I love a good marketing success story, and Friday's Wall Street Journal showcased what may become a terrific one at Gillette.
Gillette, now part of Procter & Gamble, has developed a 34-cent razor with an accompanying 11-cent blade for its Indian markets. The current price of a Mach 3 blade in India is about $2.25. Quite a stunning change in price points. And, as it turns out, product features.
Gillette intensively studied Indian consumers with respect to their preferences for shaving items, and determined that, given distribution channels, product feature needs, and price points, a dramatically downscaled razor and blade were required.
As the article states,
"The price takes into account not only consumers but the kiosk owners who serve most shoppers in developing markets. The lower cost will encourage more small store owners to stock up on the item.
To cut costs, P&G eliminated the lubrication strip and colorful handle designs Indian men weren't willing to pay for."
It is stunning to me that a global consumer products company will actually shift from a blade price in the $2 range to one costing about a dime. Such scale of change in revenue at such low prices suggests how serious P&G is at moving its current 10% share of the Indian market up toward its global average 50% share. It's amazing that they plan to make money, to prosper, on 11-cent razor blades.
More interesting are these closing passages,
"P&G will introduce Gillette Guard first in emerging markets, says Mr. Carvalho, who doesn't rule out the possibility of bringing the cheaper razor to developed markets like the U.S. "We haven't yet looked in a detailed way if it makes sense doing this in developed markets," he says, "We'll probably know that in the next six to 12 months."
That could really make for interesting consumer reactions in the US, where, as the article also notes, recent advanced Gillette razors sell four for $16.99.
Showing posts with label Marketing Research. Show all posts
Showing posts with label Marketing Research. Show all posts
Monday, October 04, 2010
Friday, February 26, 2010
More Congressional Ineptitude
Maxine Waters is not the only incompetent House member. Not by a long shot.
Yesterday, as I watched/listened to the so-called health care summit, Fox News cut to an interview by Megyn Kelly with Florida Democratic Representative Debbie Wasserman-Schultz.
It was, to say the least, revealing.
Kelly asked Schultz to explain why Democrats continue to push a 2,300 page health care bill too complex for anyone to fully comprehend, when so many polls indicate that about 55% of voters want a new health care bill to be written from scratch by both parties, together, and something like only 30% of voters want the current proposed legislation.
Schultz replied with a laundry list of items which she claimed voters were for, on an individual basis. Among the items she listed were:
-low insurance premiums or small increases
-no dropping coverage because of sickness
-insurance available for pre-existing conditions
-coverage of all Americans
What Schultz and, for that matter, Kelly, overlooked and ignored, is the flaw inherent in asking interviewees on a questionnaire for multiple, serial responses on attributes of a choice.
Back in the late 1970s, when I attended graduate business school, conjoint analysis was already a fairly mature, well-regarded technique in marketing research. That was over 30 years ago!
What conjoint analysis does is allow respondents to choose, usually in either paired-comparisons or rank ordering tasks, between various sub-optimal combinations of attributes.
In the case of health care, for example, a 'choice' might be low premium increases, but no pre-existing condition coverage and coverage for 90% of Americans.
By working through such choices, respondents reveal their relative values for each attribute. The key is being forced to choose among alternatives combining various levels of the various attributes.
Why isn't Congress commissioning some conjoint analysis-based research to provide members with information on what Americans value most, and least, among the possible, but expensive, attributes of a health care reform bill?
This is the sort of omission that drives me crazy. Sad to say, a look at Schultz's bio tells you a lot. She was a carpetbagging resident in her district when she went to work for a state legislator. She then ran for his vacated seat at the tender age of 26, won it, and served the maximum number of terms. Then she ran for Congress.
So, once again, as in the case of Carolyn Maloney or, for that matter, my old civics teacher, longtime Bob Michel aide and current Secretary of Transportation, Ray LaHood, we have a Representative with no more than perhaps 3-4 years of experience actually working for a living. And those years were quite long ago.
