What customers actually want (now also applies to tech markets)

What customers actually want (now also applies to tech markets)

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I once spent a month analysing five-years worth of marketing surveys for a major manufacturer across the whole of Europe. At the time, I found the results bitterly disappointing. In retrospect, I should have seen them as a revelation.

What automotive braking customers wanted was the highest performance, most reliable products delivered right now for the lowest possible price.

Sounds obvious, right?

Many things in marketing which are true sound obvious, but there are also lots of things which sound obvious — particularly when you are making a product — which are not true. For example, a couple of years ago lots of tech-journalists said there was obviously no market for a tablet computer, since tablet computers had been around for ten years and nobody was buying them. Evidently wrong. For years an urban myth floated round claiming that a light bulb which cost almost no energy and lasted almost indefinitely had been invented, but the oil companies and the government were conspiring to keep it from being released in order to keep the price of oil high. The myth was obvious nonsense, but the underlying ‘obvious’ truth was that if such a device existed, everyone would buy it and energy sales would drop. When first fluorescent and then LED light bulbs came onto the market, promising dramatically lower energy costs and longer life, adoption was so painfully slow that governments (though probably without the collusion of the oil industry) are banning incandescent bulbs to force people to switch over. A part of this was over-selling by the manufacturers, who claimed that their 15W bulbs were as bright as 100W bulbs, which they clearly aren’t. Much of it, though, was market inertia.

If you want to sell a product, rather than a service, you would do well to look at the conclusions of the survey I mentioned. The data was proprietary, but the conclusions are general. The brand values that make you ‘par’ for the course are:

