Why They Buy: Introduction Part 2 How to describe and understand your customer | Michael Solomon | Skillshare

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Why They Buy: Introduction Part 2 How to describe and understand your customer

teacher avatar Michael Solomon, Expert on Consumer Behavior

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

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Taught by industry leaders & working professionals
Topics include illustration, design, photography, and more

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4 Lessons (38m)
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      12:03
    • 2. 0

      5:29
    • 3. 0

      6:54
    • 4. 0

      13:47
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About This Class

In this second installment, we will do a deeper dive into the important dimensions we use to describe customers.  Then we'll explore a range of techniques to understand why they make the decisions they do.  

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Meet Your Teacher

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Michael Solomon

Expert on Consumer Behavior

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Hello, I'm Michael.  Here's some background about me and what I do:

Michael “wrote the book” on understanding consumers. Literally. Hundreds of thousands of business students have learned about Marketing from his 30+ books including Consumer Behavior: Buying, Having, and Being -- the most widely used book on the subject in the world.

 Michael’s mantra: We don’t buy products because of what they do. We buy them because of what they mean. He advises global clients in leading industries such as apparel and footwear (Calvin Klein, Levi Strauss, Under Armour, Timberland), financial services and e-commerce (eBay, Progressive), CPG (Procter & Gamble, Campbell’s), retailing (H&M), sports (CrossFit, Philadelphia Eagles), manufacturing (DuPont... See full profile

