A few weeks ago I attended a 2 day conference jointly organized by the Kellogg Graduate School of Management (at Northwestern University) and the Marketing Science Institute. The conference was titled Realizing Opportunities for Profitable Growth.
It was a fantastic conference for me. The agenda was packed with excellent presenters, I met many interesting people, and I felt like I was back at graduate school on the Kellogg GSM campus, my alma matar. It was especially great to see one of my favorite professors, Professor Greg Carpenter, again.
I’ve had a busy couple of weeks since the conference so I am just getting around to organizing my notes from the conference. Over the next few posts I plan on summarizing those notes and providing the most important nuggets of learning to you.
The first topic area discussed at the conference was how companies can go about the task of developing better strategies to achieve growth in a competitive marketplace.
An obstacle to growth for many maturing customers is how they currently think about their customers. Many companies can't grow a mature product until they put aside their traditional thinking about how and why their customers buy. Many companies in mature markets have blinders on and have hard fast assumptions about their customers. For example, they think that their customers have the following purchasing behaviors
- Lower price is better
- Buyers choose rationally
- Buyers know what they want
- More choice is better
- Information improves choice
Growth companies tend to throw out those assumptions and ask: How can we think differently about our customers? Companies that do a good job of developing competitive growth strategies in maturing product categories know that it requires a deep understanding of what customers value.
To understand what customers value, we must understand how customers set goals…for goals are what drive customer decisions. Goals are desired future states of being. Customers set goals because they have ambitions about the future. They set both short term and long term goals. The goals drive customer wants, needs, and purchase behaviors.
There are, of course, different types of goals, but from a marketing perspective, there are three important types of goals that customers have that impact purchasing decisions.
- Emotional goals
- Functional goals
- Economic goals
Most goals are set high and are somewhat difficult to achieve. So by the mere process of setting goals, customers are also creating problems that need to solved if they are to achieve the goals. Thus goal setting quickly turns into a process of learning what problems they need to solve and then coming up with action plans to solve those problems. As a result, customers place a high value on products and services that can solve their problems.
Growth oriented companies who pay attention to their customer’s goals and help position products to help solve problems, can grow, even in mature product categories. They can do this by helping shape how customers learn how to solve problems.
As they go about solving problems, customers seek knowledge. All customers have a process for how they go about learning how to solve problems, and eventually, making decisions. Based on learning activities they choose participate in customers form their own sense of reality. Growth oriented companies develop marketing strategies that are designed to influence what and how the customers learn …and therefore impact customer’s perception of reality.
Growth companies look to create new learning paradigms around maturing products by innovating uniqueness in their products. By innovating uniqueness into maturing products, growth companies cause customers to seek more knowledge. But you also need to keep things simple as customers need to know just enough information to solve their problems...not much more than that.
It is also worth noting that customers have an unlimited supply of goals. As goals are achieved, new goals are created. So this leads to a unlimited supply of problems customers must solve.
As I said above, look for a few additional posts in the near future summarizing some of the other key thoughts from the conference.
Thanks to the Marketing Science Institute for putting on such a great conference!!