  • Performance
  • Availability
  • Reliability
Everyone wants to buy products that perform well enough. That was one of the main issues with replacement light-bulbs: the colour was different, and they gave out less light. Manufacturers would have done far better to give correct, perceptual figures and sold 22W fluorescent bulbs to replace 100W incandescent bulbs — still a saving of better than 4:1 — which would not have prompted customers to say “but they don’t work”.
Right back in the 1960s, British business fell foul of the Availability issue, when toy Daleks became the rage. The Dalek was a British invention. But it was Hong Kong manufacturers who were able to flood the market because British manufacturing couldn’t cope with the demand. This was back in the days when ‘Buy British’ was still a watchword for many people, and ‘Made in Hong Kong’ was code for ‘cheap and nasty’. Nonetheless, customers will buy what they can buy.
Supermarkets are all too aware that one of the biggest causes of brand churn is lack of availability on the shelves. People will keep buying what they buy, until they can’t get it. When they switch, they may not switch back.
Scarcity can — to a certain point — push up the desirability of goods, but only if there is not a realistic competitor on the horizon. The launch of the iPhone 4S and the new iPad was greeted by an immediate backlog (though, strangely, you could walk into the Apple Store the next day and pick up an iPad without any difficulty). This did Apple no harm because of two things. First, a lack of a real competitor — although Android fans will tell you that their tablets are ‘just as good’, someone who has decided to buy an iPad will generally make sure that’s what they get. Second, a confidence that the scarcity was one of delay rather than non-appearance.
Reliability is simply a question of: will the thing that I buy carry on doing the job for as long as I expect it to.
Consider the most basic shopping experience of them all: buying a can-opener in PoundLand. A can opener is a completely undifferentiated product, at least with the traditional chromed alloy design.
I spent much of the last year working with a group of people who were more or less half my age. Some aspects of that were very exciting. Going for a lunch time walk, and ending up visiting PoundLand, 99p Land, and two other variations, with the intention of buying the aforementioned can-opener was not exactly exciting. But it was very instructive.
First, everything was set in the context of price. Tesco, Rackhams, Selfridges, Debenhams and the like were all ruled out. People who would happily sign up to a monthly contract which resulted in spending more than £1,000 over eighteen months to own a Samsung Galaxy S2 or an iPhone 4 ruled out the pricier shops because they were inappropriate for the purchase of a can opener. I’m fairly certain we would have got a budget can opener from Tesco, but the theory was never put to the test.
Second, availability was crucial. In an undifferentiated market, either there was a can-opener that looked like a can-opener on the shelf, or there wasn’t. In one shop there was a much more modern kind of can-opener, the kind my mother recommended to me fifteen years ago and which I always buy, because they work better. This was rejected: we were in the market for a traditional can-opener, not some fancy modern thing. What’s interesting here is that, at Tesco, you would certainly pay more for the modern can-opener than than the traditional kind. At the particular £1 outlet store we were at, everything was £1.
This brings us straight to perceived reliability. When shopping for an undifferentiated product, caveat emptor is firmly written into the psyche. With a little inspection, you know that a traditional can opener is going to be as reliable as you expect it to be. It’s metal, it looks the right shape, when you turn it in your hand it responds as you want it to be. The fancy plastic looking kind, with oval shapes, might not work at all.
Which brings us to perceived performance. Actually, although manufacturers persistently push additional features and higher performance, most customers are not looking for something which outperforms their expectations. I’ve seen crowds shuffle away from a charismatic market tradesman who insists that the product in his hands is better than the knife they are used to. I have no doubt (because I’ve seen it) that the same salesman could sell budget kitchen knives by the hundred. But something which promises to outperform is viewed with suspicion.
To recap: set against price, customers want performance to their expectation, they want reliability in that performance, and they want availability. Given those things, they may well be interested in style, trend, prestige, environmental qualities, extra features and so on. But failing in the first three means the product will not sell widely.
Some tech companies understand this very well indeed. Everyone, of course, immediately thinks of Apple. But the same is true for Philips, which has quietly pioneered the CD, the new light bulbs, and my personal current favourite, the air-floss, which takes little time to use, is painless, and doesn’t ever make your gums bleed. The path of a Philips product is very simple: they develop it, manufacture it, ship it, and market it. This traditional approach to ‘ship first, market afterwards’ is the opposite of the ‘announce now — ship in three months time’ that we’ve got used to in the tech world, or, sometimes, ‘announce now — ship something quite different in a year’s time’, but it  has enabled Philips to keep selling everything that it makes. They don’t just sell light bulbs. Walk into a major hospital and you will see a lot of very pricey Philips equipment saving lives.
By and large, though, the steady erosion of margins in the consumer-tech world, which has troubled Sony, Dell, Nokia and other great players of the last two decades, has to do with a failure to understand the three product fundamentals.
I’ve already referenced the availability paradox. Tech companies are so desperate to be ahead of the game, to have the very latest features, that they often announce products months before their release. It’s irrelevant that they can fill the shelves of Currys and PC World when the product finally is launched. The buzz and the desire is at the time of announcement. Samsung appears to have learned with the launch of the Galaxy S3 this simple lesson from Apple. Announce your product, and allow pre-orders to start more or less the next day, with first delivery a couple of weeks later. Any longer and you haven’t created expectation, you’ve created frustration.
Performance is another area in which tech companies have long failed. Tech companies may be surprised at this assertion: after all, they have improved the speed and capacity of their machines every six months since the 1970s. What industry trades on performance more than tech does? Actually, almost any industry. Performance is against the customer’s expectations, not against some internal benchmark that the company has set to distinguish itself from its competitors. I’ve been watching adoption of personal computers since the Apple II days. Although I have heard almost nothing apart from specifications from tech-thusiasts, I get the opposite from non-tech consumers. The first thing they say when they get the shiny new PC home is more or less ‘how do I get it to do the things I want’. Enthusiasm is immediately abated when they discover either that they have to buy separate software, or that the version of Windows, Office or both on their new machine is different from the one at work, and doesn’t do things in the same way. It may be ‘better’ in a tech-gressive sort of a way, but as far as the customer is concerned, it does not perform as expected. Very few consumers are still thrilled with their new laptop a week after getting it out of the box.
The final element of customer disillusion with tech is on reliability. Again, this is an area where Apple and Philips excel (have you ever had to return a Philips product?) Sharp contrast with most people’s experience with PCs: the number of times they have to go back to PC-World, the difficulty of getting things sorted out, the promise that it was sorted when it still goes wrong when you get it home.
Part of the rise of Samsung in the high-end tech world is because they understand the importance of reliability. Samsung TVs generally don’t go wrong, Samsung DECT phones keep working no matter how often you drop them, Samsung smartphones keep doing what they were promised to do. 99% of the profits in the mobile phone industry, according to recent reports, are made either by Apple (at 78%) or Samsung (at 21%). The rest of the manufacturers account for just 1% of profit, though vastly more in terms of turnover.
In the same way, the rise of the Amazon Kindle has a lot to do with them not going wrong. If you want to replace a paper book, then you are still left with the three things: does it read as easily as a book (performance), is it as reliable as a book, and can I get the books I want? Amazon’s success over its rivals is in a large measure because it has far more books on its books, and they are instantly downloadable on the 3G Kindle for no additional charge.
In retrospect, instead of submitting a rather dejected verbal report at what I uncovered from customer surveys, I should have been shouting it from the roof tops.

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