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Transcripts

1. 0: I hope I've convinced you in the unlikely event that you needed convincing that it's really important to understand your customers. So let's dig a little deeper and answer the next question. How do we describe consumers? What are some of the dimensions that are useful to slice up the larger pie? Because, after all, not everyone is the same. And so we have to really think about what are the meaningful dimensions that we might use to differentiate among different customer groups. So to do that, we rely upon the tried and true philosophy that is known as market segmentation, probably a concept that you are familiar with. And the underlying logic is that again, we can't be all things to all people. So we want to pick our shot and Taylor are offering to one or more market segments whose needs we can most easily satisfy. So the easiest and most widely used way, too segment a market is in terms of demographics and demographics. Simply refer to the observable aspects of a population in other words, characteristics of your customers that are fairly easy to describe and to observe. So one of these is, of course, age and we know that people of different ages obviously are quite different from one another. That becomes more apparent every year that you get older. And so, uh, the products and services that might appeal to Millennials, for example, probably are going to be very attractive to older people. And certainly that's the case. Vice versa. So one of the interesting things about age groups, and especially younger consumers, is that people today, students and millennials people who are in their teens or younger are what we refer to as digital natives. And what that means is that they have always lived in a world where they are online, and so to them it is perfectly natural to be going online offline, online, offline all day long and, in fact, to be engaged with multiple devices at any one time. And that's obvious whenever you walk down the street and see young people walking around with their heads buried in their phones, Of course, so digital natives represent new challenges and opportunities for us, and anybody with teenagers knows what a big challenge this could be. And certainly as a college professor, I face this challenge every day, trying to get digital natives to actually listen to what I'm saying in the front of the class. So think about this statistic. For example, the average U. S teenager spends over nine hours a day looking at a screen. Think about that over nine hours a day, and that doesn't even include the amount of time they're spending on multiple screens. So, obviously, if your target market includes young people, you've got to be thinking pretty seriously about how to speak to them on a screen, because if you're not on a screen, they're just not looking at you. Another very important characteristic is gender. So obviously, males and females are different. As we know. Some are from Venus and summer from Mars, and they're quite different from one another in many ways. So a lot of our strategies have to tailor our approach to one or the other. Family structure is something that marketers think a lot about as well. So a Nen vivid jewel, who is a certain age, has a certain income but who has a family, for example, maybe with kids running around the house is obviously a very different consumer than that same person who lives alone. So we need to divide our market in terms of how many kids are living at home. Are there any kids at all? Is the family young or old, etcetera, Social class and income? Clearly, very important. We hear a lot of talk these days about income inequality, especially in the United States, and that's a problem that, of course, manifest itself in the marketing world as well. Because clearly, people in different social classes not only have different income levels, but their tastes and preferences are quite different from one another. So you actually can have to consumers who make the identical income. But because of other characteristics like level of education, occupation and so on, they really are two entirely different people. Race and ethnicity again, very important. We hear this all the time. We we hear about the growing diversity of the US population. This is something that is of profound importance to many marketers, especially those who still haven't quite figured out that the ethnic and racial composition of their customer base is quite different than it was even 10 years ago. And 10 years into the future, it's going to be different still so extremely important for us geography. Where do you live? What type of region do you live in? Do you live in an urban area? A rural area? Do you live in the southern part of the U. S or the North? And as you travel around the country, even though we are increasingly becoming a homogenized society, I think everybody would agree that we are almost in different countries as we travel from the south to the north, to the west and so on. But then we turn to psych a graphics, and this is where things get a little more interesting and a little more complicated. So psychographic refers to aspects of the population that are not immediately apparent that lie beneath the surface, psychological characteristics of consumers, their beliefs, their attitudes, their values, the things that keep them up at night, the things that they love to think about, the things that they love to do, their political orientations, their religious activities, the way they spend their leisure time again. You can have two demographically identical consumers and find that they are enormously different from each other because of the way they choose to express themselves their values and beliefs, etcetera and that. And that's why simple demographic segmentation often is a valuable first step, but usually not sufficient to truly understand what goes on inside the mind of your customer. So one psychographic dimension is personality. We all have different personality traits. One obvious example is how extroverted people are. Some people are are very outgoing. They love Teoh, really be a presence in the room, so to speak. If you're in sales, you're probably an extroverted person because introverted people don't really like making cold calls and talking to people they don't know. Traits like extra version and introversion and many others often show up in terms of our preferences for different products. Our attitudes about various beliefs and behaviours, everything from smoking to politics result in enormous distinctions in terms of our preferences for different brands, our activities. How do we spend our leisure time? Are we active or passive? Do we have hobbies that take up a lot of our time and attention and money? These are very important as well and also, of course, our behavior. And you know, as we like to say, the best predictor of future behavior is past behavior so understanding how your customers behave is extremely important for segmentation strategies