Customer role, Innovation and Value Creation

Things are changing.  And change is often so subtle that it shows up without any warning signs. Managers often discover its arrival when their performance metrics show deterioration. A late discovery can potentially erode customer and competitive superiority.

One of the important sides of marketing equation is market or customer. And no marketer can afford to ignore to check how developments are affecting customer. A change is both an opportunity and threat. It all depends upon how it is reacted to- whether it is seized and converted into customer value creating initiatives or it is allowed to depreciate value delivery. Consider how internet technology altered the value equation by enabling firms to deliver content (e.g. movies) directly to customers doing away with the need to buy or rent DVDs. Blockbuster lost to Netflix due to this. The web seems to be recasting the concept of market that can be targeted. The term ‘market’ now needs to be separated from the concept of location. The current campaign by eBay attempts to establish that shopping can be done sitting at home with an ease, economy, and convenience.

The customer side in a marketing exchange hides three roles. A transaction involves an act of buying, paying and using a product or service. This gives rise to three different sets of considerations. For the buyer ease (location, physical availability) of buying is important whereas payer role involves exchange of financial consideration like cash or card. The product or service is use or consumed and at this intersection point and benefits are delivered or extracted (user considerations involves what the product does and what benefits it delivers). Consider a simple case of Maggi noodles. The user often is a child (benefit-taste), the buyer may be the servant (ease or convenience) and the product is paid (price considerations) for by the parents.

In the old thinking, goods are produced by the firm to be exchanged with customer who ‘uses’ them to extract performance. This required for achieving satisfaction. Long time back Levitt proposed that people are not interested in drills rather their performance (holes). The user role can be complex which can deter people to buy drills. Recasting user role (simplifying) a drill marketer boost sales by creating do it yourself drills.  Earlier glucose monitoring systems made diabetes patients dependent upon doctors for reading blood sugar levels. New glucose monitoring machines have recast the space by transferring the user role to patients. Now they can monitor sugar level on their own, the skill required to do the job has been reduced. Washing machines intimidated many potential users for their usage required some kind of ‘expertise’ to press right buttons for right jobs. But now many marketers have launched smart models which on their own ‘read the wash requirement’ (fuzzy logic) create value by de-skilling the customer role as a user.

Apple’s current campaign (why wait?’) spells out how the brand can be bought and paid for in interest free installment plans. The company has adopted an open distribution model (not through mobile companies) and tied up with its distributors Redington and Ingram. This scheme tweaks the high upfront financial burden and places the brand within the reach of many who otherwise could not buy unlocking a hidden market potential. The new cab services launched by companies like Meru in metro like Delhi are based on altering the payer role. Now the cab service can be taken by distance travelled or time You pay for time you want to use a cab for or the distance travelled). This payment scheme allows firms to tap a new segment of customers. Earlier newspapers were expensive because they sought revenue from readers. But now newspapers make money not out of readers but from advertisers.  The ‘cash on delivery’ innovation has opened a huge internet based market in India.

There was a time when magazines could only be bought from newsstands or vendors. This subjected reader to ‘sold out’ situations and procurement inconveniences.  The shift to subscription based model by most of the magazines like India Today and Business Today creates value by changing buyer role. The inconveniences associated with buying things from markets and malls are throwing opportunities to new web based sellers like Jabong and India Times. Domino challenged the notion that warm restaurant food can only be ad in ‘dine in’ format by creating home delivery model.  Domino creates value by saving its customers from travel, parking, waiting, and weathering.

 

 

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