Tag Archives: Purchase Decisions

Discovering Customer Needs through Research

INTRODUCTION:

Barclays is a global bank. It provides a range of financial services in 56 countries. Barclays provides retail banking services to customers, whether they are individuals or businesses. It offers a broad range of financial products and services including current accounts, savings accounts and general insurance.

Within the UK, Barclays communications are designed to help customers “Take One Small Step” to managing their money better every day. Different kinds of customers represent distinct markets for Barclays. The market for personal banking services is very competitive. Personal customers have a choice of banks on the high street or on the web to assist them in managing their finances. For example, they can have their salaries paid into accounts, pay bills through the bank or save money to gain interest on their savings. There is also a competitive market for business banking services. Businesses require different services such as credit management, payments for suppliers or loans and overdrafts to help them to survive and grow. For example, an expanding business may need a mortgage to buy a new building.

Market segments

Each market is capable of being further sub-divided into segments. A market segment is a part of a whole customer group that shares particular characteristics. These include such factors as age, life stages, geography or occupation. Within the market of personal banking, the segments could include categories such as students, graduates, “new to work”, mature, and families. By identifying different market segments, organisations can ensure they are providing products or services to meet the needs of these customers.

In addition to this, appropriate promotional techniques can be used to reach the people in the separate segments. Through segmentation, Barclays has been able to devise appropriate banking offers for customers in different segments. This approach is helping Barclays to improve its market share of the student accounts market.  Barclays believes students constitute a very important market segment for the business. Students may be choosing a bank for the first time and Barclays hopes to retain these customers. By focusing on the specific needs of this segment, Barclays hopes to attract more student customers and keep them in the long term. Using market research has enabled Barclays to identify the right product offer that will meet their needs.

The case study shows how market research enabled Barclays to improve its student account offer.

PURPOSE OF MARKET RESEARCH

The purpose of market research is to gather data on customers and potential customers. The collected data aids business decision making. This therefore reduces the risks involved in making these decisions. In order to create a product proposition that would attract new student accounts, Barclays needed to understand fully the needs of this target market. Before engaging on external market research, Barclays began by asking itself a series of key questions. It did this to ensure the business was fully aware of all the relevant issues and did not make incorrect assumptions.

In asking itself these key questions at the start and reviewing internal customer data, Barclays was able to clarify its rationale for acquiring students. Firstly, students provide an opportunity for developing a long-term relationship. As the student market segment increases each year in September/October as the university term starts, Barclays has an annual opportunity to target new student customers who need an account and who might not yet have chosen a bank.

Secondly, the use of this data highlighted that in the years after opening their accounts, Barclays was able to establish a valuable long term relationship with students. This meant that students could now be seen as an extremely important market segment, and attracting new student customers became a significant opportunity.

This internal understanding was vital. With this background, Barclays designed a programme of market research. The purpose of this was to establish what students really needed from a bank. In this way it could offer appropriate products and services which would add value to students.

TYPES OF MARKET RESEARCH

Barclays began a process that involved both primary and secondary research.

Primary research

Primary research involves finding out new information. It finds the answers to specific questions for a particular purpose. These enquiries may take the form of direct questioning. For example, it may include face-to-face surveys, postal or online questionnaires, telephone interviews or focus groups. This type of direct contact with people is valuable as it gives specific feedback to the questions asked. However, it is important that the questions are clear and that the researcher is trained. This will ensure that the results are not influenced. Although primary research can be expensive and time-consuming, the up-to-date and relevant data collected can give organisations a competitive advantage. This is because their rivals will not have had access to it.

Barclays” primary research process began internally with two key questions:

  • Who should our key customers be?
  • What are their needs?

The insights from these questions provided a factual basis to work from.

Qualitative and quantitative research

After this an external agency was employed to carry out an opinion panel. This took the form of an online questionnaire. The results of this delivered data about the market itself, as well as Barclays” market share among this target audience.

Quantitative research presents information in a numeric way, such as graphs, tables or charts that can be used to analyse the information.

For example, Barclays found from the questionnaire that 81% of students surveyed held a savings account and 32% an investment savings account (ISA).  The opinion panel also provided qualitative feedback on what was of interest to students and what they wanted from an account.

Qualitative research provides information on consumer perceptions, such as:

  • how they feel about products and services
  • what they like or do not like
  • what they would want from a new product.

The panel produced valuable insights which Barclays used to help re-evaluate its existing student account. It then used the information to develop new features and benefits to meet the established needs.

