STRATEGIC TOOLS FOR MARKETERS tool ssummary

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PrioritizingNeeds181.ppt
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Creating Categories by Uncovering
and Prioritizing Latent Customer Needs Through Customer Input

Overview of Today’s Class

  • Understanding the outcome-based approach to generating customer needs

  • Where is this typically used?

  • Uncovering customer needs

  • Prioritizing customer needs

SALES

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How do New Categories Form?

  • When new categories form:
  • Customers have no familiarity with the category – it doesn’t exist!!!!
  • Sometimes technology-push prevails
  • Technology in search of a market
  • Customers cannot articulate needs very well
  • Latent needs prevail

  • So new categories generally need to uncover latent needs
  • If sufficient latent needs can be uncovered and a technology found to match those needs….VOILA! A category is born!!

Examples of Recent New Categories

  • Personal Digital Assistants – Palm Pilot
  • Hard-drive based portable music players - iPod
  • TiVo
  • Wireless email devices – Blackberry
  • Self-regulated insulin pumps – boon for diabetics
  • Digital movies
  • Nutritional water
  • Smoothies
  • Etc. etc.

Conventional Tools Fail!

  • Mapping, conjoint, and value curve would not have helped with any of the previous categories

  • But, a company cannot just depend on serendipity to develop new categories

  • How then do we uncover latent needs???

Latent Needs

  • Latent: having potential, not visible, hidden

  • Point being – customers cannot tell you about latent needs
  • They have to be discovered

  • So how do you discover latent needs?

Procedure for Uncovering, Classifying, and Prioritizing Latent Needs

Uncover Latent needs – Ethnographic Observation of

“jobs-to-be-done” and problems encountered

Listing and classifying “jobs-to-be-done” and problems

Prioritizing Customer Needs using the

Opportunity Algorithm

Step 1: Uncovering Latent Needs –
Ethnographic Observation

  • Observation of customers in their “natural” habitat
  • Coupled with selected conversations

  • Drawn from anthropology
  • Observing people/tribes in their natural habitat

  • Use multi-functional team (different interpretations)

Step 1: Uncovering Latent Needs –
Ethnographic Observation

  • Filters for ethnographic observation?
  • Current customer filters
  • New product/technology filters

Step 1: Uncovering Latent Needs –
What to Use for Ethnographic Observation

  • Camera – digital/video
  • Mini tape recorder – if you get to talk to people
  • Sketch pad and note pad
  • A book/magazine – disguise
  • Permission letters – if not in a public place
  • Appropriate clothing to blend in

Step 1: Uncovering Latent Needs –
What are we looking for?

  • Looking for what?
  • Problems that customers encounter while going about their regular lives (KEY = NATURAL CUSTOMER BEHAVIOR)
  • Hassles, stress-points, frustrations, struggles

AND

  • What products/services do they “hire” to get their “jobs” done?
  • How do they achieve “outcomes”

Natural Consumer Behavior –
Problems Faced & Products Hired

  • Not product focused

  • Not category focused

  • Driven by pull and push of life’s natural rhythms

  • Problems are encountered in the course of everyday living

Natural Consumer Behavior –
Problems Faced & Products Hired

  • Customer = Mercenary
  • Near-zero loyalty
  • Obsessed with convenience and “quick” satisfaction
  • Meaning = Not much time to obsess over products and services (DAMN!!)

  • When faced with a problem in everyday living..
  • “hire” products and services
  • “satisfice” rather than “optimize”

  • Problem with satisficing is that the solution is not ideal
  • Swiss Army knife

Problems Faced & Products Hired -Example

  • Makers of Blackberry (Research in Motion)
  • Observed business travelers in airports
  • Problems faced:
  • Kill time
  • Catch up on voice mail
  • Leave instructions
  • Find a comfortable work space
  • Read documents
  • Catch up on news
  • Etc.

  • Products hired?

Problems Faced & Products Hired -Example

  • Sony Digital cameras
  • Observed families during and after the vacation
  • Problems faced:
  • Run out of film
  • How do I know if the picture is good?
  • How can I get into the picture?
  • Why do I have to wait for the pictures?
  • How do I share pictures?
  • How do I file pictures?
  • Do I really file pictures?
  • How often do I pull out the pictures to reminisce?
  • Products hired?

