, what problems they experience, and what opportunities are yet to be addressed.
Utilizing Marketing Personas
Marketers have a challenging job. We have to develop goods and services and then communicate the benefits and awareness of those products to a diverse customer base. We use tools like segmentation and target marketing to help narrow our focus but ultimately we have to wrestle with the fact that no two customers are identical and if we segment too much we run into diminishing marginal returns. This is also a challenge when conducting research to learn about the needs and motivations of potential customers. The use of personas is a common way of trying to personify our target segments but challenges and pitfalls still exist. This Marketoonist cartoon and the associated article talks about the author’s experience working with a client who was drowning in customer data and unsure how to use that data effectively. The persona creation process ultimately gave them the clarity they needed. The article includes some additional great persona cartoons as well.
Opposing Strategies for Customer Loyalty
Marketing strategies universally need to incorporate mechanisms to attract, upsell, and retain customers. Some companies focus more on one aspect than another but they’re all there somewhere. Loyalty programs are one of the mechanisms used to help with both upselling and retention and this Marketing Dive article takes a close look at some of the changes taking place with retail loyalty programs. Interestingly the article talks about conflicting strategies. Some stores are moving more toward inclusivity and trying to let as many customers join as possible. Others go the opposite direction. Amazon increased the price of Prime membership, Wayfair implemented a $29.99/year fee for their loyalty program, and Lululemon is testing a program that would cost $128/year. The article also talks about how services can impact loyalty as well. For instance, offering same-day delivery increases loyalty for 61% of shoppers. A significant benefit of loyalty programs is detailed information about the customer and their browsing/shopping history. Stores are using that information to try to foster a stronger emotional connection and thereby increase loyalty even further. The article is full of content that could be used for a great in-depth discussion with students debating the merits and drawbacks of different strategies.
Ben & Jerry’s to Eliminate Plastic Straws and Spoons
Ben & Jerry’s is the latest company to join the movement to discontinue use of plastic straws. This follows similar decisions by Disney, Starbucks, Royal Caribbean, the city of Seattle, and more. Ben & Jerry’s reported that they currently use 30 million plastic spoons and 2.5 million plastic straws each year. Concern over social responsibility is a growing trend and a great marketing tool for attracting employees and loyal customers.
Interestingly, if you want to talk about market research and validating secondary data, there’s another angle you can take on this story. If you search the Internet to see how many straws are used by Americans each day one of the most frequent figures you’ll find is 500 million. That statistic is quoted by National Geographic, government agencies, news networks, and more. However, that statistic hasn’t been well authenticated. This New York Times article covers the history of that statistic. It originated in 2011 from a 9 year old boy named Milo Cress. According to the NYT article, more rigorous studies suggest the number of straws is likely between 170-390 million. It’s still a very large number but this helps illustrate the need to authenticate the actual source and validity of secondary data.