You’re Not Competing In The Category You Think You Are! (The 5 Steps to Category Identification)

If you’re a regular reader here – and if not, then please sign up below so you don’t miss future posts – you’ll know my 7-step CatSight™ Process for Insight Development.

The first step of the process is to identify the category in which you are competing. If you don’t know the process, that may surprise you, but you’d be amazed just how many brands are not in the category they think they are. When was the last time you checked?

Just think about the consequences of an incorrect attribution; you would be concentrating on competitors that your customers never compare you with! And you would waste resources defending yourself against the wrong brands. Talk about squandering valuable resources! That’s why I decided to dedicate a whole post to this important topic.

But before I get started, I suggest you first read the post (Customer Centricity is Today’s Business Disruptor, Insights its Foundation) as background information. In it you’ll discover the full description of the seven steps of the CATSIGHT™ process, which I know will also be useful to you. In the article, I summarise the very first step of Insight development, that of category definition, like this:

C = Category

Whenever you want to develop an insight, the first task is to decide on the category you want to study. This may seem obvious to you, but in many cases, it isn’t as clear as you might have thought.

For instance, suppose you are planning on launching a new fruit-flavoured soft drink. You may think that you are competing with other juices or perhaps other soft drinks. But rather than just assuming the category in which you are competing, I highly recommend that you check; you may be very surprised.

Identify the category by zooming in

In working with one client who was in this exact situation, we actually found that their main competitor was an energy drink!

The reason for this was because this category is seen as being for lively, energetic, fun-loving people who need a boost. Whether this comes from the caffeine of an energy drink, or from the added vitamins and minerals of real fruit juices, which was my client’s offer, it didn’t seem to matter.
If we’d only looked at other fruit-flavoured soft drinks, we would have missed a whole – and much larger – segment of potential category consumers. By starting our analysis as wide as possible by looking at all beverages, and then slowly zooming in as we learnt more, we were quickly able to discover this perhaps surprising positioning for the new drink.
This shows the power of taking the consumers’ perspective, especially when segmenting a market. But more about that in a moment. 
The above example is a great start. But so many clients ask me to help them with their own category definitions, that I decided to detail the five most important steps in defining your category, so that you can do it for yourself for each of your brands and products.
Never underestimate the power of taking the consumers’ perspective, especially when segmenting a market. #Brand #Segment #Marketing #Segmentation Click To Tweet

 

Step 1. What is the category definition you are currently using? 

In any process, we should always start by identifying where we are today. In the case of your category definition, it should be the one you think you are competing in at the moment. Depending upon whether you are offering a product or service, you might define it as:

All hot beverage consumers …….. or …….. users of a particular insurance service.

All consumers of coffee …….. or …….. people who have bought insurance for natural disasters.

All consumers of instant coffee powder …….. or …….. house owners in Florida who have bought insurance for natural disasters.

All consumers of instant coffee powder costing less than US$ 2.50 per 100 gms …….. or …….. owners of houses valued over US$2 million in Florida who have bought insurance for natural disasters.

As you can see from just these four examples, the bottom definitions are far more focused than the top ones. Hopefully you can appreciate why targeting such precise groups of customers is more likely to meet with greater success, than the wider, less specific groups first mentioned.

In any process, we should always start by identifying where we are today. #Process #Category #Business Click To Tweet

The Zoom tool you decide to use (in or out), will depend upon whether you are looking to grow your brand through your marketing activities or planning to develop a new product or service offer.

I call this zooming in and zooming out of the category. In general, understanding the category by zooming in is best for growth and precise targeting, whereas zooming out provides more opportunities for considering innovative new products and services.

Now take a look at your own current category definition. I bet it’s too broad for successful use isn’t it? This is the mistake that most businesses make, big and small. They want to attract the largest number of consumers or users of a category, but as is often quoted:

“If you try to please everyone, you end up pleasing no-one”

The more precise you are in defining the group of customers you are trying to attract, the more focused will be your actions and communications, and the more successful you will be. In addition, the tactics and strategies you use are more likely to resonate with your target audience.

