Feeds:
Posts
Comments

Posts Tagged ‘Customers’

The Theory of Jobs to Be Done has the power of shifting perspective in the areas of marketing and consumer behaviour, customer choice in particular: it advocates changing the focus of marketers from consumers as targets to what the consumers or customers wish to achieve by ‘hiring’ their companies’ products or services. The Jobs to Be Done Theory (or Theory of Jobs in short) is the central theme in the book “Competing Against Luck: The Story of Innovation and Customer Choice” (2016) authored by Clayton M. Christensen (with three colleagues). Christensen, a professor of Business Administration at Harvard Business School, passed away in late January 2020 at the age of 67.  His book is one of the more illuminating, and nonetheless captivating, books I have read in the field in recent years; this post is written in tribute to Clayton Christensen and his valued contribution to knowledge and practice.

Christensen is probably known better to many engaged in management for his important, foundational work on disruptive innovation: how enterprises with original and ‘unorthodox’ approaches get to disrupt existing markets and unsettle incumbent companies or non-profit organizations. In many cases the new approach may alter the boundaries defining existing markets. Most often the innovation is technology-enabled, yet it is not all about technology but about a divergent and ingenuine way of thinking. The Theory of Jobs is actually aligned with his previous research: giving an innovative, better answer to a job consumers try to complete, where other solutions failed or disappointed, can cause disruption in a respective market.

Consumers have goals they wish to achieve or tasks they aim to accomplish — a ‘job’ is defined by a task or goal set by the consumer in a certain condition. More punctually, the ‘job’ is the progress consumers are making towards accomplishing their task, or getting the job done. It may often be constituted by a problem the consumer wants to solve. Christensen views consumer needs as something too vague and general, not describing closely enough the issue a customer faces and tries to resolve in a given situation. The job, however, is context-specific, described from the viewpoint of the consumer. The job can have functional, social and emotional aspects or drives that may change with circumstances (e.g., is George driving to work or spending time with his children in the mall? — in each case a milkshake can serve a different job, is Jane looking for something to eat in front of her TV or something to prepare for dinner for her family?)

The approach proposed by Christensen is not entirely new — it is inspired by a concept put forward by Theodore Levitt in the 1960s when criticising ‘marketing myopia’ — it is not the product that is of interest to consumers but what they need it for (e.g., solve a problem) or what they want to do with the product (e.g., people are looking for transportation, not necessarily for trains or cars, one does not buy the electric driller but the hole in a wall that can be made with it, for example to install holders for a shelf). In the same spirit, Christensen suggests that consumers do not buy products or services — they ‘hire’ a product or service to get a particular job done. Furthermore, the job does not dictate any specific type of product — a consumer may consider different types of solutions that lead each to hiring possibly a different type of product or service (e.g., taking a bus, riding a scooter, or walking {shoes}). However, Christensen seems to have evolved such ideas into a much more concrete plan for execution, one that goes beyond abstract needs and preferences to realistic tasks and goals, jobs encountered in specific circumstances in people’s everyday lives.

Customers remain central in the marketing strategies, plans and efforts of companies, but the emphasis of planning and analyses should not be put squarely on the customers and their characteristics (e.g., demographics, personality traits, lifestyles, needs, preferences). From the perspective of Jobs to Be Done, too much attention is given by managers to “who” the customer is, or even to “what” the customer did — the theory is focused  primarily on “why” the customer did something. Marketers have to understand much better the jobs that underlie the eventual choices made by customers. Because if  marketers understand why a certain choice was made, what job led to it in order to make progress, then they (and their associates) might be able to invent or develop an alternative solution (product or service) that customers would consider a better answer for that job the next time it arises. To obtain such understanding, Christensen and his colleagues advise that marketers should observe the behaviour of customers carefully and methodically (with aid of video), and listen to them. They propose five essential elements that should be captured in a struggle of a customer to make progress — what progress, circumstances, obstacles, compensating behaviour, and what makes a better “quality” solution.

A state of struggle is a crucial condition for a company to make impact on a customer’s choice– if a customer does not find himself struggling to get a job done, then one has no reason or motivation to replace his current solution, and is not likely to be open to alternative suggestions and offers. When a struggle does happen, a customer may ‘fire’ a product or service currently in use for the job in progress and ‘hire’ another as a solution to get the job done. Customers may be struggling to complete a job when a product they have so far employed turns out to be inadequate (e.g., terms of the job have changed, not necessarily due to the product’s fault) or its performance is disappointing. The theory seems to be concerned more with situations where the customer is not satisfied by the progress made with available solutions known to him or her and is voluntarily looking for alternative solutions. Additionally, customers may be struggling when they face a job for the first time. Whether a consumer is novice or experienced with a certain type of task or job, he or she may expand the range of product types and brands considered until identifying an apparently suitable solution for completing the job successfully (e.g., from the more usual and familiar options to the more novel and exceptional ones). Customers hire products or services, but may also fire others beforehand, and this can work in favour of a company or against it, thus creating threats as well as opportunities.

