WEEK 3

• How to Discover People’s True Needs?

• Ones attitude toward objects is largely determined by the total environment in which he is evaluating the object (McGuire)

The Roles of Internal Filters

• It is the attitudes not the opinions we should be exploring, and that we should recognize that the environment in which a new product is to be used plays an important role in its evaluation.

Five Levels of Emotion That Guide Consumer Behavior

Self

Values

Beliefs

Opinions

Assimilation (Absorption)

Attitudes

First Exposure, First observation or perception of new information.

First emotional responses “Hmm maybe I like that. I am not sure I will ask my friends”

We begin to take a serious look.Our behavior can be influenced at this level.

Reflects a persons particular social and private orientation

Different than beliefs, more intense.We don’t like discussFidelity, family, honesty. We seldom tap into Values.

Perception Expansion Theory

Self

Values

Beliefs

Opinions

Assimilation

Attitudes

We first begin to form acceptance or rejection of new concepts at the attitude level.Precursors to the formation of beliefs and values.We process the data and examine it to see how it fits within our value structure.We begin to make decisions about issues and situations, and we become prepared to present those decisions as our own, ready to defend them to the outer world.

Can it help me solve problems, or feel better about myself or make me feel more secure?If so we react positively to the incoming data if not the data is rejected.

“OK you fit, I will react positively to you” The sale is made, because we have answered the question WIIFM.

Breaking the Opinion BarrierConcept Boards

Self

Values

Beliefs

Opinions

Assimilation

Attitudes

McGuire's findings suggest that a respondentsattitude toward objects, (technology/products)is largely determined by the total environment in whichhe or she is evaluating the object.

We need to create an artificial environment that would replicate the environment in which he or she is evaluating the object.

The most effective way is to create a concept board.

11” * 14” graphic renderings suggesting a product in use situation

Probing for Negatives

• Ask customers to look at the concept boards and give us reactions, they immediately share their expertise in the area, or tell us how they don’t need this.

• First reaction comes from the opinion level( the immediate reactions) and then we probed beyond that.

• Challenge them what is wrong with this concept• We need to learn what the concept doesn’t solve. • Fulfilling our customers unmet needs.

• People buy products and services because of the benefits being promised, not because of features the product may have.

• People buy for One reasonWIIFM.

So we must be able to identify their real needs accurately, before we can create products that offer benefits that fullfill those needs.

WIIFM

What Is In It For Me ?

• What is our potential customer really looking for in a new product or service?

• How will it benefit him or her?

• What need or desire are we fulfilling with our new product?

Build a brand that stands for solving problems

The quest for a solution brand

The USP Links Features and Benefits to Needs

Needs

Features

Benefits

Products Consumers

Unique SellingProposition

If we truly have the benefit needed by customers all we have to is to find a unique way of presenting it to them, a way that appeals to their conscious or subconscious needs and we ll make a sale. And that is what its all about.

Linking Benefits to Needs

• Unique Selling proposition – Earths biggest selection - Amazon.com– The worlds online market place - Ebay.com– The internet superstore - buy.com– Solid smarts, straight talk, easy answers Dell.com– The ultimate driving machine - BMW– Everything that is fit to print - NY Times

• Brand image– Give your product a first class travel ticket through

life..

Erase the Line between Product and Service

• No longer is it enough to simply, market a product or a service alone.

• Products and services alone must be so tightly linked that it becomes impossible to see where intangible benefits and tangible benefits begin

• And that interconnection must not be limited to the selling process; it must drive the product development process from it s inception to create what we call an offering.

Product

Service

Product (Tangible + Intangible)Development

Marketing

Offering

Nike.com

Where Do Products Fit?

• Internet driven world is less about tangible items than about intangibles.

Intangibles > Tangibles

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Information about Stuff

Instant access All informationAll the time

Buyers can instantly measure: Supply against DemandFeature against FeaturePrice against Price With the market itself determining the real value of a product at any given moment.

Increased Commoditizationof many products.

New and expanded competitionThe emergence of flex pricingThe emergence of digital b2b marketplacesAutomated shopping agents.

•The networked environment increasingly affects how the offering is created sold and distributed.

Commoditization can affect just about any product, from hard to soft goods as the

nature of the business environment changes.

When products or services are commoditized you must find other ways to provide added value

-Something that people will be willing to pay for.

Amazon.com Web siteHotmail MSN MessengerNike.com Your own brand name shoe

The Great Value Shift

Products are commoditized Find other ways to provide value

Emergency

Can I help you?

Onstar System

The Offering

• One way a company can protect itself against a possible value shift in its business category is to do the value shift itself.

• Marketers need to look for ways to expand what the company

provides its customers. • The new way of doing this is to create an offering.

Offering

• An offering is a tight unification of product and service that better satisfies customer needs and wants and helps enhance the FV of the Customer Relationship.

ProductService

Increased Future Value of Customer Relationship

OfferingOffering Customer

Interaction

Expanding the Future Value of CR

An offering

Up selling Cross-sellingSelling something entirely new

Focuses onWhat is being sold $$$$$$

How the purchase can be

leveraged for

Future Value• To truly unlock FV, an offering must be structured in

such a way that it maximizes the opportunities to gain valuable information.

• A company must take into account Customer Service as an integral part of the offering itself rather than as an integral value proposition, or, worse, afterthought.

• Selling, implies convincing the customer of the value of a products or service.

• The emphasis switches from a company selling to a buyer choosing.

