The reading material for our Marketing Class this week included an article titled: “The customer doesn’t know best; you do“. As this is something I mentioned in my blog a number of times before, I must admit I was intrigued. And I wasn’t a disappointed.
The first point of the article deals mainly with customers’ perception around prices:
Customers always want lower prices, but marketers should rarely listen. And our tough times don’t warrant exceptions
The writer, Anne-Marie Fink, gives a number of examples where price reductions caused a decline in sales due to branding issues. The interesting examples are those in which surveys said that customers will be willing to pay a certain amount for a product but actually paid a lot more in the stores. This did not come as a total surprise to me. Surveys are problematic. But more than that, asking people to give an estimation of value is problematic. A survey takes a certain point in time and asks the surveyed to appreciate how much he will be willing to pay in the unknown future. As Dan Gilbert points out in his fascinating TED talk, human beings are really bad at doing this, because value is situation dependent. Perception of value of a certain product changes according the circumstances – mode, what other products I am buying at that moment, was is my total sum of expenditure and more. These things are more important than what a person says he will do in some anonymous survey.
Another great example in the article relates to another point I discussed here: competitive advantage. Fink describes fast food restaurants’ attempts to introduce health food into their menus because this is what customer said they wanted. Almost all of these attempts (usually adding some kind of veggie burgers or grilled products) failed even though in the surveys customers explicitly said they would like to see healthier menus. Why? Because you don’t go to a fast food restaurant to eat a healthy meal. These chains lost sight of what their competitive advantage was. Off what they were offering and insisted on listening to the customer instead on focusing on themselves and their advantages.
All of this does not mean the surveys are useless or that we should ignore what customers are saying. I think it is more important to understand how we are listening to our customers and what kind of questions we are asking. In the case of consumer behaviour and price sensitiveness, the best prediction is probably the wallet and we should listen to it very carefully and adapt our “market research” to it.
So, how are you listening to your clients?