The more precise you are in defining the group of customers you are trying to attract, the more focused your actions and communications will be. #Segment #Category #Marketing #CEX Click To Tweet

Conclusion

Going through these five steps will give you the very best possible understanding of the category in which you are currently competing, as well as of the customers who make up the sub-segment you decide to target.

Have you successfully mastered every suggested step? What have you forgotten?

Is there something I myself have forgotten or that you would add? If so, then please share your ideas in the comments below. Thanks

If you’re still struggling with your own category definition or identifying the very best customers you should be targeting for your brand, then let’s talk. Book a complimentary call with me – I call them Happiness Sessions because that’s how you’ll feel after we talk!

This post is an update of the article that was last published on C3Centricity in 2020.

[button_1 text=”Don’t%20Forget%2C%20Book%20your%20Training%20NOW!” text_size=”30″ text_color=”#274660″ text_bold=”Y” text_letter_spacing=”0″ subtext_panel=”N” text_shadow_panel=”Y” text_shadow_vertical=”2″ text_shadow_horizontal=”0″ text_shadow_color=”#38b9f0″ text_shadow_blur=”0″ styling_width=”40″ styling_height=”30″ styling_border_color=”#274660″ styling_border_size=”7″ styling_border_radius=”6″ styling_border_opacity=”100″ styling_gradient=”Y” styling_shine=”Y” styling_gradient_start_color=”#38b9f0″ styling_gradient_end_color=”#64bce2″ drop_shadow_panel=”Y” drop_shadow_vertical=”1″ drop_shadow_horizontal=”0″ drop_shadow_blur=”1″ drop_shadow_spread=”0″ drop_shadow_color=”#38b9f0″ drop_shadow_opacity=”50″ inset_shadow_panel=”Y” inset_shadow_vertical=”0″ inset_shadow_horizontal=”0″ inset_shadow_blur=”0″ inset_shadow_spread=”1″ inset_shadow_color=”#274660″ inset_shadow_opacity=”50″ align=”center”/]

Do Companies Still Benefit From Having a Market Research Department?

What’s your gut response to the title question about Market Research Departments? Yes? No? Being Swiss I would say it depends!

I am probably in the third camp. Yes, if it is a department that integrates and analyses information from multiple sources, and then delivers actionable insights and recommendations to the organisation. No, if it is the traditional market research department, whatever that is.

I first asked this question a few years ago and it generated a lot of – sometimes heated – discussions. Now after so many changes in the past couple of years, I thought it was worth revisiting. Please add your own perspective into the comments below and let’s get those discussions started again.

Thanks to social media and websites, the IoT (Internet of Things) and smart products, companies are inundated with information these days. Who better than market research to help in its analysis? But in order to become this new business decision support group, new skills are required.

Insights 2020 by Kantar-Vermeer ran some interesting research into the future of market research and insights. In their report, they spoke about the need for researchers to have five critical capabilities:

  • Research & analytics mastery
  • Business acumen
  • Creative solution thinking
  • Storytelling
  • Direction setting

The fieldwork is now a few years old but I still think it makes good background reading to make companies think about their own needs in terms of data analysis. Also, the world and business environment has changed dramatically in the last eighteen months.

Another study by BCG and GRBN resulted in an Invest in Insights Handbook to help organisations report on the ROI of the insights function. They reported that those who measure the ROI of their information have found a seat at the decision table, increased budgets, and more control. Those are the department objectives that the FMCG world in particular desires today, be they in a manufacturing or retail environment.

As the handbook mentions:

“Architecting a world-class Insights organization requires executive, cross-functional commitment/engagement”

To do this, the report mentions the following six points:

  • Vision & Pace
  • Seat-at-the-table and leadership
  • Functional talent blueprint
  • Ways of working with the Line
  • Self-determination
  • Impact and truth culture

The analysis concludes that:

“The biggest barriers to experimenting with innovation in CI are resources, both time and money. A lot of times there’ll be [a need for] an innovation project but it can’t find a home.”