and in particular, the need to identify your heavy user. I can't stress how important that is. Your heavy user, that is, you're not necessarily in terms of weight, although that may be true for fast food heavy users, I guess, but in terms of the frequency with which they purchase your product. So we talking marketing about the so called 80 20 rule, which tells us that approximately 80% of your revenues are accounted for by 20% of your customers. Now those numbers aren't set in stone, but it's fascinating to see how often they do line up fairly close to that ratio. The ratio itself doesn't matter so much as the recognition that your heavy user someone who buys your product very frequently, is likely to be quite different in a lot of ways than your more casual user. We need to keep that in mind. It's quiz time. Let's have a quick quiz just to make sure that you've been paying attention and not reading a magazine or something while you've been listening to this little video. So here's an easy question for you. According to this merchant, the women who by my apparel products tell me they want clothing that makes them feel confident in professional situations. So the need to use products to bolster low self esteem, as in this case, is an example of which a demographic variable, a psychographic variable or a behavioral variable make your choice A B or C. If you chose be psychographic variable, you just won 100 bonus points. So self confidence is an example of a psychographic variable, and probably you can see in many contexts, not just professional clothing. The belief that you are competent to carry out a certain task may actually affect the type of brands that you want to buy, and we'll talk more about that later in the course. 2. 0: we've talked a little bit about what keeps your customers up at night. Let's switch gears and now think about what keeps consumer researchers up at night. In other words, what are the major topics that we need to really understand? In order to arrive at a clearer picture of consumer behavior, weaken divide a study of consumer behavior into two very, very broad domains. The internal life of the customer? That is what goes on inside that person's head, that individuals mind and the external life of the customer, which refers to all of the forces that go on outside of us, outside of each of us as members of a culture, members of society, members of different groups that exert influence upon our buying decisions. So let's first do a very quick review of some of the topics that we need to consider. When we focus on the internal life of the customer, that is the dynamics to go on inside each of our minds. First, we have perception. Perception refers essentially to the way that we process data about the outside world and make sense of it Internally. Learning builds upon perception the process of learning which can be very complicated or very simple, depending on the context refers to how we take the raw data that we have absorbed and that our brains have processed in certain ways to structure our experience, to orient our behavior, to make sure that we respond in the same way next time based upon our prior experience, motivation and emotion. Why do we do the things that we do, how we feel about them? What is our involvement with a product or service? In other words, are we very motivated to think a lot about it, or is it something that we'd rather not think about? It all the self, That is the way we think about our individual Selves and our identities? Do we feel good about ourselves? Do we feel bad about ourselves? What are the things that we believe we can do? What are the things we would like to do but that we can't do now? And as we'll see, marketers play a very big role in convincing us, on the one hand, that perhaps were not so good at what we want to do or, on the other hand, that if we use a certain product or brand guess what will be better able to do that thing that we really want to dio gender rules. Fascinating to think about all the different expectations that society conveys to us about what it means to be a male or a female at a given point in time, in a given place, as you can imagine again, marketing plays a huge role here, and the way that we think about our sexuality, our masculinity or femininity is extremely important because it guides our purchases of many, many different brands and not just personal care products, all kinds of products. Attitudes. We talked about this when we discuss psycho graphics. Are we loyal to certain brands like this fellow is toe Walmart. You have to be pretty loyal to get some input on your back that, I guess, is gonna be permanent for the rest of your life. So how do we feel about brands? How do we feel about products and services? What and how can marketers persuade us to change our attitudes, for example, to form an attitude that is more favorable to their brand than the one that we currently hold? How do consumers make decisions. How did they assemble the information that they need to weigh various options and to decide that one option is preferable to others? As we'll see, this is a very complicated process, and many of the reasons that we use to decide on one product over another are not necessarily rational or obvious. 3. 0: then we jump to the external life of the consumer. All of those factors that operate outside of us each as an individual, but that exert a profound influence upon our buying decisions. So, as we noted earlier, many consumer decisions are actually made in groups. Now that group may be only two people say a husband and wife or it could be a very large group, but nonetheless, many of our choices are at least influenced by others, if not in made entirely on our behalf by others. So when we get into groups, a lot of the dynamics that go into group decision making really take us beyond what the individual considers many of these decisions. These group decisions our business to business decisions. So it's not just end consumers who are influenced by all of these dynamics. Many of the business decisions that you make in terms of running your business, for example, are made in concert with others. So it's important for us to understand how buying centres, for example, evaluate different pieces of information and come to a decision that may impact an entire corporation similarly family decision. So the dynamics that go on within a family, as we all know, can be very convoluted and very political, full of intrigue, as each member of the family tries to persuade the other decision makers in the family to come around, to their point of view, the sale situation. If we're interacting with a sales person, as we often do, whether by phone or in person or perhaps even online, what are the factors that influence that person's degree of influence over us? The shopping environment, Whether we're grocery shopping, clothes, shopping, car shopping, you name it. Factors in the environment, the physical design of the environment, whether it's warm or cold. Many, many different factors influence