Christensen offers five ways where to find and uncover opportunities to create innovative solutions for Jobs to Be Done: (1) Finding a job close to home — gaps may arise in the more essential, daily and ordinary activities and tasks performed by consumers; (2) Competing with nothing — consider non-users who so far avoided tackling an issue or goal they have with available solutions because they believe those to be inappropriate or unsuitable for them — addressing ‘non-consumption’ can awake a new market segment; (3) Workarounds and compensating behaviours — when consumers cannot find a satisfying answer with available products or services offered as solutions they try to improvise and ‘invent’ their own solutions with existing means, often not intended for the made-up application — such cases should be identified to create a ‘tailored’ product-solution; (4) Look for what people don’t want to do — identify ‘negative jobs’ that are necessary but are seen as nuisance or burden (e.g., it comes at the worst time) to offer a relieving service that smoothens or reduces the burden of doing the job; (5) Unusual uses — a product that is consistently and constantly used for a purpose other than intended by the manufacturer may suggest a missing solution for an existing but unrecognised job that may now be fulfilled (this route seems close to the third route above). The five ways are briefly summarised here merely to demonstrate the scope of opportunities that Christensen (with his colleagues) opens up to practitioners to take initiative, not to rely on luck, and create innovative solutions that consumers may appreciate and adopt for their jobs.

The book “Competing Against Luck” is abundant with examples of jobs encountered by consumers and actual products and services developed and created to provide useful (working-functional) and fulfilling (social or emotional) solutions for them. The cases described help to illustrate jobs with different goals and in varying circumstances, and also to demonstrate research and enquiry methods for uncovering the jobs and devising solutions. The products and services cover a wide span of areas and domains for the interested readers to discover (e.g., distant online learning, shopping for matrasses, medical guidance and treatment, lodging, savings for children).

  • A Nugget for Thought: We could contemplate why men are shaving in different ways in the morning. Is M shaving every morning, every other day, or maybe just on weekends? M may be pressed in time for work and he just wants to keep a clean and decent look hassle-free (no time, no cuts, no mess); he can thus leave more time for other duties in the house before going out. His friend L may be keen about a particular look, an exact shape and cut of beard, that fits his self-image or the image he desires to have in the eyes of others (colleagues, friends etc.). We could also think about men who do not shave: N might grow a constant beard for religious reasons, but he may still wish to appear orderly and respectable, maybe even authoritative. The most suitable solution for the job of M may be an electric shaver whereas L may turn to a manual razor; N may be helped for his job by a set of scissors, a trimmer and a small brush. All three men would probably complete their jobs with some form of lotion or cream for their face (and beard). But are there any new devices, toolsets and services that can be made to help M, L, & N get their jobs done to even higher satisfaction and pleasure?

As an exception, I chose to conclude the post with a citation of Clayton Christensen from the chapter of Final Observations in the book “Competing Against Luck”  (p. 231):

I could go on for hours about how the Theory of Jobs helps us see the world in unique and insightful ways. Good theories are not meant to teach us what to think. Rather, they teach us how to think. I encourage you to continue the conversation from here in your home or your office after you put this book down.

I believe that this wish of late Clayton Christensen deserves to be adhered and fulfilled.

Ron Ventura, Ph.D. (Marketing)

Reference: 

Competing Against Luck: The Story of Innovation and Customer Choice; Clayton M. Christensen, with Taddy Hall, Karen Dillon and David S. Duncan, 2016; Harper Business (Harper Collins Publishers).

 

 

 

 

 

 

 

 

 

 

 

Read Full Post »

Surge pricing is a variant of dynamic pricing (also known as variable pricing). The dynamics of prices means that prices can now change much more frequently and vary across customers, time and place at ever higher resolution; a price surge or hike at peak moments in demand can be described as an outcome of dynamic pricing. Surge pricing received great attention due to Uber’s application of this strategy, and not least because of the controversial way that Uber implemented it. But dynamic pricing, and surge pricing within it, is a growing field with various forms of applications in different domains.

A price surge is generally attributed to a surge in demand. In the case of Uber, when the number of customer requests for rides (‘hailing’) critically exceeds the number of drivers available in a given geographic area, Uber enforces a ‘surge multiplier’ of the normal (relatively low) price or tariff (e.g., two times the normal price). The multiplier remains in effect for a period of time until demand can be reasonably met. The advantages, as explained by Uber, are that through this price treatment (1) drivers can be encouraged to join the pool of active drivers (i.e., ready to receive requests on Uber app), as well as  pulling drivers from adjacent areas; and (2) priority can be given to a smaller group of those customers who are in greater need of prompt service and are willing to pay the higher price. Consequently, waiting times for customers willing to pay the price premium will be shorter.  (Note: Lyft is applying a similar approach.)