Invest in InsightsThis seems to suggest, at least to me, a chicken and egg situation. Resources are insufficient because the business doesn’t see the benefit of investing in market research and insight development. But the Market Research Department is struggling with insufficient budget and personnel to provide the support that they should – and often could – provide.

In the GRBN report, they mention the largest barriers to the measurement of the ROI of market research and insight. These were found to be:

  • Difficult to do – studies are used in many different ways
  • Difficulty in isolating impact of consumer insights
  • Time lag between insight delivery and business results

The secondary concerns are:

  • Consumer insights distant from business decision-makers
  • Business objectives not clearly defined
  • Insufficient staff to measure
  • Lack of alignment on important metrics

Looking at this list, it is clear that the market research profession is in need of a significant overhaul. Most local MR associations, as well as the global ESOMAR team, are all very aware of this and have set up various groups to look into it. Hopefully, we’ll see changes coming out of all those debates in the coming years.

In the meantime, I decided to propose a few ideas to get your market research and insight departments moving in the right direction, no matter where you are today.

10 Steps to Reinventing Your Market Research Department

Here are the steps that I would suggest you take, should you wish to create or optimise your market research and insights function. Feel free to add your own in the comments below. I would welcome your input.

Step 1: If you already have a market research or insights department, then the GRBN / BCG self-assessment tool is a great place to start – and it’s FREE! The link is: http://insightsassessment.bcg.com/ . This will clearly indicate both what stage of development you are in, and what you can do to improve. Invaluable! Then all you have to do is to prioritise the changes needed!

Step 2:  Another assessment tool than can help you to better understand your customer understanding in its wider sense, is our own  C3C Evaluator™. Again it is completely FREE, at least for the mini version, which provides an overview and summary analysis and recommended actions. The link is https://c3centricity.com/miniquiz-landing/. Unlike the insight assessment tool from GRBN, this C3C Evaluator™ tool looks at insights as the motor or foundation to adopting a customer-first strategy. As such, it considers best-practice market research and insight development as a management decision support tool.

Step 3: Review the management’s needs in terms of customer metrics – in addition to the financial data they are already receiving. Prioritise and choose only the major KPIs (Key Performance Indicators) to follow your business vision and strategy. For a truly customer-centric organisation these may include:

  • Market and category shares
  • Customer profiles
  • Brand image and brand equity metrics
  • Pricing, value perceptions and CLV (Customer Lifetime Value)
  • Distribution and OOS (Out-Of-Stock)
  • Awareness of communications
  • Understanding and appreciation of messages
  • Website and social media traffic, and conversion rates
  • Customer retention and churn rates
  • Sales funnel’s level distribution

Besides measuring your chosen metrics, trends often mean more than the numbers themselves – in many markets the numbers will be going up anyway. Although I have mentioned many examples above, remember that KPIs mean the metrics you choose must be KEY to your business. Choose wisely so you don’t drown people in data and information. (This was in fact a problem I encountered in my previous job when working with data analysts who believed that management should have every single number, table and graphic that they came up with. They also believed that visualisation was analysis and I had many a heated discussion with them about their lack of actionable analysis! Hopefully, they finally understood after I left.

Step 4: Identify which of the metrics you already gather are important and which additional ones you need to start collecting or at least on a more regular basis. Then review methodologies and suppliers for providing all the information. If you already conduct regular tracking studies, they should be opened for pitch every few years, to avoid both sides becoming complacent and the analysis stale.

Step 5: Once the metrics are agreed upon, turn them into a one-page summary or dashboard. Most executives don’t have time for more than a rapid scan of information, so find ways to help them to read it. Using traffic-light colours, graphs and one-number indices all help them to quickly understand the current situation and identify any needed actions.

Step 6: In addition to data, management will also require information about the market, its customers, competitors and retailers. This can be gathered through observation and listening, whether in person or through market research qualitative studies. Read “Five rules of observation and why it’s hard to do effectively.” for more on the topic.