No wonder our elected representatives provide so few modern, easily-available techniques to assist in resolving policy questions. They truly are clueless, because they've spent too much of their adult lives as professional office-holders.
And, again, as I did at the end of my post about Maxine Waters, I want to stress the business implications of this post. Provisions of the current health care bill will cause businesses to dump their employees into government-run plans. This will cause health insurance costs to skyrocket, increasing our national debt and, eventually, raising taxes. This will lead to less job creation and lower economic growth rates.
It's important for all of us to push back ill-advised, stupid legislation and government overreach. It begins by getting rid of lifetime officeholders of all parties, and striving to elect experienced, non-professional candidates for a few terms, so that their goals and those of ordinary citizens who work for a living are aligned.
Yesterday, as I watched/listened to the so-called health care summit, Fox News cut to an interview by Megyn Kelly with Florida Democratic Representative Debbie Wasserman-Schultz.
It was, to say the least, revealing.
Kelly asked Schultz to explain why Democrats continue to push a 2,300 page health care bill too complex for anyone to fully comprehend, when so many polls indicate that about 55% of voters want a new health care bill to be written from scratch by both parties, together, and something like only 30% of voters want the current proposed legislation.
Schultz replied with a laundry list of items which she claimed voters were for, on an individual basis. Among the items she listed were:
-low insurance premiums or small increases
-no dropping coverage because of sickness
-insurance available for pre-existing conditions
-coverage of all Americans
What Schultz and, for that matter, Kelly, overlooked and ignored, is the flaw inherent in asking interviewees on a questionnaire for multiple, serial responses on attributes of a choice.
Back in the late 1970s, when I attended graduate business school, conjoint analysis was already a fairly mature, well-regarded technique in marketing research. That was over 30 years ago!
What conjoint analysis does is allow respondents to choose, usually in either paired-comparisons or rank ordering tasks, between various sub-optimal combinations of attributes.
In the case of health care, for example, a 'choice' might be low premium increases, but no pre-existing condition coverage and coverage for 90% of Americans.
By working through such choices, respondents reveal their relative values for each attribute. The key is being forced to choose among alternatives combining various levels of the various attributes.
Why isn't Congress commissioning some conjoint analysis-based research to provide members with information on what Americans value most, and least, among the possible, but expensive, attributes of a health care reform bill?
This is the sort of omission that drives me crazy. Sad to say, a look at Schultz's bio tells you a lot. She was a carpetbagging resident in her district when she went to work for a state legislator. She then ran for his vacated seat at the tender age of 26, won it, and served the maximum number of terms. Then she ran for Congress.
So, once again, as in the case of Carolyn Maloney or, for that matter, my old civics teacher, longtime Bob Michel aide and current Secretary of Transportation, Ray LaHood, we have a Representative with no more than perhaps 3-4 years of experience actually working for a living. And those years were quite long ago.
No wonder our elected representatives provide so few modern, easily-available techniques to assist in resolving policy questions. They truly are clueless, because they've spent too much of their adult lives as professional office-holders.
And, again, as I did at the end of my post about Maxine Waters, I want to stress the business implications of this post. Provisions of the current health care bill will cause businesses to dump their employees into government-run plans. This will cause health insurance costs to skyrocket, increasing our national debt and, eventually, raising taxes. This will lead to less job creation and lower economic growth rates.
It's important for all of us to push back ill-advised, stupid legislation and government overreach. It begins by getting rid of lifetime officeholders of all parties, and striving to elect experienced, non-professional candidates for a few terms, so that their goals and those of ordinary citizens who work for a living are aligned.
Friday, August 24, 2007
On Students As Marketing Research Subjects
Being a double marketing major, there was a recent Wall Street Journal article which caught my attention. Two Fridays ago, the paper reported, in an article by Carl Bialik, on the pitfalls of too often using college students in marketing research studies.
