Jeff Bezos: ‘Market Research Doesn’t Help’

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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.

FedEx Using Robots for Future Deliveries

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The final leg of delivery to customers (referred to as the “last mile”) is often the most expensive leg of the journey.  In a commoditized market, FedEx is trying to find a way to reinvent the last mile and give themselves differentiation and a lower cost structure versus their shipping competitors.  FedEx revealed plans for utilizing an autonomous delivery robot which they descriptively but unimaginatively named the “FedEx SameDay Bot” to manage same day deliveries.    The article also talks about Amazon’s foray into this space with their “Amazon Scout”.  Target, Walmart, and Pizza Hut are all on board as initial customers utilizing the FedEx service.  This logistical innovation will help them provide greater customer experience and presumably lower costs as well.

Welcoming unwelcome innovation

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In my Principles of Marketing class I ask my students a simple True/False question: “Good marketing means giving customers the products and services they ask for.”  I’m always surprised at how many say “True”.  What they don’t yet realize is that customers don’t always know what they want or even what’s possible.  Successful innovators often develop products that people aren’t asking for and, sometimes, they create products that are so disruptive they elicit a negative initial reaction from their customers.  That doesn’t mean the idea is necessarily bad but it does mean they need good marketing to help customers get over that initial rejection and embrace the benefits possible.

Amazon is one of those companies that’s not afraid to take risks in all aspects of their business.  Some of those ideas are spectacular failures but those that have succeeded have helped propel the company to becoming one of the world’s top three retailers.  One of Amazon’s most recent initiatives is the “Amazon Key“.  This new device replaces a traditional lock on a customer’s front door with a smart, electronic lock.  This new lock allows Amazon delivery personnel to deliver products inside a customer’s house, not just at their front porch.  The device includes video recording of the delivery as well as options for the owner to block entry.  The idea has been met with understandable skepticism.  Allowing strangers into our home feels like an invasion of privacy and there’s an inherent fear of theft when the consumer hasn’t personally vetted the delivery personnel.

Ask your students what they think about the innovative delivery idea.  How can Amazon successfully promote the new concept in a way that gets customers past that initial rejection and to the point that they install the Amazon Key on their front door?

Home Depot Reinvents the Bucket – Finds New Opportunities for Customer Value

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While there are many examples of breakthrough high-tech products, we (at least I) often forget the power of design with common everyday products. Take the bucket — Home Depot did. Apparently Home Depot looked to a design leader for inspiration, which you can read about in “How Home Depot Copied Apple to Build and Ingenious Bucket” (Wired, December 31, 2013). We have also posted this at Learn the 4 Ps.

The video below would be a great addition to a class on new-product development. But it could also be used when you discuss customer value. Ask your students who would be the target market for this bucket? How each new feature adds value — and how much more some customers might pay?

 

Digital Wallets About to Take Off?

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Technology available today gives consumers access to “digital wallets.”  Examples of this include waving a key fob or cell phone in front of a reader to pay for a good or service.  While I think that geeks (like me) look forward to this, I believe most consumers remain reluctant to give up their cash and credit cards.  A few recent articles on the topic suggest that maybe the tipping point for electronic payment in the U.S. may arrive soon.

A push from Starbucks cannot hurt.  Starbucks recently invested in Square (see “Starbucks and Square to Team Up,” New York Times, August 8, 2012) and will no doubt push it in its stores.  If you want a more detailed lay of the land, see “The death of cash,” (Fortune, July 9, 2012).  If you are a glutton for knowledge about this topic, you can also check out “What’s In Your Wallet? Wait, You Don’t Need One ” (NPR, All Tech Considered, August 16, 2012).

The topic cold fit into a number of different sections of the introductory marketing course. For example, it certainly reflects an external environmental factor related to technology.  The Girl Scouts have sold a lot more cookies by leveraging portable credit card readers.  We cover paying in the price chapters.

I am going to discuss these systems when when I go over the adoption process and diffusion of innovation.  This is cool technology — but it has not made much progress. You could ask students (as we do at Learn the 4 Ps):  How many of you use your cell phone or a key fob to pay for goods and services?  Would you be able to get by without cash today?  Are you comfortable moving to a cash-free world?   Do you think your parents are ready for this?  My priors are that our college-age students are more comfortable with this than many of their parents.