After Ethnographic Observation – What?

  • Need to reflect and analyze what we have observed

  • Need to list out all the problems and jobs-to-be-done that were observed using the appropriate filters

  • Need to classify all the problems

Step 2: Listing and Classifying Customer Problems and Jobs-to-be-Done

  • Make a large (and long) list of all the problems and “jobs-to-be-done” that were observed via ethnography
  • In some cases this can be as long as 500 need statements
  • Compile across multiple sources
  • Create one master list

  • Then?

Step 2: Listing and Classifying Customer Problems and Jobs-to-be-Done

  • Classify the individual problems and jobs-to-be-done into broader categories of needs
  • Say 10 to 30 broad need statements
  • Each broad need can have 5 to 50 smaller problems and jobs-to-be-done subsumed under it

Step 2: Listing and Classifying Customer Problems and Jobs-to-be-Done - Example

  • Need 1: Hassle-free set-up and operation of home entertainment system

Would like to watch my VCR/movie through my TV with easy set-up

Easy menu navigation

Best possible picture

Easy hook-up

Voice activated control

Speech recognition and talks back

  • Need 2: Be able to play “anything” in my home entertainment system

CD-ROM playability

Play games on my TV

Connects to all my home appliances

  • Need 3: Never miss my favorite content

Tapeless recording, recordability

Games, movies on-demand

Reminds me when my favorite program is on

Watch my shows when I want to

Step 2: Listing and Classifying Customer Problems and Jobs-to-be-Done - Example

  • Need 4: Simplified, centralized, “anywhere” control of household functionality/operations

Answer phone through TV; monitor phone call number

Check on kids by watching TV

Control house functions through TV; heat, air, intercom, security, lighting

Remote access

Home diagnostic, self diagnostic

Never have to leave the couch

Home security

  • Need 5: Instant information and communication

Surf web through TV

Send email

Instant information on stocks, sports, stats, time, temperature

Instant content information, e.g. Starsight, digital, DVD, silver disc, broadcast, satellite

Instant ordering; pizza, beer, Chinese

Family information

Bookmark product information

Product ordering

Step 2: Listing and Classifying Customer Problems and Jobs-to-be-Done - Example

  • Need 6: Experience of being at the movies

Want the experience of being at the movies – home-theater

3-D TV

  • Need 7: Perfectly deliver on my décor preferences

Must match décor

Not obtrusive

“No-TV” look – camouflaged TV

Screen-saver, decorative image

Hang on the wall

  • Need 8: Always perfectly clean home entertainment system

Dust free

Easy to clean remote

  • Need 9: Never lose my remote

Easy to find remote

  • Need 10: Portability

Easy to move and transport

Step 2: Listing and Classifying Customer Problems and Jobs-to-be-Done - Example

  • Need 11: Personal and household “on-line” manager

Inventory control; groceries, gas, bills, appointments

Banking, personal finance manager, taxes, credit records

Send flowers to spouse

Daily planner

Messaging

  • Need 12: Never fear obsolescence

Upgradeability

  • Need 13: Energy efficient and environmentally responsible home entertainment System

Solar powered TV

Rechargeable remote

  • Need 14: Customizable to my individual “challenge”

TVs for the visually impaired

Step 3: Prioritizing Customer Needs

  • Now back to more conventional survey research

  • Survey targeted customers – large sample size (like mapping and conjoint analysis)
  • List out the broad needs - use summary statements
  • Have them rate each need for importance – 1 to 9 scale
  • Rate each need for how well it is satisfied – 1 to 9 scale

  • Calculate opportunity associated with each need
  • Opportunity = [Importance + (Importance – Satisfaction)]

Step 3:Prioritizing Customer Needs-Example

Step 3: Prioritizing Customer Needs
Rank order the needs based on opportunity scores

Creating the New Category

  • Where to next?
  • Create a product or service that can solve for the most number of opportunities in the order of the opportunity scores
  • The created product or service is the new category

Now You Do It

  • Observe “yourselves” in your natural habitat

  • Filter? – You as the segment, observing problems encountered before, during, and after a DePaul course

  • List, classify, and prioritize your latent needs