I recall a marketing professor from my graduate days lamenting the amount of bad research and horrific consumer behavioral inferences based upon how college students evaluated stereo equipment. Back in my day, that seemed to be a favorite combination in which many marketing professors, no doubt on the tenure track, embedded their research concepts.
The Journal article details quite a few examples in which either products and concepts not really germane to college students are tested among them, or college students, as a group, are considered to be homogeneous. Neither of which makes for particularly valid conclusions.
A Professor Robert Peterson, marketing professor at University of Texas, Austin, found 63 examples in published research involving psychological relationships where students differed significantly from non-students.
Despite the Mr. Bialik's admonishment that the real fault lies with those who would apply such narrowly-based research results to non-students, I don't believe that's quite true. Studies using students for the sample, if they involve PhD work, are probably held out as offering real world conclusions. It's doubtful that so many student-based research projects would be done for nothing more than methodological validations.
No, I think the entire ethos of business school professors and graduate students using the available student population is an age-old, and recurring problem. Who knows how many products or services have had their basic concepts 'proven' this way?
It's an illuminating window onto a rather sordid and well-kept secret among the marketing department cognoscenti of academia.
I recall a marketing professor from my graduate days lamenting the amount of bad research and horrific consumer behavioral inferences based upon how college students evaluated stereo equipment. Back in my day, that seemed to be a favorite combination in which many marketing professors, no doubt on the tenure track, embedded their research concepts.
The Journal article details quite a few examples in which either products and concepts not really germane to college students are tested among them, or college students, as a group, are considered to be homogeneous. Neither of which makes for particularly valid conclusions.
A Professor Robert Peterson, marketing professor at University of Texas, Austin, found 63 examples in published research involving psychological relationships where students differed significantly from non-students.
Despite the Mr. Bialik's admonishment that the real fault lies with those who would apply such narrowly-based research results to non-students, I don't believe that's quite true. Studies using students for the sample, if they involve PhD work, are probably held out as offering real world conclusions. It's doubtful that so many student-based research projects would be done for nothing more than methodological validations.
No, I think the entire ethos of business school professors and graduate students using the available student population is an age-old, and recurring problem. Who knows how many products or services have had their basic concepts 'proven' this way?
It's an illuminating window onto a rather sordid and well-kept secret among the marketing department cognoscenti of academia.
Tuesday, July 10, 2007
Tesco's Foray Into American Food Marketing
The Wall Street Journal article about British grocer Tesco's entry into the US market, and its interview with the company's CEO, Terry Leahy, was a pleasure to read at the end of last month.
In the Thursday, June 28th issue of the paper, Leahy described how and why Tesco is preparing to enter the brutal, margin-crushing world of US grocery retailing, opposite, among others, Wal-Mart.
In part, the article stated,
"Mr. Leahy has studied how Americans shop, and he is hoping his new design for smaller stores with fresher food will differentiate his stores from competitors'. To develop his model, he sent Tesco teams to live with American families. One finding: Americans visit many stores; they're not one-stop shoppers after all."
I absolutely adore and respect companies, CEOs, executives, who do this type of research. Similarly to the new CEO of Kraft, Irene Rosenfeld, whose ground-level customer research I noted in this February post, Leahy is beginning at the most basic level- observing consumer behavior in action firsthand.
His conclusions ring true, by the way. Certainly for me. My daughter and I typically visit two stores to complete our grocery shopping. Meat is better at one, while produce is more available and less expensive at the Stop & Shop where she prefers to buy our groceries. When it's working well, we find the S&S self-checkout to be a godsend. It even varies by S&S store, with one outlet's scanners routinely balking at the same barcodes, while those in another S&S do just fine.
Back to Leahy and Tesco. The article further stated,
"Mr. Leahy still likes sitting on customer panels and making unannounced store visits."
To me, this is the mark of a truly insightful and passionate CEO.
As I began to write this piece, I wondered why anyone would want to enter the US grocery business opposite Wal-Mart. You'd think that the margins would be too low, the prospect of such crushing competition too intimidating.