Testing

The enhanced student account proposition was then tested directly with 100 existing and new Barclays Student Additions account holders. This was carried out through bank branches and an online questionnaire. The sample group provided more qualitative feedback about what motivated students to choose a particular bank. Although small, the sample allowed Barclays to get a feeling for how students would respond to the proposition. For Barclays, it was important to know what motivated a student to choose a bank. Using existing students meant the bank was able to assess if the new offer would meet their needs. The expectation was that new and future students would also find it attractive.

Secondary research

Secondary research focuses on existing information. It uses published data that previous research has already discovered. This covers a wide range of materials, such as:

  • market research reports
  • sales figures
  • competitor marketing literature
  • government publications, e.g. national statistics.

Secondary research may be quicker to carry out but may give less specific outcomes for the topic in question. This part of Barclays research revealed that student accounts in 2009 amounted to 0.4 million out of a total market of 5.4 million new accounts.

RESEARCH FINDINGS

Numeric data gives a factual basis for planning – a snapshot of a situation. On the other hand, qualitative information can find out the things that really matter to consumers. For example, 80 out of 100 consumers questioned might say they preferred one brand of coffee over another. However, more valuable information comes from understanding what it is they prefer. Is it the smell, the taste, the packaging or the price?

To meet student needs for a valuable, helpful financial service, Barclays needed to understand what students really wanted.

By using student focus panels and staff working in branches with a high proportion of student customers, Barclays was able to discover students” concerns, priorities and strength of feeling.

Research outcomes

The outcomes of the opinion panel and the sample of student customers showed that:

  • students relied heavily on different forms of credit. These included an easily manageable bank overdraft to finance their time at university
  • students wanted and often needed to own high-tech gadgets and electrical goods, such as laptops
  • students wanted to have separate accounts to manage their student borrowing and spending
  • any incentives offered would not alone motivate students to choose that product. They were expected as part of any deal.

This insight was a real help to Barclays when considering the most attractive proposition for students. Its objectives were to attract new student accounts. It also wanted to retain students as customers for life in a profitable relationship that met their financial needs.

Barclays could now start to put together an offer that would embrace the main concerns of the target market. These concerns were financial security, credit availability, flexible banking and the right sort of incentives.

IMPLEMENTATION AND EVALUATION

In 2009, Barclays set up a working group to oversee the setting up of the new student proposition. It used the insight from the research to establish the key features and benefits of the student account. These features are valid for the life of students” studies:

  • no monthly fee to keep costs down for students
  • an interest-free overdraft facility of up to £2,000 from starting the account. Previously this started at £500 in the first year and increased through the years of study. This extension helps students manage their finances.
  • mobile banking and a network of local branches for ease of access to accounts.

Incentives

Of several incentives tested with students, Barclays found that an incentive based on a mobile or telecoms offer would have most appeal. This idea was tested further with students on university campus. The students expressed a clear preference for an incentive offering mobile broadband:

“The broadband offer looks good…I”d definitely go in to find out more.” “It”s good if the broadband offer is for the life of the account´you may be in halls for the first year but not after that.”

To establish this incentive, Barclays researched broadband providers. It then entered into partnership with Orange – the UK”s number 1 broadband provider.

Orange”s strengths were a good business fit for Barclays and ensured that the offer had credibility and perceived value. Students who signed up for a Barclays student account were able to obtain a 25% discount on the monthly cost of whichever Orange mobile broadband scheme they chose.

Communicating the proposition

Having developed a student banking proposition that Barclays felt confident would appeal, it began to communicate the message and promote the new student offer. An innovative marketing plan was launched which involved:

  • a word-of-mouth campaign through “100 voices” which encouraged students to share their experiences of managing money whilst at college or university
  • promotional literature available in branches nationwide. This proved useful information for Barclays colleagues as well as for students and their parents to take away
  • online advertising through barclays.co.uk
  • direct mail to prospective students through the summer before going to university.
CONCLUSION

The Barclays student account proposition shows how it is crucial for a business to listen to its market. To do this effectively means targeting specific market segments to discover their needs.

Barclays” new student account proposition was an “insight-led” approach.

Using carefully constructed and phased market research, the bank was able to gain an overall insight into the thinking of students. In the early stages of the research, it was discovered that the student segment provided an opportunity to develop a long-term relationship. It was found that students were not necessarily “here today, gone tomorrow”. If the bank made a valuable and relevant offer, students were likely to remain lifelong customers.

Barclays” initial target was to increase the overall number of student accounts by 25%. This target was exceeded with an increase of 34%. As a result, Barclays increased its market share of the student market, moving from third to second among the top four market leaders.

