Chapter 5

Capabilities for
Learning About
Customers and
Markets
CAPABILITIES FOR LEARNING ABOUT
CUSTOMERS AND MARKETS
 Market-driven strategy, market sensing and learning
processes
 Marketing information and knowledge resources

 Marketing intelligence and knowledge management

 Ethical issues in collecting and using information

 LEARNING CAPABILITIES AT P&G

 Competitive strength from superior customer

knowledge
 To deliver a customer experience, less formal
research, more one-to-one communication
 Consumer Village
 Online virtual reality Cave
 Watch people clean baths
 Understand what it is like to live on $50/month
 Social networking sites
MARKET SENSING AND LEARNING
PROCESSES

 Market sensing processes

 Learning organization
 Learning and competitive advantage
 Learning about markets
 Barriers to market learning processes
 MARKET SENSING AT TESCO
INTERNATIONAL
 Retailer entry to U.S. grocery market, not with existing
format
 Discovering what U.S. consumers want:
 Senior managers live with U.S. families
 Probe lifestyles of families
 Prototype store

 Developing a new retail format and targeting the “grocery

gap”
MARKET SENSING PROCESSES
 Open-minded inquiry processes
 Analyzing competitors’ actions

 Listening to front-line employees

 Searching for latent customer needs

 Scanning the peripherary of the market

 Encouraging experimentation
MARKETING INFORMATION AND
KNOWLEDGE RESOURCES

 Scanning processes
 Specific marketing research studies

 Internal and external marketing information resources

 Relationships with external marketing research providers
 Screening A New
Research Supplier

1. Client  Would you recommend this supplier?

2. Supplier  Do you have sufficient funds for this
project?
3. What parts of the project will be subcontracted, and
how do you manage subcontractors?
4. May I see your interviewer’s manual and data entry
manual?
5. How do you train and supervise interviewers?
 Screening A New
Research Supplier

6. What percentage of interviews are

validated?
7. May I see a typical questionnaire?
8. Who draws your samples?
9. What percentage of your data entry is
verified?
10. Managers - What do you think about
this supplier?
Source: Seymour Sudman and Edward Blair,
Marketing Research, A Problem-Solving Approach, Irwin/McGraw-Hill, 1998, 67.
 A FRAMEWORK FOR MARKET SENSING

Probability of the Event Occurring

High Medium Low
7
Utopia Field of
6 Dreams
Effect of the
5
Event on the Things to
Company 4 Watch
3
2 Danger Future
Risks
1

* 1=Disaster, 2=Very bad, 3=Bad, 4=Neutral, 5=Good, 6=Very good, 7=Ideal

 Learning About Markets

Objective
Inquiry
Keeping and Synergistic
Gaining Access Information
to Prior Distribution
Learning
Mutually
Informed
Interpretations
Source: George S. Day, Journal of Marketing, October 1994.
 BARRIERS TO MARKET LEARNING
 Managers reject new insights/information
 Rigid organizational structures and inflexible information
systems
 Politics favour the status quo

 Overwhelming pressure of existing business operations

 Tendency to “active inertia”

 BEST BUY’S CUSTOMER KNOWLEDGE
STRATEGY

 Strategy treats customers as individual, develops

solutions for needs and engages employees to serve
them
 New ideas from listening more closely to customers
and employees
 Knowledge shared with manufacturers and product
developers
 Core innovation competency is gathering and
synthesizing customer intelligence
 CUSTOMERS AND DESIGN AT XEROX
 “Customer-led innovation” - “dreaming with the
customer”
 Not just building prototype and getting feedback
 Focus groups as first step in commercial printer
design
 Changing designs in response to customer insights
 Investment in understanding what customers think
about the “bright ideas”
MARKETING RESEARCH PROJECT
 Defining the problem
 Understanding the limitations of the research

 Quality of the research

 Costs

 Evaluating and selecting suppliers

 Research methods
EXISTING MARKETING INFORMATION
RESOURCES

 In-company resources
 Open source resources
 Research agency resources
CREATING NEW MARKETING
INFORMATION
 Observation and ethnographic studies
 Marriott - rethink hotel experience for “road warriors”
 GE - developing plastic fibers position
 Intel - use of computers by children in China

 Research surveys
 Internet-based research
PROBLEM DEFINITION TO GUIDE
MARKETING RESEARCH STUDIES

Research Describe the topic

Project and Scope for the study and
the background.

Research Set specific goals for

Objectives the study - why is it
being undertaken?

Identify the specific

Research pieces of information
Questions required and the
questions that need
to be asked to obtain
that information
Planned When completed how
Outcomes should the results be
presented for management
use?
 IMPACT OF THE INTERNET ON MARKETING
COSTS AND AVAILABILITY

 Online Surveys
 Fast
 Inexpensive
 Limitations in population coverage
 Resistance to excessive Web communications

 Customer feedback and peer-to-peer Web communications

 Monitoring customer Web behavior
MARKETING AND MANAGEMENT
INFORMATION SYSTEMS

 Marketing information systems

 Management information systems

 Marketing decision support systems

Marketing Decision-Support
System Components

Database Display

Analysis
Capabilities Models
MARKETING INTELLIGENCE AND
KNOWLEDGE MANAGEMENT

 Marketing intelligence
 Knowledge management

 Role of the chief knowledge officer

 Leveraging customer knowledge

ETHICAL ISSUES IN COLLECTING AND
USING INFORMATION

 Invasion of customer privacy

 Information and ethics
 Information collection
 Research subjects
 Information sharing
 NEUROMARKETING
 Magnetic resonance imaging (MRI)
 Pictures response of brain to stimuli

 Probing consumer preferences is controversial

 Invasive

 Privacy issues

 Information sharing
 Insurancecompanies
 Employers
 Law enforcement