On the contrary, as I suspected, Leahy noted that the US grocery margins are higher than elsewhere in the world, and, in his opinion, the American market rewards innovation. Tesco plans to open stores that are smaller than supermarkets, but larger than higher-priced convenience stores. When asked why Tesco didn't just buy an existing American grocery chain, Leahy replied that they wanted to turn their weakness- no market presence- into an advantage-
"research and design the perfect store for the American consumer in the 21st century."
This makes a lot of sense. Witness Whole Foods' growth. Although currently running into some troubles, the chain experienced enormous growth in this oft-dismissed category.
From my own marketing background, I find myself thinking that any buying activity which is so frequent and necessary as food buying will probably lend itself to well-considered, innovative service and product advances. When you spend so much time and energy buying food, and you want to like what you buy, it makes sense that Tesco could make major inroads by rethinking the traditional American grocery model, and providing more pleasing, efficient and value-oriented solutions to shopping issues we might not even know we have.
Again, from my marketing training, I know that these types of improvements are often the best. It's an old adage that nobody asked the Wright brothers to invent airplanes, so consumer research doesn't really lead to the right new solutions. But it depends on the questions you ask. By studying American family shopping behaviors in their homes and as they shop, I think Tesco will acquire some valuable insights that allow them to invent new, attractive features in their grocery stores.
Their chain's debut is slated for California and a few other western states. Stay tuned.
In the Thursday, June 28th issue of the paper, Leahy described how and why Tesco is preparing to enter the brutal, margin-crushing world of US grocery retailing, opposite, among others, Wal-Mart.
In part, the article stated,
"Mr. Leahy has studied how Americans shop, and he is hoping his new design for smaller stores with fresher food will differentiate his stores from competitors'. To develop his model, he sent Tesco teams to live with American families. One finding: Americans visit many stores; they're not one-stop shoppers after all."
I absolutely adore and respect companies, CEOs, executives, who do this type of research. Similarly to the new CEO of Kraft, Irene Rosenfeld, whose ground-level customer research I noted in this February post, Leahy is beginning at the most basic level- observing consumer behavior in action firsthand.
His conclusions ring true, by the way. Certainly for me. My daughter and I typically visit two stores to complete our grocery shopping. Meat is better at one, while produce is more available and less expensive at the Stop & Shop where she prefers to buy our groceries. When it's working well, we find the S&S self-checkout to be a godsend. It even varies by S&S store, with one outlet's scanners routinely balking at the same barcodes, while those in another S&S do just fine.
Back to Leahy and Tesco. The article further stated,
"Mr. Leahy still likes sitting on customer panels and making unannounced store visits."
To me, this is the mark of a truly insightful and passionate CEO.
As I began to write this piece, I wondered why anyone would want to enter the US grocery business opposite Wal-Mart. You'd think that the margins would be too low, the prospect of such crushing competition too intimidating.
On the contrary, as I suspected, Leahy noted that the US grocery margins are higher than elsewhere in the world, and, in his opinion, the American market rewards innovation. Tesco plans to open stores that are smaller than supermarkets, but larger than higher-priced convenience stores. When asked why Tesco didn't just buy an existing American grocery chain, Leahy replied that they wanted to turn their weakness- no market presence- into an advantage-
"research and design the perfect store for the American consumer in the 21st century."
This makes a lot of sense. Witness Whole Foods' growth. Although currently running into some troubles, the chain experienced enormous growth in this oft-dismissed category.
From my own marketing background, I find myself thinking that any buying activity which is so frequent and necessary as food buying will probably lend itself to well-considered, innovative service and product advances. When you spend so much time and energy buying food, and you want to like what you buy, it makes sense that Tesco could make major inroads by rethinking the traditional American grocery model, and providing more pleasing, efficient and value-oriented solutions to shopping issues we might not even know we have.
Again, from my marketing training, I know that these types of improvements are often the best. It's an old adage that nobody asked the Wright brothers to invent airplanes, so consumer research doesn't really lead to the right new solutions. But it depends on the questions you ask. By studying American family shopping behaviors in their homes and as they shop, I think Tesco will acquire some valuable insights that allow them to invent new, attractive features in their grocery stores.
