Monday, January 6, 2014

Using Consumer Adoption Drivers to Determine Marketing Strategy

Defining Potential Actions

Having the right offerings that best meets the market needs at a price that is acceptable to customers and provides profitable cash flows for the organization requires a well thought out product assessment process.

It is important to include a complete description of the product and the alternatives used in the comparison. The product description should include all tangible and intangible characteristics. Tangible characteristics would include size, weight, and other physical properties of the product. Intangible characteristics would include guarantees, customer service, and ease of understanding how to use the product or product training and so on.

While tangible and intangible characteristics may be hard to capture it is an important exercise from the view of the customer. It helps understand the real job the customer has hired the company and its products to do.

Clayton Christensen gives the example of milk shakes being used in the morning as a breakfast substitute for people on their drive to work and in the afternoon as a reward mothers gave to their children after school. In his example the milk shake had been “hired” to do two different jobs by two different customer groups. Clearly price alone could not describe the different jobs the product was “hired” to do nor could it describe the value of the product to either group. In the case of milk shakes characteristics that would need to be included would be the availability of the product (this would fall under “search time intensity” below).

To help describe product characteristics it may useful to consider the potential actions to be taken in light of several “Consumer Adoption Drivers”  (CAD) that we developed at GWR Research.

1)    Group Influence Intensity – relates to peer pressure exerted on customers
2)    Perish ability – the length of time the product is deemed useful,
3)    Psychological appeal – status associated with the product
4)    Price sensitivity – the need for the customer to budget for the purchase,
5)    Relative Price Influence – the attractiveness of other products as a substitute when price is a consideration,
6)    Frequency of Purchase – The frequency with which the customer purchases the product,
7)    Search Time Intensity – the amount of time invested in the search for the “right” product,
8)    Tangible Differentiability – physical differences between products,
9)    Intangible differentiability – non-physical differences between products (guarantees, relationships with company, branding etc.),
10)Technical Complexity – the need for training before a customer can use the product. This may be a factor in determining the type of sales force that will be required.

The table below arranges each dimension next to a semantic differential. Using a fairly simple research survey, customers can rank the dimensions as being of high, low or no importance. Analysts can use questions that elicit responses for each CAD descriptor.1

Group Influence Intensity

Perish ability

Psychological Appeal

Price Sensitivity

Relative Price Influence

Frequency of Purchase

Search Time Intensity

Tangible Differentiability

Intangible Differentiability

Technical Complexity

Customer Survey Process
Using focus groups to get a qualitative feel may provide a good start to identifying customer groups according to CAD.

For critical strategic decisions customer groups should be large enough to provide results with a high level of statistical confidence. The Key customer and Under-Potential customer categories may require a census to provide statistically significant findings. Nonuser categories are likely large enough to use random sampling techniques.

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