Sunday, May 25, 2014

ABSOLUTE VALUE

Marketing people are always trying to figure out what we consumers are thinking so they can develop products and services that they can steer us to profitably.  Until recently they have been developing strategies based on the fact that buyers have had limited information and choices.  What happens when regular buyers have easy access to much more information?  Is the decision process different?

Many studies of consumer behavior have been made under controlled conditions so that the critical factors can be isolated.  But consumers don't live in a laboratory, and in the real world have easy access to more useful information than ever.

One of the biggest assumptions in marketing is that brand is king.   Branding is the mark of quality, assuring many that they can now determine value.  It can take a long time and a lot of money to develop a brand, but what happens when a consumer has easy access to information on alternatives?  Is branding just a short cut to evaluate quality or maybe just one of a few tools available.

The authors, Itamar Simonson and Emanuel Rosen develop the concept of relative and absolute information.  Relative information is more limited, sometimes consisting of a few choices in front of you or what you might have gleaned from advertisements.  Absolute information is used in the sense that there is a lot more information currently easily accessible through the inter-net.  Not every product has extensive information and not every prospect cares to investigate.

It is increasingly common for those about to buy something to check it out on the internet often with a smart phone.  Many products or services have generated dozens, even thousands of reviews.  For some it might be  overwhelming but reviews can be sorted in various ways to closely match preferences of the viewer.  As smart phones become more popular many buyers can even study reviews right in the store.

One traditional strategy is to seek out and develop early adopters of new products.  In the past most consumers have been reluctant to be among the first adopters, but it turns out that was largely because they weren't comfortable with the available information.  Nowadays they can gain information much more quickly and are more apt to accept new products that are appropriate to their preferences.

Social media is perceived as a modern marketing tool and many users see company information as just another marketing "tool" and not sufficient.  Companies can recruit honest opinions from experts or consumers who have used their product or service.  Surprisingly negative reviews can help drive sales: by creating credibility, but also one person's negative can be another's positive.   Another strategy is to develop community interest.

One personal experience illustrates the power of social media.  Recently I was with about 16 relatives for a restaurant outing where the management was unable to get our meals out in a timely manner and were evasive.  My daughter Heather first posted a panorama photo and then later commented that we had been seated at 5 and were still waiting for service well after 6.  Her friends and others are unlikely to think of that restaurant in positive terms. and I, for one am glad we were able to warn off others.

The authors take their time to make the case, but concede that traditional marketing strategies are not all useless.  They effectively establish the trend and overcome many objections.  To survive, the role of the marketer has to adjust.  The first step is to assess how vulnerable specific products and their categories are to the new information technology.  Some may not be at the moment, but you also need to keep looking for game changers.  Also some segments of the target group might not be vulnerable, but as time goes by this is also likely to change.

There are many useful insights covering a wide view of the topic. If you need more inducement to read the book (it really is a game changer itself) check out their website: where you can also find links referred to in the text http://www.absolutevaluebook.com/

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