Their chain's debut is slated for California and a few other western states. Stay tuned.
Monday, June 04, 2007
HP's Resurgence: The Details
Today's Wall Street Journal features an article purporting to describe, in detail, the reasons for H-P's resurgence under Mark Hurd. According to the piece, it all comes down to Hurd's first new hire, Todd Bradley, late of Palm.
What Mr. Bradley did, upon arriving at H-P, was essentially three basic things:
-reviewed consumer purchase behavior research
-concommitantly focused H-P's PC marketing on retailers
-identified, tackled and solved various operational issues involving distribution to said retailers>
What ought to concern any reader, and does me, is that none of what Mr. Bradley did was all that unusual. As I wrote about Burberry's recent CEO change here, so often, the solutions are not all that novel.
Why is it so hard to find people who can do the mundane and obvious? Where was H-P's board all the while when Carly Fiorina bumbled this one, via her 'management team,' such as it was? Why wasn't that board grilling Carly & Co. as to the reasons for whatever PC strategy they had, and why it wasn't working?
As I look at Mr. Bradley's actions, they are classically excellent. Clearly, this guy is worth whatever they pay him, as is Hurd, for finding him. But why did it take just Bradley? Why wasn't there some underling in the marketing or product management ranks at H-P who has or had sufficient talent to do this?
Let's review Mr. Bradley's program for rescuing the PC business.
First, he went to the data. He learned that Dell was weak in retail.... duh! That most consumers were now moving to buy laptops and notebooks and, consequently, wanted to see, touch and feel them, then walk out of the store with them. As I wrote here last fall, one benefit of selling notebook computers is that there isn't a whole lot to customize, so a vendor can realistically cover several price points at retail, without the time and expense of custom building the products for each order.
Next, Mr. Bradley focused on channel management issues. He improved communications and service to his downstream partners, listened to their problems and ideas, forged stronger relationships with them. Now he was in a leadership position in the channel of choice for notebooks and laptops.
Finally, he went about hunting down and fixing the various logistical stumbling blocks inside H-P that threatened the successful execution of the retail strategy. Through painstaking homework to identify bottlenecks, hold frequent meetings and establish performance metrics, he brought the logistical performance up to grade, and completed the overhaul of the unit's product and marketing strategy.
What about any of this was magic? Bradley did not apparently bring a team with him, or, if he did, the article omitted this. He simply used basic, traditional marketing strategy and tactics, common sense, and good management skills.
Are these so lacking in most American businesses, and H-P, as to require an infusion of this type of skill from another company?
Honestly, I think this speaks very poorly for the continuing state of American management education, the MBA as a useful degree, and middle-to-upper management in the average large US corporation.
H-P prior to Hurd seems to have simply been allowed to become mediocre. Even the board seemed to take a long time to show Fiorina the door and usher in a more competent CEO, Mark Hurd.
How many more US corporations underperform, consistently underperform the S&P500 total return, due simply to inept management of decent products in attractive markets?
What Mr. Bradley did, upon arriving at H-P, was essentially three basic things:
-reviewed consumer purchase behavior research
-concommitantly focused H-P's PC marketing on retailers
-identified, tackled and solved various operational issues involving distribution to said retailers>
What ought to concern any reader, and does me, is that none of what Mr. Bradley did was all that unusual. As I wrote about Burberry's recent CEO change here, so often, the solutions are not all that novel.
Why is it so hard to find people who can do the mundane and obvious? Where was H-P's board all the while when Carly Fiorina bumbled this one, via her 'management team,' such as it was? Why wasn't that board grilling Carly & Co. as to the reasons for whatever PC strategy they had, and why it wasn't working?
As I look at Mr. Bradley's actions, they are classically excellent. Clearly, this guy is worth whatever they pay him, as is Hurd, for finding him. But why did it take just Bradley? Why wasn't there some underling in the marketing or product management ranks at H-P who has or had sufficient talent to do this?