There are some noteworthy aspects to the modern surge pricing. A basic tenet of economic theory says that when demand surpasses the supply of a good or service, its price will rise until a match is reached between the levels of demand and supply so as to ‘clear the market’. Yet the neo-classic economic theory also assumes that the equilibrium price applies to all consumers (and suppliers) in the market for a length of time that the stable equilibrium prevails; it does not account well for temporary ‘shocks’. Proponents of surge pricing argue that this pricing strategy is an appropriate correction to a market failure caused by short-term ‘shocks’ due to unusual events in particular places. There is room in economic theory for more complex situations that allow for price differentials such as seasonality effects or gaps between geographic regions (e.g., urban versus rural, central versus peripheral). Still, seasonal prices are the same “across-the-board” for all; and regions of different geographic markets are usually well separated. On the other hand, in surge pricing, and in dynamic pricing more broadly, it is possible through advanced technology to isolate and fit a price to a very specific group of consumers in a given time and space.

One of the concerns with surge pricing in ride e-hailing is that the method could take advantage of consumers-riders when they have little choice, cannot afford to wait too long (e.g., hurry to get to a meeting or to the airport) or cannot afford a price several times higher than normal (e.g., multipliers of more than 5x). The problem becomes more acute as surge pricing seems to ‘kick in’ at worst times for riders, when they are in distress [1a](e.g., in heavy rain, late at night after a party). The method seems to screen potential riders not based on how badly they need the service but on how much they are willing to pay. The method may fix a problem for the service platform provider more than for its customers. Suppose hundreds of people are coming out at the same time from a hall after a live music concert. If the surge multiplier shown in the app at the time the prospect rider wants to be driven home is too high because of the emerging peak in demand, he or she is advised to wait somewhat longer until it slides down again. How long should riders wait for the multiplier to come down? Often enough, so it is reported, it takes just a few minutes (e.g., minor traffic fluctuations). But in more stubborn situations the rider may be able to catch a standard taxi by the time the multiplier declines, or if the weather permits, walk some distance where one can hail a taxi or get onto another mode of public transport.

Another pitfall is reduced predictability of the occurrence of surge pricing. Consumers know when seasons start and end and can learn when to expect lower and higher prices  accordingly (though it used to be easier thirty years ago). In public transport, peak hours (e.g., morning, afternoon) are usually declared in advance, wherein  travel tariffs could be elevated during those periods. Since surge pricing is based on real-time information available to the service platform provider, it is harder to predict the occasions when surge pricing will be activated, and furthermore the extent of price increase. Relatedly, drastic price changes (e.g., due to high frequency of updates, strong fluctuations) tends to increase the uncertainty for service users [1b].

The extent of price surge or hike is a particular source of confusion. Users are notified before hailing a Uber driver if surge is on, and a surge multiplier in effect at that time should appear on the screen. The multiplier keeps being updated on the platform. It is sensible, however, for the multiplier to stay fixed for an individual rider after the service is ordered. Thus the rider can make a decision based on a known price level for the duration of the ride (or an estimate of the cost to expect). Otherwise, the rider may be exposed to a rising price rate while being driven to destination — but the rider should also benefit if the multiplier starts to slide down (or entering another area where surge is off). The first scenario resembles more a situation of bidding whereas the latter scenario looks more like gambling. Stories and complaints from Uber users reveal recurring surprises and unclarity about the cost of rides (e.g., claims the multiplier was 9x, a ride of 20 minutes that cost several hundreds of dollars, a claim the multiplier dropped but the total price did not go down in accordance). Users may not pay attention sufficiently to the multiplier before hailing a ride, do not comprehend how the pricing method works, or they simply lose track of the cost of the ride (i.e., the charge is automatic and appears later on the user’s account).

Discontent of customers may also be raised by a sharp contrast experienced between the relatively low normal price rate (e.g., compared with a standard taxi) and the high prices produced by surge multipliers [1c].  A counter argument contends that the price hikes or surges allow for low rates at normal times by subsidising them [2]. More confusion about Uber’s pricing algorithm could stem from reports on additional factors that the company might use as input (e.g., people are more receptive of surge prices when the battery of their mobile phone is low, and customers are more willing to accept a rounded multiplier number than a close non-rounded figure just below or above it (MarketWatch.com, 28 December 2017).

