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Über dieses Buch

Full of practical diagrams and maps, as well as international case studies, this book offers a unique and extensively-tested 'GO-STOP Signal Framework', which allows managers to better understand why consumers are not buying their products and what can be done to put this right.



Introduction: hit-or-miss consumer insights

Behavior is context dependent
Hit. In the first decade of the 21st century, Ron Johnson, a Harvard MBA, had built a formidable reputation as a brilliant retail executive. His laser-sharp focus on improving the in-store customer experience yielded rich dividends at Target. It transformed Target from just-another-discount-store to a unique store brand that sells chic yet affordable products. Target became Targé under Johnson’s stewardship. Not just at Target; the same focus on customer experience during Johnson’s tenure at Apple made Apple Stores, including the Genius Bar, a runaway success and one of the most profitable retail outlets in the United States. A similar focus helped him to improve patient experiences and outcomes at a Stanford University hospital.
Amitav Chakravarti, Manoj Thomas

Chapter 1. Three causes

Why successful consumer insights are still a hit-or-miss affair
Executives often attribute marketing mistakes to a lack of customer centricity. The standard refrain is that mistakes happen because managers do not listen to the “voice of the customer.” However, the problem is not so simple.
Amitav Chakravarti, Manoj Thomas

Chapter 2. The 100 calories paradox

An insightful packaging innovation
Keebler’s deluxe chocolate chip cookies are Jennifer’s favorite brand of cookies. They are neither too chewy nor too crumbly. And they have just the right amount of chocolate chips in them to make them irresistible. So on a Saturday evening in 2004, during a weekly visit to the grocery store when she found that Keebler’s deluxe chocolate chip cookies were on sale—two regular packs for $5—she was instinctively inclined to add two packs to her shopping cart.
Amitav Chakravarti, Manoj Thomas

Chapter 3. Pricing disaster at JC Penney

Know how your price cues operate
Early in 2011, JC Penney, or Penney’s as it is commonly referred to, continued to be besieged by lackluster sales figures. Its revenues and profits in 2011 were lower than they were 15 years earlier, and it suffered a 5% drop in revenue from 2010, to $5.43 billion (while its rival, Macy’s, saw an increase of 5.5%, to $8.72 billion), and a net income loss of $87 million. Despite its 111-year storied history, in recent years the brand continued to decline. According to retail experts, at the core of these disheartening figures was a trifecta of problems that revolved around JC Penney’s brand image, in-store consumer experience and pricing strategy.
Amitav Chakravarti, Manoj Thomas

Chapter 4. Tata Nano, the world’s cheapest car

Low price can backfire
If you have traveled to India, you might have been intrigued by a common sight on the country’s streets—a family of four traveling on a two-wheeler. The father is usually on the driver’s seat, carefully navigating the scooter through the chaotic traffic. The mother sits sidesaddle on the pillion seat, clutching on to her baby in her lap with one hand and holding on to the scooter with the other hand. The elder child, sandwiched between the father in the driver’s seat and the mother on the pillion, wraps its arms around the father to avoid falling off the scooter.
Amitav Chakravarti, Manoj Thomas

Chapter 5. When not to discount

Inexpensive wines and employee discount for everyone
In Chapter 4 we discussed the case of Tata Nano. Ratan Tata, the visionary head of Tata Motor Company in India, observed families riding on two-wheelers—the father driving the scooter, his young child standing in front of him, his wife seated behind him holding a baby—and resolved to build a safe and affordable car for such a low-income Indian family. His target was to launch a people’s car priced at $2000. His engineers and designers worked tirelessly for four years and realized this goal. Tata Nano, the low-income people’s car, was launched. But the low-income people balked at purchasing the inexpensive car. Instead they preferred to buy a used Maruti Suzuki or Hyundai car from the second-hand car market at around the same price, because Nano’s low price reduced the attractiveness of the cars. The Tata Nano case study and the SoBe experiment described in Chapter 4 suggest that people often rely on the popular folk wisdom “you get what you pay for.” They view low-priced products with suspicion, and instead of increasing sales, low prices can reduce sales. In this chapter, we further explore this intriguing psychological phenomenon.
Amitav Chakravarti, Manoj Thomas

Chapter 6. Avoid discordant pricing

Do you know your consumer’s mindset?
Let’s take an example of two restaurateurs in New York City. One owns Café Cubano and the other owns the Fountains restaurant and bar. The restaurateurs are considering dropping their menu prices in the hope that lower prices will attract more customers. But they are concerned whether lowering the menu price will hurt the perceived quality of the food. Can menu price affect the perceived quality of food? Will lowering the price hurt food quality ratings at these restaurants?
Amitav Chakravarti, Manoj Thomas

Chapter 7. Paying for medicines and Tickle Me Elmo

Beware of unfairness cues
On 4 January 1996 a young woman named Denise Katzman filed a class action lawsuit against Victoria’s Secret, the popular lingerie brand. Her bone of contention? A colleague of hers received a catalog in which the same product was offered at a lower price. Was there a lot of money at stake? Not really. She was offered the product at a $10 discount while her colleague was offered a $25 discount. The absurdity of the situation becomes a little more apparent if you take into account the legal fees—$5000—she had to pay for the entire litigation process. It gets even curioser and curioser! It turns out that her colleague who was unfairly “favored” by Victoria’s Secret was male, which likely (though not definitively) indicates that her colleague may not even be in a position to “enjoy” that differential discount.
Amitav Chakravarti, Manoj Thomas

Chapter 8. Credit cards and obesity

Small changes, big side effects
Since the mid-1980s, how Americans pay for economic transactions has changed considerably. Cash payments have been replaced by card payments. Consumers and merchants have embraced relatively painless forms of payments such as credit and debit cards. The average American today carries four or five plastic cards in their wallet to pay for their everyday transactions. In contrast, in the 1960s and 1970s most people paid for their purchases in cash. As banks, retail merchants and finance companies flooded the market with plastic cards of different color and design, people gladly switched from cash to cards because card payments obviated the hassles associated with cash payments: they no longer had to visit the banks or ATMs and stand in long queues to collect cash for their daily transactions; they did not have to worry about the possibility of running out of cash in a grocery store; and even if they finished all the cash in their bank account, credit card companies smilingly offered them money on credit. Never in the history of economic transactions has making a payment been as easy as it has been in the last three decades.
Amitav Chakravarti, Manoj Thomas

Chapter 9. Why paying people to donate blood does not pay

Insights for public policy and prosocial behavior
What has public policy got to do with GO and STOP signals?
Amitav Chakravarti, Manoj Thomas

Chapter 10. Five steps to actionable consumer insights

How to lead and manage the insights process
The head of innovations at OSRAM Sylvania is leading a new product development project on an LED-based lighting system. The innovation, tentatively called the SmartLite system, promises to be a breakthrough innovation in the lighting market. The company, a global leader in lighting products, has already announced to the world the wonderful things their intelligent lighting system can do:
Imagine a perfect start to the day. As you start waking up, SmartLite will start automatically simulating the sunrise to fully wake you up. The SmartLite system will also, without any intervention on your part, automatically turn on the coffee machine to start the morning brew. With the smell of fresh coffee in the air, the lighting system informs the window shades to slowly open to synchronize the light with the sunrise. It also turns on the radio to play your favorite wake-up song. SmartLite is the first step toward truly intelligent lighting system. It will know your needs, sense your mood, know your agenda—and automatically provide the right light where you need it, when you need it, even before you know you need it. And to top it all, it will significantly lower your electricity bills.
Amitav Chakravarti, Manoj Thomas


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