Let's review Mr. Bradley's program for rescuing the PC business.
First, he went to the data. He learned that Dell was weak in retail.... duh! That most consumers were now moving to buy laptops and notebooks and, consequently, wanted to see, touch and feel them, then walk out of the store with them. As I wrote here last fall, one benefit of selling notebook computers is that there isn't a whole lot to customize, so a vendor can realistically cover several price points at retail, without the time and expense of custom building the products for each order.
Next, Mr. Bradley focused on channel management issues. He improved communications and service to his downstream partners, listened to their problems and ideas, forged stronger relationships with them. Now he was in a leadership position in the channel of choice for notebooks and laptops.
Finally, he went about hunting down and fixing the various logistical stumbling blocks inside H-P that threatened the successful execution of the retail strategy. Through painstaking homework to identify bottlenecks, hold frequent meetings and establish performance metrics, he brought the logistical performance up to grade, and completed the overhaul of the unit's product and marketing strategy.
What about any of this was magic? Bradley did not apparently bring a team with him, or, if he did, the article omitted this. He simply used basic, traditional marketing strategy and tactics, common sense, and good management skills.
Are these so lacking in most American businesses, and H-P, as to require an infusion of this type of skill from another company?
Honestly, I think this speaks very poorly for the continuing state of American management education, the MBA as a useful degree, and middle-to-upper management in the average large US corporation.
H-P prior to Hurd seems to have simply been allowed to become mediocre. Even the board seemed to take a long time to show Fiorina the door and usher in a more competent CEO, Mark Hurd.
How many more US corporations underperform, consistently underperform the S&P500 total return, due simply to inept management of decent products in attractive markets?
Tuesday, January 30, 2007
More on Fundamental Marketing: Still a Rare Skill
Yesterday morning's Wall Street Journal piece in the "Theory & Practice" column of its Marketplace Section was entitled, "Seeing Through Buyers' Eyes."
As do so many of this column's pieces, it rehashes an introductory marketing concept- understanding customer needs and potential uses of your product or service.
Will we never learn? This is such fundamental marketing, and, yet, it still gets coverage in a recurring column in the nation's most widely-disseminated business daily.
The article in question recounts various large companies' efforts to focus product development on how consumers would actually use their products, and what the needs of those consumers actually are, as they pertain to the companies' offerings. GM and P&G are mentioned.
As I have written before, perhaps it is a measure of overall management mediocrity that this sort of topic commands such attention. As someone who holds two marketing degrees, I can attest to the fact that the subject of this article is neither news, nor a recent finding. This sort of thing is literally the most fundamental marketing principle in existence.
Which leads me to once again, as in my prior post, be reassured by the mediocrity and lack of attention to fundamentals of most executives. This article probably is news to a lot of WSJ readers.
That just makes it easier to select the superior companies, which have superior-performing executives, in which to invest, for consistently superior total returns.
As do so many of this column's pieces, it rehashes an introductory marketing concept- understanding customer needs and potential uses of your product or service.
Will we never learn? This is such fundamental marketing, and, yet, it still gets coverage in a recurring column in the nation's most widely-disseminated business daily.
The article in question recounts various large companies' efforts to focus product development on how consumers would actually use their products, and what the needs of those consumers actually are, as they pertain to the companies' offerings. GM and P&G are mentioned.
As I have written before, perhaps it is a measure of overall management mediocrity that this sort of topic commands such attention. As someone who holds two marketing degrees, I can attest to the fact that the subject of this article is neither news, nor a recent finding. This sort of thing is literally the most fundamental marketing principle in existence.
Which leads me to once again, as in my prior post, be reassured by the mediocrity and lack of attention to fundamentals of most executives. This article probably is news to a lot of WSJ readers.
That just makes it easier to select the superior companies, which have superior-performing executives, in which to invest, for consistently superior total returns.
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