Throughout our Marketing Tutorials and Blog Posts, we repeatedly stress how crucial it is for marketers to have a firm grasp on understanding what their customers' needs really are. While this is one of the most important issues facing marketers, it is far from being an easy assignment. For instance, for those operating in high-tech fields, predicting what customers want has historically been a challenge as needs change very rapidly often because customers did not even know they had a certain need until a new product is offered (e.g., cellphones, tablet devices).
But even less technical industries need to be on guard for changing needs, though these tend to happen on a slower pace than in high-tech industries. For example, food manufacturers may see consumers change their consumption habits but the change generally occurs slowly over many years. However, no matter what industry, marketers must be aware of what is coming and begin to move in the direction of the changing needs.
To help prepare for change, marketers immerse themselves in a wide-range of research techniques by gathering data from both internal and external sources. For example, marketers may develop their own customer surveys and ask customers directly what needs they may want satisfied in the future. Another internal option may involve closely tracking any changes in the purchasing patterns of identifiable customers, which can be done easily if customers use purchasing or loyalty cards, or other trackable measures.
For external sources, marketers may spend money to acquire specialize research that a third-party research or trade group conducts for an industry. Another external source may be reports produced by reputable news outlets, such as discussed in this story from USA Today. It paints an interesting picture of what the food habits of American consumers may be like in five years. The information contained in the story is based on comments by food experts from around the country. While this is likely not an example of highly scientific research, the comments offered should give companies operating in the food industry, including food producers, restaurants and grocery stores, something to discuss when they begin to talk about what their customers will want in the next few years.
A few weeks ago we discussed how difficult it may be for marketers to determine whether a perceived change in customer behavior is a real trend or just a passing fad. While spotting trends and adapting to them can yield important competitive advantages, reacting too quickly can be potentially risky. A company that adjusts its marketing strategy to address what they believe is a real change to their market may be making a big mistake if the trend is only a blip and does not pan out in the long run.
For this reason, the issue addressed in this NBC News story is one that some marketers would be wise to take time evaluating before reacting by changing their strategy. It discusses what may be a growing market for customers who dine alone or order takeout for their meals. The initial thought that may come to restaurants and other foodservice marketers is that the research presented in this story is signally that a behavioral shift is occurring and changes are needed.
For instance, for dine-alone customers who eat at restaurants, eateries may consider: making changes to store layout to provide more comfortable seating for single customers; offering access to several electrical connections to allow customers to plug-in multiple electronic items; or providing more adaptable plates and food containers that enable customers to place food around different parts of the table rather than just on a single large plate. For takeout customers, ideas may include: expanding the takeout menu including offering food options that may differ from what dine-in customers see; or encouraging or even rewarding the use of reusable food carrying bags which the purchaser brings with them, thus helping reduce the cost of takeout packaging.
However, it is also important to note that some foodservice companies will not want to change even if the increase in dine-alone customers is more than a fad. As we mentioned back in April, the space and time taken up by single customers may not be worth the expense and may limit the opportunity to generate higher revenue by servicing tables with multiple customers.
Just about every basic marketing textbook and marketing website, including KnowThis.com, provide a detailed discussion of the Product Life Cycle (PLC). The PLC is generally considered one of the fundamentals of marketing. The adopter labels and unique characteristics of each group, that was created over 50 years ago by Everett Rogers' study of the agricultural industry, still stands today. Moreover, while many have criticized the idea of reducing customers in a market down to just five categories, it is safe to say that, despite the criticisms levied against the PLC, the idea there is a way to look at a market based on characteristics of the customers, and when they start and end consumption, is still a highly accepted concept.
However, while it is relatively easy for marketing professionals and most marketing students to describe the characteristics of most of the four main product categories - Innovators, Early Adopters, Early Majority and Late Majority - it is often very difficult for them to quickly cite an example of buyers who fall into the Laggard category. Well, this story from the Washington Post offers and an excellent example of Laggards. It discusses how AOL still relies on millions of customers who access the Internet using old-fashion dial-up service. Yes, that is correct. These customers still use a modem connected to a phone line.
Whether you find this odd or not, from a marketing perspective it falls right into the benefits of not dropping products too quickly. As we note in our Planning with the Product Life Cycle tutorial, marketers often find Laggards to be extremely loyal. They are often quite insensitive to price increases and thus become a profit gold mine for the marketer. And, for AOL, these Laggards provide the needed income that enables the company to invest in newer products.
Many so-called business experts predict a bleak future for store-based retailers. In most cases, they cite the incredible pressure exerted by online retailers as the major challenge facing brick-and-mortar stores. While competitive pressure is certainly great, it does appear that some adjustments can be made by retail stores to attract more customers. Some of the changes are discussed in this story from NBC News story. As expected, the adoption of evolving retail technologies is widely considered an essential strategy. For instance, the story reports on how apparel retailers will soon be using body scanners to sell products. These scanners can take a shopper's body measurement and then suggest particular clothing to match the body type.
Another change is a bit more intriguing, at least in terms of retailing history. The story suggests the retail selling space footprint of future stores will be much smaller because the need to carry additional inventory will be greatly reduced. This is because improved shipping methods (maybe even shipping by drone) will enable shoppers to see a product on a shelf, place an order and then quickly obtain their purchase that is shipped to the address they provide.
However, another example of this retail model is also interesting. As noted in the story, a company called Hointer operates apparel stores that have only one version of a clothing product on the retail floor. If a customer wants to try on an item, they use a smartphone app to request the clothing which then appears in a dressing room.
While the limited floor display approach may seem like a new type of retailing format, it is not. Limiting the number of products displayed on a retail floor was a common retail approach used by showroom retailers. Years ago, companies such as Best Products and Service Merchandise operated retail locations where customers could browse a showroom then place an order that could be picked up as they exited. However, by the 1990s the rise of mass discounters, such as Walmart and Target, and category killers, such as Best Buy and Staples, pushed the showroom retail category to the edge of extinction. Whether shoppers will accept a move back to this model is certainly something to watch.
Wow. Here is a quick hit that waited until most marketers left their office for the weekend. According to this New York Times story, one of the world's largest consumer products companies, Procter & Gamble, is making a radical decision to eliminate more than half of its brands. As the story notes, P&G plans to eliminate over 100 low-performing brands while retaining the 80 best performers. As the story notes, the brands P&G will retain represent 85% of the firm's profits and 90% of sales. Which brands are to be pushed out is not identified. However, it appears the firm's leadership is looking to sell off the brands instead of simply discontinuing them.
Obviously this is major news in consumer marketing. A decision of this magnitude is rare. Besides the number of brands affected, the number of employees who will lose their jobs may be significant, though an acquiring company will likely try to keep some workers associated with the brands they purchase.
The move to consolidate is almost certainly a trend we will see continue within many other industries. Certainly, for marketers of leading consumers firms this could be a long weekend since, come Monday morning, they may be summoned to the CEO's office and told to evaluate their company's product portfolio to determine whether product consolidation is something they should also be doing.