Step 7: Improving your data and the information collected during market research surveys will depend upon a solid briefing document. The brief should be developed in collaboration between the internal client and the market research department. It must include at a minimum why the information is needed, by when and why. For more on how to better brief for market research studies, read “Why Marketing doesn’t Always Get the Research it Needs, But Usually What it Deserves.”

Step 8: Identify how to measure the ROI of your research once it has been completed. Agree together what will be considered a success before the study is undertaken. The importance of a detailed brief cannot be overemphasized as an essential part of this. It will not only allow good work to be done so the business gets the answers it needs. It also allows the measurement of its ROI using metrics agreed upon before the fieldwork even started. Knowing how the information will be used and the value of the decisions made from it, will go a long way towards proving its value. If this is only considered in retrospect, it is unlikely to meet with agreement from all concerned parties, especially when results are surprising. Therefore, these must be discussed and included in your briefing document at the start of the project.

Step 9: The next step is to build a team of supporters within the organisation with whom you regularly share all the nuggets you learn from your different analyses. Beyond answering the questions for which any research was conducted, there are always additional learnings that can be invaluable to share. Unfortunately, most Market Research Departments are so stretched that they spend most of their time behind their desks.

Even if it is just in the corridor, or during a coffee or lunch break, always have something interesting to share with your internal clients. This will quickly build respect for the MR team, which will then be seen as an invaluable source of business understanding. Of course, this does mean that the department should be involved in business meetings, but this tends to naturally come when you start sharing more with the business than mere market research results’ presentations and reports.

Step 10: The final step in optimising your market research department is to start developing insights. Although I mention this last, the 7-step insight development process I suggest to my clients involves data and information gathering only at step 6. And yet this is the one (only?) thing most MR departments are seen to do.

The reason why I mention insight development last here is that an organisation must believe in the need for a deep understanding of its customers before it can start to develop insights about them. Otherwise, its market research department will remain simply a data-gathering group. For more details about the C3Centricity insight development process, please check out our new online course and the video introduction to it: “The New 7-Step Process for Developing Actionable Insight Development.”

 

Et voila! To answer my question in the title of this article, my reply would be a resounding YES! Of course, I would expect your team to follow these ten steps that I believe will help all organisations upgrade their market research departments. And if nothing else, I hope you will try to complete the two assessment tools. They will give you a terrific start to understanding just how good – or bad – your department is today!

And of course, I would encourage you to watch the fun, interactive video about our new insight development course. Just click the above link to have some fun making your own personal choices in it. 

If you need help in upgrading your market research and insight department or their processes, then please check out our inspiring website content, especially our training offers, and then contact me here: https://c3centricity.com/contact

Why Customers Are The Answer To All Your Problems (If You Ask the Right Questions)

Last week I asked whether it is employees or customers who are more important to an organisation. If you missed it read “Customers Care About a Product’s Value, Not How the Company Treats Employees” now and catch up.

I knew it would be a provocative question but I still didn’t expect quite so many comments! So this week I decided to be just as provocative and talk about the issues that challenge many businesses. And where the answer to whatever problem they have is actually quite simple. For me, customers are the answer! They can either answer or help you overcome any challenge or issue you may have.  Read on and then let me know if you agree.

 

How can I innovate more successfully?

 
According to an excellent article by Harvard Professor Dr Srini Pillay “Humans have a natural aversion to innovation because it involves a healthy dose of uncertainty and risk.”
 
 
Unfortunately, we try to reduce this risk by referencing past events to help us to predict the probability of our future success. Dr Pillay concludes that possibilities rather than probabilities are more likely to lead to better results.
 
I would concur with this statement, as the world is changing too fast to rely on past events as a predictor of anything in the future. This is why I say that customers are the answer!
 
It is only by getting closer to our customers and being constantly curious, that we have any chance of increasing our success in satisfying them.
 
It therefore makes sense that we involve our customers in helping us innovate. Not as a judge of concepts, which is what many businesses do. This is wrong because we know that consumers don’t know what they want, at least not until they see it.
 