how we feel at the moment of purchase and helped determine whether or not well by at that moment and what it is that will buy word of mouth one of the most profoundly important factors, especially in today's wired world, where an individual is able to reach literally millions of other people in some circumstances to share their opinions about products or services. How did those dynamics operate, and how do we learn from others Who do we choose? Toe listen to whether we're online or offline opinion leadership. This refers to the notion that not everyone is equally influential, were more likely to go to some people to get referrals or recommendations than we are to others. So marketers need to understand how to find those people and what to tell those people in order to make it more likely that there referrals will include their brands, income and social class. Your place in society again. We talked about this with regard to demographic variables, subcultures, that is, groups within a larger culture that share some kind of identifiable interest affiliation, ethnic identity and on and on. There are many, many subcultures, some of which were born into, like race and ethnicity and others that we actively choose like, for example, the types of music that we listen to and the music communities, whether online or offline, that influence not only how we think about music, but also perhaps other things as well, like the way we dress and the people that we want to hang out with the values that consumers hold, how they feel about important cultural issues like, for example, sustainability. So green marketing is an extension of a growing concern about the environment and we know that increasingly, consumers, even more mainstream ones, are likely to prioritise products that make promises about being sustainable or environmentally friendly. That's one example of an important value. The culture at large, the various rituals and myths and traditions and beliefs that are so important to us. A wedding, of course, is a great example of a cultural ritual that is full of meaning and, of course, one in which we spend a tremendous amount of money. Popular culture in general. Many marketers don't realize the impact that they exert upon popular culture and the impact that popular culture exerts upon them their their desires, their preferences, their product designs and so on. So all of the things that are going on out there in the world music, movies, entertainment, sports events, etcetera. All of these things have really, really amazing influence on the products that are being introduced and the products that are being promoted successfully at any point in time, the the diffusion of innovations. In other words, how do new ideas spread throughout a culture, and part of that is affected by what we call the fashion system so the fashion system doesn't apply just to clothing on a Paris runway. It actually influences all kinds of ideas, whether political, intellectual or artistic, such as music and literature. 4. 0: Now we understand that it's really important to empathize with your customer, to try to get into his or her head and really understand the deep seated reasons for wanting your products or services. So the next question becomes, How can we do that? What are the techniques we can use to accomplish this objective? How can we generate what marketing researchers call consumer insights? As you probably realize, there are many methods out there. No method is necessarily better than another. They're often used in combination with other methods and every every circumstance. Every context calls for a different kind of approach. So let's take a few minutes just to review the major techniques for generating consumer insights. Generally speaking, we can divide insight methodologies into two kinds. Qualitative and quantitative. Qualitative techniques generally are deep techniques that is, they are going to probe deeply into the thoughts and experiences of a relatively small number of people. They may or may not be generalize herbal to a very large population, but the richness of the results often makes it worthwhile to use a qualitative technique. Many insights People will tell you that the best strategy is to start with qualitative techniques to do what they call exploratory research to to really get your hands around what the issues are, and then to bring in one or more quantitative techniques that usually involves some kind of numerical values thes allow us to calculate various kinds of scores, averages and so on, and thus we can generalize too much larger groups of people. So one widely used qualitative technique is Thean interview, sometimes called the Mall intercept, because shopping malls are very commonplace for these interviews to occur. And as you might guess in an interview scenario, we're going to pretty much stop people as they're walking down the street or through the mall. And perhaps they meet certain criteria that we've determined beforehand, and the interviewer is going to ask them a set of questions. They may actually show them a few items and get their responses and so on. But essentially, these man on the street interviews, if you will, are valuable for getting very quick reactions from passers by again. Not very generalize Herbal necessarily, but but very useful for getting a reality check about certain ideas. Focus groups are the single most widely used marketing research technique At this moment in time, there are literally hundreds or probably thousands of focus groups being conducted around the United States at various facilities. So a focus group, unlike a in person interview, usually consists of a assembly of about 8 to 10 to 12 people who meet some criteria. And they're going to sit in a room with a professional moderator. And they're going to discuss an issue maybe for 45 minutes, maybe for an hour, maybe even for two hours. It's very common for the client to sit in on the other side of a one way mirror to watch this exercise taking place. The reason it's called a focus group is that the moderator's job is to focus the discussion that is, to keep it focused to keep it directed on the issues that the client is concerned about. And ethnography is a variation of a technique that has long been used by anthropologists. Now, the way anthropologists do this is a bit different, because they will often actually go to so to speak, live with the natives. That is, in order to study what's going on inside of society, you need to be accepted by the people who live in that society, and they tend to act differently when they're some outsider standing there with a clipboard , running down everything they do. So in a true ethnography, the researcher might embed him or herself in a group in a village somewhere in the world. Onda literally may stay there for years. In some cases. Now, we as marketers, don't have the luxury to do that. But nonetheless, we can still do our own version of living with the natives. And what that means is that we can send researchers Teoh to, in some