The process of meeting customer needs is an ongoing one. Barclays has a continuing plan for re-evaluating its student proposition to ensure it remains relevant to the target audience.

Source: thetimes100.co.uk

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Consumer Psychology: Understand your Customer

“…the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.” ~ Peter Drucker

Introduction
Markets have influenced our acquiring/buying habits from the earliest days of our evolution, perhaps as early as bartering systems in pre-historic times. One tribe had an excess catch from hunting; another tribe had an excess of hides from last season’s catch and the market is born. The exchange of goods is motivated by need and its reptilian drive, “survival of the fittest”.

Fast forward to today’s modern marketing. As the science of marketing has developed, several concepts have gained wide-spread application. The primary focus today is that fully understanding and tapping into the consumer’s motivation, which can be deeply subconscious, results in brand loyalty in purchasing products and services. An example is Clotaire Rapaille’s approach that to understand the “collective unconscious” and thereby articulate the “code” opens the way to desired marketing success.

The foundation of marketing science is based on market research strategy, to know the customer and to fill needs that need filling. Understanding the customer can produce high-quality products, such as Apple has done. On the other hand, some marketing approaches have turned into manipulative endeavors to sculpt the customer to believe they need what’s being sold. This form of marketing is distorted and disturbing. This BLOG post reviews the history and development of marketing as a science, then explores the power of modern customer-centric marketing updated for the digital age, and then looks at the downside of manipulative marketing.

Background – Development of Marketing as a Science
Early development of marketing as a science included Louis Cheskin and Neil Borden. Cheskin contributed the “customer-centric” approach, rather than the top down approach that had been previously popular. The earlier approach to marketing was top-down, where a company would create a new product with the assumption that it would sell. A customer-centric approach is based on consumer feedback, often through customer focus groups and observation. This approach defines the needs of the customer thereby providing products and services that meet those needs. For example, through customer research, Cheskin helped engineer the success of margarine by changing it’s color from white to yellow, and advertising it’s similarity to butter (Cheskin, 1959).

Borden, in his seminal article, “The Concept of the Marketing Mix,” named the 4Ps: Product, Price, Place and Promotion (Borden, 1964). The evolution of technology has brought with it increasing speed as well as additional Ps: People and Performance. We have moved from a top down approach, where the consumer was thought to be one amongst many and easily influenced, to a customer centric approach, where individuality, instinctual desires and inner drives have become the focus of marketers.

Purpose of Marketing
I believe there is a true purpose to the original intent of marketing. Discovering human needs and providing the products or services that support those needs is the most effective formula for exchange in the marketplace.

In Making Meaning: How Successful Businesses Deliver Meaningful Customer Experiences, the authors state, “We envision a time when customers increasingly make their purchase decisions based on deeply valued meanings that companies evoke for them through their products and services – in other words, meaningful consumption – as opposed to simply responding based on features, price, brand identity, and emotional pitches” (Diller, Shedroff, & Rhea, 2008, p. 1).

For example, Apple captured the MP3 market with the iPod and iTunes. The iPod became an emotionally constructed appendage that represents much more than just a music device. It has become a cultural icon that people purchase not only for usefulness but also for a sense of belonging, an image of appearing “cool,” and much like a stylistic piece of jewelry, it comes in hip colors and unique styles.

The Evolution of Marketing Research
Concept Engineering, a market research approach developed by Gary Burchill at MIT, uses an ethnological immersion process called “Voice of the Customer.” Key people on a new product team visit customers, interviewing and observing them in order to discern what the true need is. They are especially trying to discover “latent needs,” needs or wants that the customer has but is not consciously aware of. They then target their new product or service to fill that need or want. This process of listening to the customer allows the new product developers to make meaning of the consumer’s direct experience. Innovation and customer satisfaction can follow (Burchill & Brodie, 1997).

Apple – A Case Example

Apple is a great example of the power of understanding customer needs and providing products and services to fill those needs. Apple has become a cultural icon for our technological era and this digital age. As I wrote in this week’s forum post, Steve Jobs announced Apple’s newest, latest, greatest and COOLest product this past January with global fan-fare: the iPad.

In typical Apple marketing fashion, Apple required customers to wait several months for the iPad’s release. During this time Apple launched a marketing blitz, including an iPad frenzy on Twitter. iTunes has just launched an update for interfacing with the iPad, just in time for the iPad’s release. There was a Netflix app available for the new iPad even before the iPad’s release. Many people tweeted that they were downloading it in preparation for getting their iPad. There were 240,000 pre-orders awaiting the iPad.