However, they do know what their pains are; what is wrong with a product or service and what they would rather have. Co-creation and in fact ongoing conversations with our customers is the only way to stay ahead of the game.
 
In another article, this time in the HBRHeitor MartinsYran Bartolomeu Dias and Somesh Khanna from McKinsey shared the results of numerous interviews they conducted in Silicon Valley, the home of US (tech) innovation.
 
They conclude that it takes many skills and cultural changes for most organisations to become more innovative. These include:
  • Audacity and grit: The determination to continue despite failure. And I would add the acceptance of failure and the license for employees to fail too.
  • Strong leadership and true collaboration: An inspiring vision and the tenacity to make it happen – together.
  • Give employees autonomy. We all need meaningful work. The chance of helping an organisation grow is what motivates top employees. That and the freedom to make decisions based on clear goals but without directive processes on how to meet these objectives.
  • Build platforms, not products. This may be the hardest for many organisations to grasp. Giving your customers the opportunity to decide what and how they use what you produce, and how it should be changed is the route to success. Networks and co-creation are the future that is already here. And customers are the answer!
 
  • Think like engineers and customers. Everyone in an organisation should be encouraged to look at problems from the customer’s perspective. It always amazes me how we seem to “take off our consumer hat” when we arrive at our place of work!
  • Know that money only gets you so far. Innovation has a much shorter shelf-life than it used to. In fact, best-in-class organisations have a continuous process ingrained in their culture.
  • Get acquisitions right. Many companies are looking for acquisitions for a way to quick-start their innovation. But it is difficult to get the timing right. The current value is good but potential growth is better.
 
The article concludes with an interesting comment that it is “leadership in business model innovation that offers the deepest and most transformational insights.” I would add it’s our customers too!
 
If innovation is a challenge for you and you know your process is not optimal, then you might like to read “Improving Ideation, Insight & Innovation: How to Prevent Further Costly Failures.”

Where do I find out what issues my brand has?

You’re measuring your sales and hopefully the trend is upwards. You’re following your distribution and hopefully it’s expanding. You’re calculating your profits and hopefully those are also rising. What else are you doing to follow your brand?
 
You would be amazed at just how many brand managers stop there! Even those in major CPG companies! It’s not enough. You know nothing about your customers! Your forecasts are based on outdated information from the past. (and if you didn’t skip to this point but read the previous one, you know why that’s insufficient)
 
The health of your brand and a good estimate of at least its short-term future comes from your work with customers. From brand image and equity,   to co-creation and observation, your customers are the answer.
 
Brand image and equity measurements are vital for helping you to understand what current and potential clients think about your brand. If you want to learn more about the topic then read “What Every Marketer Needs to Know about Brand Image, Equity, Personality & Archetypes.”
 
There is an additional bonus in following your brand image and that is that it acts as an early-warning signal. This is because it almost always starts to decline before your sales do!
 
The reason for this is that we are creatures of habit, retailers included. Change is difficult as a decision has to be made. So we tend to continue with the same products and services until something important happens. Important in the eye of the customer that is.
 
It may be a new brand introduction, a price promotion, bad publicity or negative comments on social media. If these are important enough to customers then they may decide to change brands. And if this impacts a lot of customers, the sales decline can be fast and significant.
 
Better therefore to follow your image as well as comments on social media.
 
Social media platforms can provide a wealth of information about your brand. Of course, different people adopt different platforms for different uses. Pew Research ran a useful analysis in their Social Media Update 2016 of the demographic similarities and differences of channels in the US. It is definitely worth a read to understand these differences, as well as to identify the best platforms for your own brands.
 
Another good source of social media statistics is from Smart Insights. Their “Global social media research summary 2017” combines information from numerous sources and provides a global perspective.
 
The sort of information that can be gathered from social media includes:
  • Natural vocabulary used by your customers.
  • Issues customers have with products and services, often in real time.
  • Trending topics of interest; use trend alerts rather than the keyword tool from Google, which is slower to update.
  • Regional or country differences from topic frequencies.
 