  • Not even a strategy of surge pricing appears to be completely immune to attempts of manipulation. It was revealed in 2019 that drivers with Uber (and also Lyft’s) have tried to game the surge mechanism. The ‘trick’ is to turn off the app at a given time in a coordinated manner among drivers, let the surge multiplier rise, and then turn on the app again to gain quickly enough from the higher rate as long as it prevails. The method seems to have been used especially at airports in anticipation of incoming passengers, based on the knowledge of drivers of several flights scheduled to land during a short interval. The motivation for taking this action: the drivers claim they are not paid enough at normal times by the platform operators (BusinessInsider, 14 June 2019).

Uptal Dholakia, a professor of marketing at Rice University (also see [1]), suggested four remedies to the kinds of problems described above. First, he advised to set a cap (maximum) on surge multipliers and notify customers more clearly about them (greater transparency). In addition, he recommended curbing the volatility of price fluctuations and communicating better the benefits of the method (e.g., reduced waiting times). Dholakia also raised an issue about a negative connotation of the term ‘surge’ that perhaps should be replaced in customer communications [3].

Various forms of dynamic pricing, including surge pricing, are already utilised in multiple domains. It is noted, for instance, that the strategy of Uber was not initiated to resolve problems of traffic congestion; ‘surge’ may be activated as its result but the purpose is to resolve the interruptions that congestion may cause to the service. For dealing with traffic congestion and overload in roads, other types of surge pricing are being used by public authorities. First, a fast lane is dedicated on a highway or autoroute (e.g., entering a large city) for a fee — the amount of ‘surge’ fee is determined by the density of traffic on the other regular lanes. Drivers who wish to arrive faster should pay this fee that is displayed on a signboard as one approaches entry to the lane (a few moments are allowed to decide whether to stay or abort). Second, a congestion fee, which could actually be a variable surge fee, may be imposed on non-residents who seek to enter the municipal area of a city at certain hours of the day.

As indicated earlier, public transportation systems in large cities may charge a higher tariff during peak or rush hours. The time periods that a raised tariff applies are usually declared in advance (i.e., they are fixed). Peak and off-peak rates may apply to different types of travel fares. The scheme is employed to encourage passengers who do not really need to travel at those hours to change their schedule and not further load the mass transportation system. There is of course a downside to this approach for passengers who must travel on those hours, such as for getting to work (employers who cover travel expenses should set the amount according to the cost of the more expensive rate). Using surge pricing in this case would mean that passengers cannot tell for certain and in advance when a higher tariff applies, but the scale of ‘surge prices’ can be pre-set with a limited number of ‘steps’, and thus reduce resentment and opposition.

Other types of dynamic (variable) pricing involve strong technological and data capabilities, including demand at an aggregate level and customer preferences and behaviour (search, purchase) at the individual level. A company like Amazon.com keeps updating its prices around the clock based on data of demand for products sold on its e-commerce platform. A more specific type of dynamic pricing entails the customisation of prices quoted to individual users-customers (i.e., different prices for the same book title offered to different customers). The approach maintains that a higher price could be set, for instance, for books in a category in which the customer purchases books more frequently and even based on search for titles in categories of interest. This form of price customisation is debatable because it aims to absorb a greater portion of the consumer’s value surplus (i.e., how much value a consumer assigns to a product above its monetary price requested by the seller), raising concerns of unfairness and discrimination. The risk to sellers is of making products less worthwhile to consumers to buy at the higher customised prices. (Note: Amazon was publicly blamed of using some form of price customisation in the early 2000s after customers discovered they had paid different prices from their friends; however the practice has not been banned and it is suspected to be in use by companies in different domains.)

  • Take for example the air travel sector: Airlines may use any of these methods of variable pricing: (a) Offering the same seat on the aircraft at different price levels (‘sub-classes’) depending on the timing of reservation before the scheduled flight: the earlier a reservation is made, the lower the price; (b) Changing fares for flights to different destinations based on fluctuations in demand for each destination and time of flight; (c) There are claims that airlines also adjust upwards the fares on flights to destinations that prospect travellers check more frequently in the online reservation system.

More companies in additional sectors are expected to join by applying varied forms of dynamic pricing. Retailers with physical stores are expected foremost to use dynamic pricing more extensively to tackle the growing challenges they face particularly from Amazon.com in the Western world (e.g., supermarkets will employ digital price displays that will allow them to change prices more continuously during the day and week according to visitor traffic levels). Restaurants may set higher prices during more busy hours at their premises, and hotels are likely to vary their room rates more intensively, taking into consideration not only seasonal fluctuations but also special events like conferences, festivals and fairs (e.g., see “The Death of Prices”, Axios, 30 April 2019).

