“No one wants a 1/4″ drill bit. They want a 1/4″ hole.” – Harvard Business School – Theodore Levitt.
Professor Levitt’s very profound statement is a whole semester’s worth of wisdom for marketing students. Too many marketers…….and I’ve been part of this team too many times to count as well……dive right in with solutions without really understanding the problem. Of course, most of us in business have one big problem, that is grow sales. But as marketers, we need to realize that our problem isn’t our customer’s problem. They have their own needs and our job as marketers is to understand their needs even better than they do.
By saying that people don’t want the drill bit, they want the hole, Professor Levitt is trying to get us to reach a little further into the customer’s need states before we push forward trying to provide them solutions. Perhaps there are other ways, better ways, to deliver a 1/4″ hole than the drill bit. Perhaps when the customer is asking for a 1/4″ drill bit, they are using it to do something different than make a hole……I don’t know what that might be…..but it is possible.
Professor Levitt didn’t quite go far enough though. Why does the customer want a 1/4″ hole? I argue that they don’t. The customer really wants whatever project the 1/4″ is going to help build. Maybe hanging a painting or laying a wood floor. When you understand that, it can help you be sure that your tool and marketing are tuned into what the customer needs. For example, and admittedly, I am not a woodworker, someone hanging pictures may want a laser leveler built right into the drill. Maybe laying floor would be easier if there was a stop built into the drill bit so the carpenter doesn’t drill too deeply. Yes, feel free to correct my poor knowledge of wood working in the comment section.
But are we done yet? I say no. One key to understanding the customer is to realize that people don’t make purely intellectual decisions. We make decisions based on emotional triggers. Intellect can be used to inform our emotions and judgements but it is not the final deciding factor. Therefore, why does the woodworker want the project finished? A person who simply has a passion for working with wood may have different needs than a person who is earning a living that requires 1/4″ holes.
The deeper you drill, ok pun intended, into the customer’s needs, the better you can serve them. The better you can serve the customer, the easier it is to grow your sales.
The tasks of marketing, whether we are talking about traditional marketing, product marketing or new (digital) marketing, really aren’t that hard. At least, they shouldn’t be. Marketing can be broken down into a handful of tasks; find out what your customers want, work internally to ensure you can produce it at a profit, get it placed in distribution and then promote (communicate) it out. Not that difficult. Right?
My Foundations of Marketing class starts tomorrow night. As it stands, I have 36 students and only 9 of them are marketing majors. Believe me, the other students aren’t there because of my reputation as an amazing teacher (despite what the students trying to get into my class off the wait list tell me). The other 27 students are required to be there. The majority of them are finance and accounting majors. I remember many many years ago being a finance major being required to take a marketing class. Yuck, naïve me thought. Marketing is so easy. Hardly worth my time to pay attention. My goal tonight it to convince them that markets isn’t so easy after all. I have three reasons why……if you have more, please share them in the comments section.
1.) The putz on the other side of the board. Probably the most powerful reason that marketing is difficult isn’t because the tasks are so hard, it is because you are actually competing with dozens if not millions of competitors…..and that is only direct competitors. I just googled “how many soda producers are there” and according to the internet (so you know it must be correct) there are ten soda producers in North America. Those are the national producers anyway. So if you are Coke, you have nine other national producers you have do compete against.
But that’s not the end of the competition. Coke also has to compete with hundreds of local soda manufacturers. For example, my original list didn’t show Moxie Soda from Lowell Massachusetts. If I’m in Massachusetts……and close to Lowell, I might chose to satisfy my thirst with the local Moxie over Coke.
But WAIT! That’s not the end of the competition. As a thirst consumer, maybe I’ll quench my thirst with tea, coffee or water. Any of those would serve my thirsty needs as well as Coke and potentially be healthier. As Coke, I have to take into consideration, not just those products I’m competing against but all of their marketers as well. Especially being number one, everyone is out to replace Coke as the drink of choice, at least, for their highly segmented target market.
But WAIT! That’s not the end of the competition……A thirsty consumer might just decide to postpone drinking. This could be because of specific rules, no drinking in class. It could also be because of price, access to funds, inconvenience or a number of other reasons. The final competitor that Coke must deal with is the consumer themselves.