Observation and listening in person can provide extra benefits that social media can’t. The two information sources are thus complementary. In fact, I would consider them to be the best way to identify brand issues, long before running any market research surveys. For more on best practices in customer closeness sessions, check out “Five Rules of Observation and Why it’s Hard to Do Effectively.” 
 
 

How can I grow my brand more profitably?

As you know there are basically only three ways to grow your business:

  • Get more customers to buy.
  • Get customers to buy more.
  • Get customers to buy more frequently
 
You will see that all three ways involve the customer; of course, they do! As you know, one of my favourite quotes says “There may be customers without brands, but there are no brands without customers.” If you still haven’t understood the message, your customers are the answer to everything!
Just think about that for a moment, please. A simple but profound statement, don’t you think? Therefore, your customer is the solution to your business growth and profitability.
 
Speaking of which, sometimes a business is growing but has done so by slashing prices and being on constant promotion. This doesn’t grow your brand, it demolishes it! Both its value and reputation! Read more about this and head the warning in “Are you on the Way to Brand Heaven or Hell?”
 
A far better way to grow more profitably is to understand the value that you offer to your customers. This is done through a PSM (price sensitivity measurement), a price trade-off study (BPTO) or similar survey. These will provide you with the information you need to understand your customers’ perception of your value. Whether your price is too high or too low, you’re leaving money on the table and could be more profitable. 
 

 

Why is market research not enough to understand my customers?

There are so many reasons why running market research is insufficient to really know and understand your customers and your business. I don’t know where to start, but here are a few reasons I’ve come up with (please add your own in the comments box below):
  1. Projects are sample based.
  2. They are at best snapshots of current opinions and behaviours.
  3. The information can quickly become outdated.
  4. They ask questions.
  5. They have limited focus.
  6. People don’t tell the truth.
  7. People don’t know why they do what they do.
  8. Results are extrapolated.
  9. Results are open to interpretation.
 
I could go on and on with this list – and again feel free to add further ideas in the comments below – but you get the idea.
 
Now don’t get me wrong; I’m a big fan of market research. BUT done by experts. Unfortunately, with the ease of connecting with people online and the simple survey platforms offered for free, it is easy for anyone to run a research project today.
 
It’s great that people see the benefit of surveys, but as this subtitle mentions, it’s not enough for truly knowing and understanding your customers. Also, if the reasons I gave above are not enough, there’s something else!
 
The biggest issue from my perspective is that understanding takes far more information than any single market research project can provide. Yes, it may deliver certain answers to a finite number of questions, but to understand your customer you need to get intimate.
 
I wrote a blog on just this topic which you might want to check out for a more detailed plan on getting to know your customers. It’s called “4 “Free” Ways to Connect with Customers for World-Class Understanding.”
 
 

Why are customers always the answer?

There are many organisations that understand the importance of the customer and yet still hesitate to start walking the talk of customer centricity. If you’re one of them, then here are a few statistics that should convince you  – and your bosses – of their importance:
  • Customer centric organisations are 60% more profitable. (Source)
  • The average revenue growth of Customer Experience Leaders is 14% points higher than that of the laggards. (Source)
  • 64% of people think that customer experience is more important than price in their choice of brand. (Source) 
I don’t think anyone can read those numbers and not be excited by the potential for growth. So what are you waiting for?

Conclusions

 
As you see, our customers can provide many if not all the answers to almost any question we may have about our businesses. After all, we are in business to make a difference to our customers lives in one way or another. So it is surprising that we still go looking for our answers elsewhere.
 
If I haven’t highlighted your main business challenge for 2017, then please add a comment below. I’m sure the customer will still be the answer – but prove me wrong!
 

If you’re ready to adopt a Customer First Strategy, book a free half-hour advisory session with me directly in my calendar, so we can go through your priorities and discuss solutions.

I hope you enjoy reading this blog post.

If you want me to catalyse your growth and profitability, just book a call.

Join Global Customer First Strategists!

Get our latest posts before everyone else, and exclusive content just for you.

* indicates required