Dynamic pricing, and surge pricing in particular, is the new reality in pricing policy, with applications getting increasingly pervasive. As technological and analytical capabilities only improve, the pricing models and techniques are likely to be enhanced and become furthermore sophisticated. Moreover, methods of artificial intelligence will improve in learning patterns of market and consumer behaviour, expected to enable companies to set prices with greater specificity and accuracy. At the same time, businesses need to take greater caution not to deter their customers by causing excessive confusion and aggravation. The question then becomes: What bases of discrimination — among consumers, at different times, and in different locations — would be considered fair and legitimate? This promises to be a major challenge for both enterprises that set prices and for the consumers who have to judge and respond to the dynamic prices.

Ron Ventura, Ph.D. (Marketing)

Notes:

[1a-c] “Uber’s Surge Pricing: Why Everyone Hates It?”, Uptal M. Dholakia, Government Technology (magazine’s online portal), 27 January 2016

[2] “Frustrated by Surge Pricing? Here’s How It Benefits You in the Long Run”, Knowledge @Wharton (Management), 5 January 2016. A talk with Ruben Lobel and Kaitlin Daniels at Wharton Management School at the University of Pennsylvania.

[3] “Everyone Hates Uber’s Surge Pricing — Here’s How to Fix It”, Uptal M. Dholakia, Harvard Business Review (Online), 21 December 2015

Read Full Post »

The checkout area with its cashier counters is normally the last stop of the shopper in a store, when carrying at least one product to buy. It is easy to neglect this location in the store by thinking that the shopper is arriving there just to pay, collect the items purchased (or hand over to delivery), and leave. But there is more that can happen in checkout beyond payment, specifically in making last minute purchases.

As the consumer spends longer time touring a (large) store on his or her shopping trip, the attraction of the checkout area to the shopper increases (in other words, the shopper more strongly desires to end the shopping trip). This phenomenon is particularly associated with shopping in food stores like supermarkets that sell also other grocery and household products. However, it could also prevail in stores for other types of products (e.g., DIY and home improvement, electrics and electronics, fashion), where the retailer displays many and varied items in a layout spread over a wide-area floor (hence any single large floor in a department store may also apply). The longer the shopping trip progresses, the shopper is likely to less engage in exploring sections in the store (supermarket) and to concentrate on buying products (i.e., the shopper will skip entire parts of the store in favour of entering those sections or aisles where he or she intends to choose products to buy). The tendency to gravitate towards checkout tends to grow in response to increased time pressure perceived by the shopper [*]. Such gravitation may be experienced, for instance, when the shopper enters an aisle from the back of the store and feels urged to exit on its other end closer to checkout rather than return to the back of the store and proceed with the shopping trip.

Yet, when the shopper arrives to a cashier counter, time may pause. Especially if one has to wait in line, this creates an opportunity to consider additional purchases.

Firstly, a shopper may choose from products placed next to the cashier counter. Stores often provide multiple options for last minute purchases at hand’s reach. These are  usually inexpensive items easy to pick-up. One may be reminded for instance that he is out of batteries or tissues and take a pack from the nearby stand. The retailer may also put products on special discount (e.g., ‘last-in-stock’ offers, chocolate gifts in advance of holidays) as shoppers access the cashiers for checkout. Then there are the ‘temptations’ shoppers could buy on impulse to spoil themselves (or their children) from a variety of small sweet or salty snacks (e.g., chocolate-coveted waffles, potato chips, chewing gums or candies of different flavours). By the time consumers get to checkout their self-control is more likely to be depleted and they are more prone to make yet another unplanned purchase.

But shoppers seem to make even more extensive considrations and decisions about products situated more far afield while standing in checkout. Waiting gives shoppers the chance to think again if they have forgotten anything, or maybe re-contemplate making an unplanned purchase they rejected earlier. It is not uncommon to see a shopper leaving the shopping cart in front of the counter and going to bring yet another product (if there is enough time one may go and return even twice). Shoppers may furthermore get ideas for unplanned purchases of products from end-of-aisle displays facing the checkout area — from her place in line the shopper may notice a visually appealing ‘invitation’ and make the short walk to pick-up the product and add to the cart or basket.

  • The ‘trips’ shoppers embark on from the checkout area can sometimes be quite long, deep into the aisles, and take a few minutes until they return with the sought out product. It is hard to anticipate what products shoppers may remember as late. Still, a retailer may identify products that are more essential to consumers, and are ‘fast moving’, so as to place them on shelves inside aisles and closer to the checkout area, quick and easy to access.

But the environment in supermarkets is changing, and shopping patterns that were allowed and even encouraged till now could be forced to diminish.

Supermarkets have been removing in the past few years some of their human cashier counters (in some cases about a half), replacing them with self-service cashier stations — each station includes a small counter and a computer-cashier terminal. The stations are positioned in a special checkout court usually in place where counters with human cashiers stood (thus 8 stations can be positioned, for example, instead of 4 human-staffed counters). The human cashier is now actually the customer. This method should decrease the probability of a customer having to stand in line or the number of customers waiting in line for a free self-service cashier station.