In class, I’m going to try to press this fact by showing a 90 second video that does a really decent job teaching the game of chess. That’s pretty easy. If you can learn it in 90 seconds, chess can’t be that hard. Then I’m going to introduce the class to Tania Sachdev. Tania is an amazing chess player. She grew up in India. I believe her mom taught her chess at age six. She was winning championship before she was twelve and she would wipe the floor with each and every person in my classroom (myself included) in chess……probably simultaneously.
Chess is easy…..unless you are competing against someone like Tania. Similarly, the functions of marketing aren’t that hard. You just have to do them better than your competition.
2.) Consumers lie! Consumers will occasionally lie to market researches. Consumers will frequently lie to themselves. Ok, that was a little dramatic but still true. You can ask customers what they want or why they did something. They will tell you but what they say may not be true. Mainly it isn’t an intentional lie.
Some of the issues is that the consumer really doesn’t care. Am I really going to let the restaurant know when they did a fairly reasonable job with my meal but it really could have used a little more sauce? Not likely. They were competent. I’m not motivated to tell them their little failures (a.k.a. opportunities for improvement). I just might go eat somewhere else, the place that gives a lot of sauce, the next time.
Another issue with consumers is that the ones who are willing to talk to you might not be representative of the feelings all of your customers. You may be working to change your entire system because a small percentage weren’t happy. Worst yet, what those customers are complaining about might be what the majority of your customers love.
Consumers lie to themselves all the time as well. Think of the middle aged guy who suddenly buys a sportscar. Ask him. He’ll tell you all about horsepower, torque (whatever that is) and the zero to sixty in a tenth of a second. Do you really think any of those features are why he bought the hard? It is more likely that his forehead and belt are both growing. The love of his life has heard all of his funniest anecdotes. He needs to feel young and powerful and wanted again. I’m waiting for a sportscar to give a truly honest commercial. “We aren’t the little but we can get you to a pharmacy two towns over faster than a Corolla!”
Sometimes consumers will try to solve a need…….that just aren’t that good at it. A friend who was an engineer for high risk respiratory product. You know when they wear the full body suits with a air supply hose dragging behind them in scary movies? That. One customer complained that when they had to crawl around small spaces, they could kneel on the hose………yeah, no air. So they asked him to design a hose with a metal spring in it, so it couldn’t be crushed. Can you imagine dragging around a fifteen foot spring connected to your face? Sounds awful. Their problem was the air supply getting cut off. My friend designed a solution, which I won’t get into, that was lighter and more flexible than the spring and, more importantly, didn’t kill the worker.
There are all kinds of biases, both from the consumer and from the research, which I’ll get into in another post. The point here is that you, the marketer, has to interpret the consumer better than the competitors’ marketers.
3.) Conflicting priorities – The marketer frequently has limitations put on them by Finance, Accounting, Sourcing, Demand Planning, Legal and Executive Team. I know a lot of marketers call these departments the “sales prevention team,” which I don’t think is fair at all. They have a role to play in making the company profitable as well. The marketer does well to understand their internal team’s goals, so that you can work with them, instead of trying to fight against them.
Keep in mind the wisdom a former boss told me, “People do what they are paid to do.” I don’t know how many times I’ve heard a marketer or even an executive say, “I’m just going to tell supply chain to increase inventory.” If supply chain’s bonuses are based on keeping inventory low, you can tell them all you want. They may even say, “sure.” They may even add inventory on that one product you are asking about…..and lower inventory on all the other products in their portfolio.
Sales is going to push the marketer to have as much inventory as possible. Keep in mind that your cost of inventory is going to be somewhere in the 10 to 20 percent range (cost of money, insurance, warehousing, etc). So taking your inventory up from a two month supply to a three month of supply is going to lower your margin by 2%……..are you going to eat that or are you going to increase your price. When sales asked me to increase inventory levels and I said, “sure but I’ll need to raise the retail price by $10 to pay for it,” they quickly backed off of their request.
Let’s do one more department. Demand Planning is given bonuses for giving accurate forecasts. Sales think an accurate forecast is a forecast that is less than what they actually sold. I’ve had a great person and salesman tell me that he was a fantastic forecaster because out of the last 36 forecasts, his actuals only came in below his forecasts once……..In marketing, we call that a sandbagger. How much excess and obsolete inventory would have been created if the company produced to his forecasts? The Demand Planner aims to be over forecast 50% of the time and under forecast 50% of the time……you never hit the forecast. That just doesn’t happen.
A marketer must not only understand the consumer but must be able to work within the constraints of their company and their conflicting goals.