Apple has found the “code” for “cool,” at least for this digital generation. Apple is a cultural phenomenon, as the MacHead photo illustrates – “the cult of mac.” There are many who are fervently dedicated. The iPod is jewelry in addition to music, an emotional as well as pragmatic piece of “cool,” coming in different colors and styles to match each person’s individual uniqueness. Apple understands its customers and has successfully tapped into their latent needs, capturing the market by storm.

Daniel and I picked up our iPads on Saturday, documenting and interviewing folks in line. On the whole, the Saturday crowd are early adopters who do respond to Apple’s advertising. There were 2 mechanical engineers and another student, among many others. The wait was short. The Mac Genius who waited on us was knowledgeable and responsive. We left with our questions answered, our iPads and leather cases in hand, and BIG SMILES.

The picture below shows four generations of Apple users: Stephanie, her Mom, her Grandmom, and her son. This was a family adventure for them. Their smiles and excitement might indicate a bit about their psychology. They said they considered this a bonding experience as they upgraded their technology together and supported one another. They were really enjoying playing with their “new toys.” 

Apple sold 300,000 iPads on Saturday according to reported figures. This first rush of purchases is the “early adopters” phase. Apple’s next marketing target is to reach more of the general population.

Downside of Manipulative Marketing
There is a downside to current day marketing. The episodes we watched from Frontline highlighted the hidden and manipulative side of marketing in our digital culture. For example, the use of “product placement.” Product placement is a form of embedded marketing.  Branded goods are placed, without explicit advertising, in the storyline of movies, TV shows, or other programming. This is often not disclosed at the time the product is being featured. (Wikipedia).

Consider that the star of this week’s episode of “Modern Family” is YES: The iPad.  On the eve of the iPad’s launch – Phil Dunphy, one of the main characters in this season’s runaway hit sitcom and touted to be the best new comedy of the year, celebrates his birthday. He is all encompassed in his desire for an iPad. His wife misses the early morning rush to stand in line at the Apple store, eventually getting there only to find they are “sold-out”. Message to audience: get there early, get there or you will miss out. Eventually, Phil’s son manages to get an iPad from one of Phil’s friends through social networking. Phil gets the iPad, everyone is happy, all is right with the world.

Advertising Age reports that this was just a very clever storyline; using Apple is like using a cultural icon, and not product placement. How it’s perceived is another thing though. Advertising Age states, “Even without Apple plunking down any cash, last night’s episode was tantamount to a huge wet kiss of approval for a product that has yet to be tested by actual consumer use (Steinberg, 2010).”

Whether it was product placement or not, it caused significant stirrings and fans perceived it as such reporting being furious. A typical post on IBDb forums stated, “Tuned in for comedy, sat through a 30 min iPad commercial (Bershad, 2010).” Consumers are becoming increasingly aware and critical of manipulative marketing, either actual or perceived.

Marketing’s Message: CONSUME

The message most marketing is driving home to the consumer is MORE IS BETTER. While this is a fallacy, the marketer’s job is to create more and more desire linking satisfaction or fulfillment to their product or service, to continuously consume.

In The Paradox of Choice: Why More Is Less, Barry Schwartz explores the world of excess and its impact on our daily lives. In a local supermarket, he found over 30,000 grocery items available, including 285 varieties of cookies. He concluded that having too many choices is bewildering, erodes our psychological well-being, and becomes restrictive rather than freeing (Schwartz, 2005).

So, in fact, this culture of consumerism is in a crisis of sorts. Product and service images come rushing towards us from every channel of media available, print, web, movies, tv, mail, email, and others. The message is clear and in many ways enticing. BUY! This onslaught has effected us and our culture. We have become a nation of consumers.

“If I were dictator of my own small island, it’s not capitalism that I would get rid of, it’s marketing. That ever-present force telling us we should be more beautiful, happier, drunker, skinnier, hipper, and whatever else it takes more money to attain.” ~ David “Oso” Sasaki

The Future of Consumerism

Internet marketing continues to develop forums for making the strong voice of consumers heard. Dee Dee Gordon, founder of Look-Look, an online trend tracker, focuses on the younger demographic, those 14 – 30. She is a key contributor to product development. She provides the voice for this younger digital generation by gathering data about their needs, wants, habits, and lifestyles, listening to them and describing their world.

Marketing will continue to be a major influence on our decisions. The more we understand our own motivations as well as the marketing techniques used by professionals, the more discerning we will become.

Source: catherineaseo.blogspot.com

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