In practice the new method is not helpful and workable for every customer — especially older customers (e.g., 65+) and those less comfortable with computers are reluctant to try the self-service cashier counters. Some customers, particularly with full carts, still prefer to be serviced by a skilled human cashier. All these customers can still be found in lines, often longer ones, at the traditional checkout counters. This can frequently be evident at a time that most of the self-service stations are unused. But those stations do get employed, especially by younger customers (e.g., 30 something), and shoppers in a hurry or with just a few items taken out from a basket. Sometimes customers get mixed-up in the process, such as with scanning a product, weighing fruits or vegetables, or getting the product wrongly identified or unrecognised (errors that happen to staff cashiers as well), or having problems with payment. For those cases a permanent customer assistant must be present at all times to help customers resolve their issues and complete the purchase.

Yet, a conspicuous property of new self-service checkout areas could be noticed recently — the area or court is stripped from products anywhere around the stations. A shopper that enters the court may become isolated from the rest of the store. This has a positive aspect in eliminating any distractions from the checkout process done independently by the shopper and can help to hasten the process. There could also be a health benefit, that is by keeping the shopper away from sweets and snacks. However, it also cancels certain shopping habits that were natural, convenient and helpful to the shoppers (and also to retailers). It should not be that much of a nuisance to place a board with some useful and hedonic products next to the self-service stations. In reality, the opposite seems to happen, that is the number of products placed next to traditional cashier counters dwindles. Stands with products on discount deals may still be found in the traditional checkout area, but it may not be on the way, accessible or immediately visible to shoppers who turn to the self-service checkout area.

  • Note: Self-service cashier stations are still hard to find at this time in stores specialising in other product categories and in department stores.

The next stage is the cashier-less store with no discernible checkout area. Checkout is virtual, digital, and happens once the shopper goes out the gate or door. The early springs of this retail model already exist (e.g., Amazon Go convenience stores — “Just Walk Out”). Anything said above about shopping patterns at checkout supposedly would become irrelevant and non-valid. But the cashier-less model is still in its infancy and there are a number of issues to be resolved (e.g., in technology and application of the method) vis-à-vis human shopping behaviour tendencies.

At the moment Amazon Go stores, for instance, are characterised by quick shopping trips (e.g., “take away” prepared meals and other food items and drinks soon to be consumed), and perhaps trips to fill-in essential items missing at home. It is still unclear how the method would work for ‘heavier’ shopping missions. In particular, the methodology appears to apply to pre-packaged items taken off shelves (including in refrigerators), not to items in bulk to be weighed like fruits and vegetables. There seems to be no indication also where shoppers are supposed to move their purchased items into bags to take with them. Furthermore, at a traditional checkout counter you can ask the cashier for any clarifications about prices, discount validity or the final bill (on paper slip and now also on mobile phone). Even at the self-service station one can see on the screen the items and prices that roll as the checkout proceeds. With cashier-less stores, the shopper gets the bill on mobile app (e.g., Amazon Prime) only after leaving the store; then it is not simple to go back and find a representative to ask anything if needed.

These points suggest that a physical checkout area may not become obsolete; an area before exit with support services and counters to re-organise (e.g., before the gates) will remain needed. Perhaps cashier-less stores are simply not ready for performing more consequential shopping. When the model matures, then it should also be possible to place boards with easy-to-pick products that shoppers can grab just before going out through the gate.

The method for checkout is going through transformation, and even greater changes to this process are expected to take place in the future. However, the concept of a checkout area can remain in a new form that will answer to the needs and conveniences of shoppers. More careful thought should be given to modes of human behaviour, such as the benefit of having the time to pause and think over the shopping trip (e.g., accounting for limitations of human memory). The physical checkout area or court may always be the place for receiving human customer support, re-organising before leaving the store, and why not taking a small dark chocolate bar at the last minute on the way out.

Ron Ventura, Ph.D. (Marketing)

Notes:

[*] Testing Behavioral Hypotheses Using an Integrated Model of Grocery Store Shopping Path and Purchase Behavior; Sam K. Hui, Eric T. Bradlaw, & Peter S. Fader, 2009; Journal of Consumer Research, 36 (October), pp. 478-493 (Herb Sornsen labeled this phenomenon the “checkout magnet” in his book Inside the Mind of the Shopper.)

Also see “Deconstructing the ‘First Moment of Truth’: Understanding Unplanned Consideration and Purchase Conversion Using In-Store Video Tracking” by Yui, Huang, Suher, & Inman, 2013 in the Journal of Marketing Research on planned and planned purchases.