• When you provide an offering , you recognize that the customer is in control of the process of deciding how to satisfy his or her real preferences.

Maximize opportunity to collect information

Include Customer Service in the offer

Customer is in control of the process of deciding

Buyer chooses

Convince the customer of the value of the product

Product Service Linkages

• Service that surrounds product

• Service that encompasses product

• Service that is added to the product

• Service that creates the product

• Service that becomes the product

Service that Surrounds Product

Real time stock trades online

$1 million Cellular power systems

1999 Profit $289 million up 77.6% from previous year

- Selling banking products is still its core competency but the services that surround it s products are the differentiator.- The banking and the service are the new offering.

Service Encompasses Product

Everyone having access to anyone and anything at the touch of a button. No company can disassociate themselves from any element of the value chain.Mastercard and Intel

“Cardholders and merchants are now coming directly to us”President, CEO Mastercard

Service Added to Product

When the airbags are deployed, when you hit the Button the serviceis on the way.Strengths the product offeringIncreases customer loyalty.

Service Creates Product

A personalized GardenThe service actually developed the product.Also provides lots of instant data about the customer’s gardening interests

Service Becomes the Product

Educational and entertainingVirtual Bank AccountsAs the various features of the web site are accessed whether through chat roomsGames or educational areas virtual money is earned by the young person. The more traffic the more money.The service becomes the product in the minds of registered participants as much as the Actual bank account that is opened in order to accept the offering.

Add Relationship Equity to Brand Equity

•In the new era of individualized marketing everything changes.

• A company's Products, Services, Prices and customer contacts must become as varied as the customers themselves.

•As companies moved from customized products to customized relationships the implications are immense.

•In a wired world customers are in charge and any relationship must be established on their terms.

•If you apply customer knowledge to each transaction the outcome can be unique experience for each customer.

Building a Relationship Brand

• While the products of the company will come and go, the relationship created between company and customer can establish a lasting

bond.

Reflect.com

• Sells cosmetics, all which are designed online by the customer.

• Begins the relationship by answering series of questions.

• Customers can even choose the colors of the web site itself.

• It is backed by Procter & Gamble. • The data gathered from customization process is

extremely valuable to P&G– Primary market research to understand what makes a person

buy

Reflect.com

• “When you treat a customer as an individual, it is no longer marketing, it is a relationship.”

• If a customer creates a product and doesn’t like it, we will re-customize it free of charge.– They mail a sample of what they produced.

• In house customer service and fulfillment. – We want to own all the touch points.

• We believe a truly loyal customer is someone who is evangelist of the brand.

Reflect.com

• Everything it does continually generates more knowledge to drive its future decision making.

• Reflect.com had to create an affordable way to manufacture a different product for each customer and even filed for a patent on its customized manufacturing infrastructure.

Make Your Interactive Process become the Product

• Process as product from consumer perspective.

• Lands End, $1.3 billion

• Utilizes online shopping:– benefit the consumer – to add profit to the company's bottom line.

• You put your measurements and a model like you will appear.

LANDS’END

• Already the largest seller of clothes online anywhere in the world

• Strategy does not involve competing on price or other than providing other than the usual retailing promotions and incentives.

• Why is Lands’ end so successful

• Marriage of technology and customer experience online and offline world.

• First innovation was the personal model.

– During first 6 months 1.6 million women came to the site and created computer generated models.

• Shoppers talk directly to the CSR.

• CSR average 9 year experience

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

1stYear

2ndYear

3rdYear

Sales

A Marketing Strategy without an

interactive component, is NO marketing strategy at all.

Brand Experience

• Brand experience is no longer limited to experience of the product or service alone.

• It extends to experience of the company as a whole. • The FV of the Enterprise is equal to the sum of the brand value and the

relationships value

Brand Experience = Experience of the product / Service

Brand Experience = Experience of the Company as a whole

FV of the Enterprise = Brand Value + Relationship Value

Stakeholders can include

• Customers

• Employees

• Managers

• Distributors

• Business partners

• Suppliers

• The Shareholders

Brand Experience leads to FV

• Brand experience directly affects the relationship between company and customer and contributes to the long term FV of the business

• Satisfaction with the product being branded (P)• The interactive contact experience a customers has

with it (C)• Interaction of those two elements over multiple

contacts in multiple contexts over time (T) • What are others saying about the product (O)

Brand Experience

• Brand Experience = (Product quality + Contact quality + Others opinions ) * Time

Brand Experience = ( P + C + O) * T

Spheres of Influence

Sales Staff

Other Customers

Competitors

TheCustomer

Brand Perception v.s. Brand Experience

• Created largely by broadcasting one way message

• More easily changed

• Developed by saturation,concentration,

repetition the brand message

• Changes by changing the ad agency

• Company has more control

• Involves indirect feedback

• Created largely by direct contact

• Once established is more lasting

• Often develops over multiple contact points and interactions

• Negative experience is difficult to change

• Company has less control

• Involves direct feedback

Amazoning

• It can be ordered with one click.

• It will be the right product.

• The sender will receive notification.

• The billing will be correctly charged to the buyers credit card.

• A package tracking mechanism will be in place and available to the buyer.

• If there is a problem, it can be fixed by simply sending an email to Amazon.com or calling Customer Service.

It is this processing platform that allowed Amazon.com to expand into sellingother products such as CD’s, toys, recreational equipment,electronicsJeff Bezos realized early that the customer experience was more valuablethan the products themselves.