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Understanding the Ecosystem of Consumer Demand

Want to nail down your consumers' wants and needs? Then don't just listen to them. That's because just listening to them won't reveal what you're looking for. Observing them won't either. And if you are using surveys or ethnographic research to better understand your consumers, think twice. The bottom line is: you may not be leveraging the best tools to understand your customers. The biggest opportunities for building your brand or growing your business lay in plain sight, but you might not see them.

Problems with the survey research approach
Existing approaches are not altogether useless; marketers simply don't know when and how to use them. Marketers typically listen to consumers to identify unserved, unmet, or unarticulated needs that can be fulfilled by the company. Survey research then asks consumers what they need or want, and to what extent these needs or wants are satisfied. The problem with this approach is that it is largely useless to ask consumers what they want. They cannot know what they have not experienced. More dangerous is the approach itself. The research generates a list of 15 or so attributes that are important to consumers. The research shows the company, product, or brand performs well on some attributes and not so well on others. Clearly, so the theory goes, those attributes that are important to consumers but are not well satisfied by either the company or the industry are unmet needs or wants.

A 2002 survey in the MP3 category might well have shown that existing solutions, including the iPod, did not satisfy the delicate tastes of the very sophisticated high-fidelity listener of classic music. Normally, this evidence would have compelled product engineers to satisfy this unmet need by searching for ways to improve the device. They would have focused on engineering around the major product attributes, designing a high-quality listening experience to beat competitors to the high-end market. In the name of satisfying consumer needs, marketing would have ended up launching models and possibly sub-brands that promised premium to super-premium and deluxe listening experiences.

This is the classic product-attribute-fixation trap. Had Apple fallen into that trap, iTunes or iMusicStore and the 2,000 iPod accessories—such as the iConnector for your driving experience or Bose stereo speakers for your office listening experience—wouldn’t exist. Apple wouldn’t have sold 100 million iPods and more then 1 billion iTunes downloads.

Think companies no longer fall into the product-attribute-fixation trap? How about the venerable Motorola, which launched the ultrathin, ultracool Razr phone and quickly followed up with the Krzr, Rokr, Pebl, and Slvr brands? Meanwhile, while the marketer was busy spending money to launch these brands, the Razr raced its competitors to the bottom of low margins in just three years—the commodity hell of feature competition and rock-bottom prices.

Problems with ethnographic research
A second large category of research approaches to understand consumers are the so-called ethnographic research and the qualitative consumer insights approaches. Microsoft observes office workers by shadowing them, Marriott hires anthropologists to observe consumers during the check-in and check-out process at Courtyard by Marriott.

These are valuable studies and frequently mentioned sources of insights about consumers. But we also have to remember that observing is not equal to understanding.

The facts today are that ethnographic research is conducted in the name of creating deeper understanding about consumers, but we often observe our subjects with our own biases, our own products tucked under the arm. The result is merely a more nuanced articulation of a need for more service quality.

A new, more effective approach to consumer research
Between listening to consumers using survey research methods and observing consumers using ethnographic research approaches lies a third, totally innovative approach that focuses on understanding the ecosystem of consumer demand.

The four steps of ecosystem research:
  1. Map the demand landscape. Between the world of your products and services and the world of consumers' needs and wants resides what really matters to them: the serial realities of people's lives—the projects, tasks, jobs, concerns, and activities that consumers live throughout the 1,440 minutes we all live everyday. These matters are the starting point of our journey of discovery—not consumer needs, wants or, the product feature set.

  2. Explore consumption motivations. The Axe brand, the category leader in the male grooming business, is illustrative of where an understanding of the ecosystem of consumer demand can lead. When studying the ecosystem of demand, the real motivations of young men emerge. All their activities, many of their daily goals, activities, and priorities, are focused on the single-most-important occupation of young men: to get the girl. So Axe doesn't position itself as the better fragrance or body spray; instead, it helps young men get an edge in the mating game. Instead of turning to R&D to see what new scents are in store or asking consumers to go through sniff tests, Unilever mapped the activities and goals to be successful in getting the girl. Today, Axe is one of the most successful launches in more than 60 countries in the world. In just four years, it has replaced the long-time category leader in the U.S.

  3. Reframe the opportunity space. Understanding the ecosystem of consumer demand is an important first step, but there needs to be a process to systematically expand or reframe our understanding even beyond what we can learn from consumers. Reframing the opportunity space requires creativity and structured thinking to explore the ecosystem of consumer demand from different angles.

  4. Quantify the sweet spot. One of the biggest issues of ethnographic research, however rich the consumer insights it generates, is that it is still highly qualitative in nature. It requires a lot of conviction to follow a new insight and to invest against it. In our experience, the sequence of steps in understanding the ecosystem of consumer demand relieves this problem.

Understanding the ecosystem of demand will change the way you market to consumers and build your businesses. The objective will be to design and market the product, brand, or service so that it perfectly fits into the changing ecosystem of everyday life, transforming how people live, work, and play.