Read Full Post »

For over four decades after the Second World War, TV sets had to be connected to antennas to receive broadcast TV programming (i.e., by air) from national media networks. In the two last decades of the 20th century, connections have shifted to networks of cable and satellite TV companies (the shift started earlier in the US; some households connected to private satellite dishes).  Now, in the early decades of the 21st century, TV connections move again, this time to broadband Internet to receive TV video content by streaming, including TV programmes and films. Moreover, video content can be streamed for viewing on Smart TVs, computer screens (desktop/portable), and on screens of mobile devices (smartphones and tablets), via wired or wireless connections (though wired is still advantageous for TV content). What counts for “TV” is more fluid and it is no longer bound to TV sets in the classic form.

The streaming market for TV content is entering lately a new stage of transition. The competition is getting tougher and more crowded as ‘old-new’ players (i.e., established media networks) are entering or stepping up their involvement in streaming of full-programme video content. Netflix has set an example, and a challenge, to the more ‘traditional’ TV companies since 2007, when Reed Hatsings identified the potential of broadband Internet for streaming film content and faded-out Netflix’s model of mailing DVDs to customers. Over the past decade Netflix kept an advantage, though the gap from competitors (e.g., Hulu, HBO-Now, Amazon Prime Video) has been narrowing down. The latest developments, as discussed below, pose a more serious threat already to the business model and status of Netflix, expected to make it much more difficult for Netflix to stay on top. But the overall growing streaming activity by technology and media companies should worry nonetheless the cable and satellite TV companies of the previous generation from the 20th century.

Netflix offers to its subscribers a variety of films (movies) and TV shows, but its prestige relies particularly on its original in-house productions. Its TV series may be found in multiple genres: TV dramas (e.g., Riverdale, The Crown), Comedies, TV Sci-Fi, Crime TV Shows, Anime Series, TV Horror, Documentaries, and Kids & Teen TV. Some series are known also outside the circles of its customers; among its popular series Netflix lists, for instance, Stranger Things.

However, Netflix gives its subscribers access to view many TV programmes from other companies, including highly popular series from the American national networks, and henceforth difficulties are starting to pile up. As media companies like NBCUniversal and Disney (which are tied together) are about to launch new streaming services, they become more protective of their in-house content productions and intend to block competing streaming services from offering their programmes and films. The Walt Disney Company is additionally now in full control of Hulu streaming service (through its acquisition of 21st Century Fox in March 2019). Furthermore, HBO which currently operates the streaming service HBO Now is in ownership of WarnerMedia (AT&T), under its Entertainment division; HBO is preparing to launch HBO Max in 2020, a new on-demand TV service by streaming.

A battle over rights, especially exclusive rights, to screen video content of films and TV programmes between companies of different orientations is unfolding, and this situation signals trouble for a company like Netflix. For example, Netflix had to pay a gargantuan sum of $100 million to continue to screen Friends on Netflix during 2019, but next year the series will move to HBO’s streaming platform as it launches HBO Max. Friends, the sitcom series from the 1990s, has been very popular among Netflix’s customers, since it started showing in 2015, thus putting pressure on the company to keep it, for as long as they could. In attempt to compensate, Netflix committed to pay a considerable sum of half a billion dollars to secure rights to screen Seinfeld (its ‘spin-off’ comic series Curb Your Enthusiasm by Larry David, that is considered more favourable outside the US, will remain an exclusive of HBO Max). Also, the American version of the originally British satirical series The Office that is still available in Netflix’s library will be reserved from 2020 to the new NBC’s streaming service, NBC Peacock. Such difficulties may force Netflix to rely even more on  new and original materials, but investors are debating if those materials, being expensive to obtain, can provide sufficient return to be profitable (“Netflix Feels the Pressure as Competitors Circle“. BBC News, 17 October 2019).

The streaming service Hulu provides primarily original content of NBC and Fox. Its library includes categories of Hulu Originals, Movies, Current and Past Seasons of TV Series, and Kids. Yet Hulu has an additional facet: it avails a service of real-time TV programming. Hulu offers a basic plan, Hulu (for $5 per month), that allows streaming content from its library (with ads) and an enhanced plan, Hulu + Live TV (for $45 per month), that includes 60 TV channels (American), VOD channels and DVR for recording.  As noted above NBC and Fox are actually owned by Disney, which in turn is set to launch in November 2019 a streaming service called Disney+. The Disney Plus service will specialise in films and programmes from Disney’s own studios, plus Marvel, Pixar, Star Wars (Lucasfilms), and National Geographic, and a large selection of Disney classics as well. Yet from a different corner, NBC is going to launch NBC Peacock in April 2020 that on its part will offer TV shows and series of NBC network, films from Universal Pictures and DreamWorks studios, and it promises to provide for viewing more cinema films from Hollywood bigger studios (NBC Press Release, 17 Sept. 2019). It is said to be supported by both advertising and subscription (not clear at the moment if it will be available outside the US/North America). It will be interesting to see how the Walt Disney Company allocates and manages content for viewing across the three streaming services in its control: Disney+, Hulu, and NBC Peacock. It is not unimaginable that one of them will become redundant due to overlap and internal competition.