cases live with people in their homes or in others, just to visit this site where some kind of consumption activity is taking place. So in this example that you see here on the screen, researchers were looking at the kinds of restaurants that people use in airports, and this was done for a company that operates eating facilities in many airports around the US This was a real eye opener for these executives because they actually took on the role of passengers who were grabbing a bite at the airport facility while waiting for their flights and moving through the facility to understand the various pain points that these individuals might experience. So as a result of living that experience, they were able to identify some things they hadn't realized when they designed the facility . So going to live with the natives again, even in a very abridged way, is extremely valuable. To get some deep insights into how people are actually consuming your products or services , I highly recommend it. Some quantitative techniques, first and foremost, our surveys. No doubt you're very familiar with these. You've probably participated in many of them, or at least have been asked to participate in many of them. Maybe you've been contacted on the phone, and they always manage to call during dinner. Of course, maybe you receive something in the mail. More likely today. You've received some kind of online invitation to participate in a survey, so surveys air very valuable for getting large numbers of responses to some very basic questions. It's often difficult to probe very deeply using surveys, but in terms of quantifying the results and generalizing to large numbers of people, they're very valuable. So online surveys are rapidly replacing all kinds of other surveys, people for various reasons aren't participating in telephone surveys anymore, and certainly it's very difficult to get them going to door to door and just knocking on doors. You're not gonna have much luck. So online surveys, especially as many more people are getting access to the Internet, a T East in developed countries like ours, this is clearly the way to go. And so the technology here continues to evolve as literally, almost on a daily basis. Here is an example of somewhat early survey and actually one that that I designed, and what you can see here is that we're incorporating a lot of visuals into this survey instrument, so surveys don't have to be just bland, boring questions where you give a response from 1 to 5 or something like that. In this particular case, we're asking people for their preferences in terms of how they would furnish a living room . All kinds of product categories you see represented down here, everything from music and artwork, the tables, chairs and they're going through a process where their first doing what what resembles a qualitative technique, actually, where they're selecting a picture of some ideal lifestyle that they that they really desire and then they're trying to imagine what that person's living room would look like. So there's a longer story behind this study, as you can imagine, but I wanted to share it with you just to give you a sense of the kind of visual possibilities that that are available when you do online surveys, which can be done much less expensively and much, much quicker than old fashioned surveys. And, of course, with the explosion in social media. This has really revolutionized the entire world of consumer insights, and researchers are finding all kinds of new, fascinating ways to to mind the vast the vast amount of responses that consumers are making about your products every single day. So people on their own, without being asked by researchers are are spontaneously writing things about any product you can imagine any product at all, and I've yet to find a product that is not well represented in in social media e even relatively mundane or boring products. It's amazing how much time people will spend posting about their experiences or feelings or love or hate, or what have you for these products. So a Net Na graffiti is an example of a technique where researchers are trying to dig down into thousands or in some cases, even millions of data points and trying to make sense of what people are doing online. So what you see here is an example of a technique that is sometimes called Web scraping. Because essentially what you're doing is using sophisticated software that allows you to go out into various social media platforms like Pinterest and Twitter and Facebook, etcetera, and to identify what people are saying about various products and, perhaps more importantly, what they're saying about related products. So every time you you have a mention of a particular product, you want to see what else people are saying. In this case, this was a study that was done for Lindt chocolates, and you can see that there's lots of conversation about various things to do with chocolate . So you can. You can mind this stuff all day long and still have lots of insights left to go. It's just amazing how many things you can learn from what people are spontaneously posting on websites. Other techniques continue to evolve as well, so there's a lot of buzz these days around, so called neuro marketing, which will talk about a bit later in the course. And Euro Marketing essentially is adapting techniques that medical researchers used to monitor activity in the brain. To try to get a handle on what goes on in our brains when we talk about various products or were exposed to images of different brands and again that there it is still early days in terms of the development of this field. But researchers who do neuro marketing will tell you that it is possible to elicit very different kinds of responses in the brain. And often these are quite different from what people are verbally telling you about what they think about products. So again, it reminds us that there's a lot going on beneath the surface. There's a lot of feelings that people have about brands that they can't necessarily articulate, or at least they're not willing to articulate. So the take away from this very, very quick review of marketing research methodologies and it's about the quickest review I think that's ever been done in history. But I wanted to impress upon you that first of all, there are many ways to know your customer it's important to tailor the techniques you used to the situation rather than using the same technique in every situation. And that's a mistake that some insights researchers like to do. They've learned some technique, and now they're going to go out and apply it to everything that they do. So I would urge you, as you're thinking about how do I collect these insights? Don't be a hammer in search of a nail. In other words, don't just specialize in one technique and assume that that's all you need to answer every single insights. Question. You'll be robbing yourself of the opportunity to learn so much more about customers by using more than one technique to triangulate and to get a much richer picture.