How Google and P&G Approach New Customers, New Markets

 Peter Sims
MARCH 02, 2009

When I worked with entrepreneurs and leaders in Europe, I often heard complaints like:
“American companies have a habit of coming into Europe full of ambition, searching for big
markets, but without fully understanding what it takes to sell a product, build a brand, or forge
partnerships in each country.”

It seems obvious: our assumptions become less valuable the farther our experiences are from
our decisions and customers. Yet, these cultural traps always seem to cause frustration and
agony and, regularly, steep losses or strategy restarts. Local hiring is just the beginning - we
have to make sure we are solving the right problems for customers.

Leading companies such as Procter & Gamble and Google have realized that the more clearly
you understand your customer or partner, and their context(s), the more likely you will be able
to offer the right solutions, build the right business models and win through global expansion –
in India, Mexico, China, Russia, or beyond.

Three approaches – bringing together strategy concepts and the emerging field of design
thinking(being advanced notably at the Hasso Plattner Institute of Design at Stanford) – can
help all firms grappling with these issues.

The three approaches:

1. Proactively understand customer needs and cultural norms unique to each country.

2. Use those insights to run low-fidelity, strategic experiments.

3. Use the resulting assumptions to drive the development of local business models, including
product development, marketing and branding, sales and distribution, and manufacturing.

Google wrestles with these challenges every day around the world. Imagine searching for
information on Google in China, where the character set is extensive. You can’t just drop the
United States product in – people wouldn’t use it. So, Google uses ethnographic methods to
understand users’ needs, including shooting video tape of people searching. It learned how
hard it was for the Chinese to get satisfactory search results, so they started experimenting
with potential solutions. They built “Google Suggest” that would start to pop up search
suggestions so that users would not have to finish typing queries, or by asking users, “Did You
Mean?” They found that users really valued these tools and added them to their offerings.
These innovations were the direct result of Google’s consumer observation, understanding, and
insight gathering methods, as well as their capability to run experiments.

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Meanwhile, Proctor & Gamble’s target market in Latin America is often low-income people, the
middle 60% of wage earners – a far cry from its marketing employees, not to mention P&G
execs. Perhaps not surprisingly, P&G experienced a number of product failures there during the
1980s. In one case, featured in the Game Changer by CEO A.G. Lafley and Ram Charan, the
company launched a detergent line in Mexico that marketers assumed would be a big hit
because it saved customers money and valuable storage space. The product flopped. Why?
Many of its customers there did manual labor and were very sensitive to perspiration odors as
they bussed home from work. What gave them confidence that their clothes were getting clean
was seeing their detergent foam – something the new product lacked.

Under Lafley, P&G launched a program to have its managers actually live with representative
customers called “Living It.” Dubbed “immersion research,” P&G managers and even senior
leaders spend time in low-income homes around the world in order to understand what
matters to their customers in life, as well as their desires, aspirations, and needs. P&G has a
bevy of statistics to suggest that improved insights and assumptions have led to more effective
innovations – including laundry detergent with more noticeable suds.

These approaches are straightforward and make common sense, but they often run counter to
established management norms. Importantly, consumer or partner insight gathering is very
different from market research. The weaknesses of market research are by now common
wisdom. Yet, understanding the sometimes-hidden needs of the market through customer
observation through live-in immersion or video observation is just coming to the fore–and not a
moment too soon.

Have you seen other examples of companies taking this anthropological approach? Where has
it worked and where has it fallen short?

Source: https://hbr.org/2009/03/how-google-and-pg-approach-new