Think about purchasers of your product or service. Not Your customer but all the customers of your product being service by you, by your competitors or not being serviced by anyone. In the simplest terms, all of these customers will be considering a combination of four factors: Price, Product, Place and Promotion. You and each of your competitors will have relative strengths in the combination of those factors. One a grid, write product, price, pace and promotion across the top. Down the side, list you and all of your competitors as well as list unsatisfied. In the grid, you can then rank how each of you are succeeding in each of the 4 P’s. Are you where you want to be? For example, if your unique selling proposition is mid-level price with superior quality and features at somewhat remote locations to keep the cost down, is that where you rank on the grid? On each feature, you should be, at least, where your unique selling proposition has placed you. Perhaps better. Then again, if your rank is better than planned, you may want to either reconsider your plan or adjust your marketing to return to plan For example, if your unique selling proposition is to be mid-priced and you are ranking as a low priced provider, your business may profit by raising prices.
A useful tool in understanding your business is in understanding your competitors. More importantly, you must understand how your customers perceive you vs. how they perceive you competitors. This can be done by evaluating which characteristics consumers value in your type of product and service for both you and your competitors.
I’m going to take a quick tangent and remind you about customer segmentation. Different segments of customers will value different things. For example, my commuter car is comfortable and safe but all I care is that it gets me where I’m going as inexpensively as possible since I put on a significant number of miles each week. While reliability is important, I am more concerned about price and mileage. I have at least 140,000 miles on it and will probably double that before I think about replacing it. A friend of mine was driving back from a later event with her three small children in her car. The car broke down completely unexpectedly. This was back before everyone had a smartphone. She was stuck in the middle of nowhere with her kids for a long time before someone pulled over and offered to call AAA for her. Even then, she was nervous about the stranger in the middle of no where. She values reliability over everything else. There was no way that she was going to be in that situation again….. ever. She has purchased a new car every three years, regardless of how well she may love her current one. She also won’t consider an entry price point car because she perceives them as less reliable. Two different segments. Me, ok I’m cheap. My friend, Ms. Reliable.
Back to competitive analysis. Start by compiling a list of different functions, features and attributes about your product and your competitors’ products. Keep in mind that you want to understand the consumer perception of the products. For example, if product quality is a key differentiator and you could put your product up against a dozen competitors in a third party lab and prove without a hesitation that your product’s quality is superior but the consumers have a perception that the competitors are of higher quality than you, you lose that comparison. Common attributes include performance, price, quality, convenience, reliability, etc. Don’t forget that even if you are providing a product, the delivery process is part of the consumers’ perception. Therefore, you may need to include things like knowledge sales associates, return policy, hours of operation, etc.
A survey works well for creating what some call an importance-performance analysis. For each attribute for each product you want to test, you need to have the respondent provide two points of data. First, how does this specific product deliver against the attribute. For example, on a 7 point scale rate how product A satisfies each of the following attributes: price, delivery, reliability, quality, etc. Additionally, you need to know how important each of those attributes are to the customer. Back to the car’s, I would rank price as more important than reliability while my friend would be the reverse. In this case, I suggest force ranking the attributes. That is, if you have six attributes you are measuring, have the respondent rank them in importance. Importance of feature can be an excellent method for segmenting your customers.
Once you graph the result, you can see which areas you are superior and inferior to your competitors AND you can tell how important each of those areas are. Good rule of thumb, the more important the attribute, the more you want to be better than your competitor. The less important the attribute, the less it matters.
Originally created in the Toyota Corporation by Sakichi Toyoda as part of the Toyota Production System, the five whys is a simple yet effective tool for driving to the root cause of an issue. In utilizing the five whys, state the issue and then ask “Why?” Once you have a satisfactory answer, again ask “Why?” to the answer. Repeat asking “why” until you have discovered the root cause. Generally speaking asking “why” five times is sufficient to determine the root cause. For example, 1.) Why was the wrong product shipped to the customer? Because the sku in the catalog was incorrect. 2.) Why was the sku incorrect? Because the error wasn’t caught in final proofing. 3.) Why wasn’t the error caught in proofing? Because too few people are part of the proofing process. 4.) Why are too few people part of the proofing process? Because the draft was delivered late to the team. 5.) Why was the draft delivered late? Product marketing was late in providing final information to the catalog team. This error was really caused by product marketing being late with information. Of course, “why” could be asked several more times in this example before a satisfactory solution could be found.
The five whys is frequently used in very process oriented systems, such as manufacturing, but it also fits very nicely in marketing and strategy development. Consider trying to discover why a consumer prefers a competitive product (see below for the first level of questioning). Use field sales, customer service, management, analysts and insights team to pick the top two or three reasons why the customer prefers the competition. Then for each answer, do some research. For example, competitively shop your competition and determine how your organization’s pricing measures up. Then for each researched answer, ask the most relevant “why” question. Repeat until you have several paths of root causes for your team to provide solutions.
The five whys can also be used to build a solid story for marketing or social media campaigns? Start with why the customer would care about the story. Several levels and frequently the root of the customer’s motivation will present itself. Build your campaign to communicate directly to your customer’s root motivation.
Another use would be to determine target customers and best methods for reaching them. For example, why are Boomers less likely to use our product than Gen X? Or why are women more likely than men to use our product.