More concerning is the intention of Disney to preserve for its own streaming services the rights to screen video content, past and present, from the various studios it controls. The company is expected to forgo $2.5 billion in revenue by removing Disney content from rival services [Adam Lashinsky in Fortune Magazine, May 2019 *]. Additional revenue is likely to be lost by taking off also content of NBC and Fox from the libraries of rival services, such as Netflix. Lashinsky raises alarm over this plan of the Disney company because of the financial harm foreseen to be endured; the big question is: will it pay off in the long run by attracting enough viewers-customers keen on watching Disney video content. Competitors will suffer some headache in filling the gap by bringing content from new productions and alternative sources; will their customers miss the withdrawn content enough to switch or to subscribe to an additional service to get access to the ‘worlds’ of Disney, NBC or Fox?

Amazon Prime Video service is challenging Netflix for a while now, especially in investment in original productions. The Prime Video service offers original Amazon TV productions next to TV series from other TV providers (e.g., HBO, CBS), in addition to categories of Movies and Kids. A title ‘Amazon Original’  is flagged upon image frames of programmes credited to Amazon. Multiple genres are available: Drama, Comedy, Kids & Family, Action & Adventure, Documentary, Animation, International, and more. Members of the Prime Video club can view much of the content for no additional fee. The video content can be watched from the Web and with Amazon Prime Video app on mobile devices, with set-top boxes, and on selected Smart TVs. The competition of Amazon with Netflix would become more intense if the more veteran media companies pull content out from their video libraries.

Apple, a prime technology company, is increasing its involvement in the field of TV media with the combination of its Apple TV app and the upcoming Apple TV+ streaming service (November 2019). Apple also will not be shy in investing in original productions. The Apple TV+ service will bring new original stories of Apple (e.g., The Morning Show starring Jennifer Aniston and Reese Witherspoon; the latter already appears with Nicole Kidman in a successful series “Big Little Lies” of HBO). The original programmes will show on top of programmes and films from different premium channels, streaming services (but not Netflix), and cable providers; all can be watched with the Apple TV app on the company’s mobile devices, computers and smart TVs (CNet.com, 16 October 2019).

  • The plans of Netflix range in price from $9 (Basic) to $16 (Premium) per month.  The plans of Hulu exhibit two price extremes ($5 — $45), with advertising on the one hand and Live TV on the other.  Disney is said to charge $7 per month ($70 for a year paid in advance); it promises the service will deliver at a technical (HD) and content quality of the Premium plan of Netflix. The expected starting fee for Apple TV+ is $5 per month. Subscription to Amazon Prime Video seems to require a membership fee of $9 and then $13 per month paid monthly or $119 for a year paid in advance.

Cable and satellite TV companies face a difficult competition from TV streaming services that give viewers great flexibility with often high quality programming content. The streaming option gives a new leverage to the established TV networks and media companies to attract viewers for starting customer relationships directly with them. But the cable and satellite TV providers can still hold an important advantage: bringing a widespan variety of content of different styles and flavours from different sources, not committing to a single external production house, in addition to their own productions. Furthermore, many TV viewers are still likely to want to watch real-time (‘linear’) TV programmes (e.g., news). The TV channels should include channels of the viewer’s own country as well as optional channels from other countries and in other languages. National TV networks already provide an option to view their programmes by streaming on the Internet: live as they show in TV schedule and recorded (e.g., BBC iPlayer allows UK residents to watch programmes of BBC1 to BBC4 channels on demand); some programmes may be viewed for free and some by paid subscription. Newspapers are also producing more video stories for streaming.

However, cable and satellite TV providers should re-consider their models of service and allow much more flexibility of choice of channels by building greater modularity into their TV service plans. Video-on-Demand (VOD) and recording (DVR) services are desirable and appreciated but they are not enough. There is little point left these days in offering ‘basic’ plans with 100+ channels for a high monthly fee when people regularly watch only a small fraction of them. In the age of customization, TV viewers-customers should be given more freedom in building their own bundles of TV channels. More of the company’s income can come from the fees on ‘packets’ or sub-bundles of channels customers add-on to a low-cost basic plan, yet customers will then know they are paying for channels they are truly interested watching (e.g., news and documentaries, classic cinema films 1940s-1980s, British / French / Italian TV, vintage TV series 1960s-1980s, animation, and so on). The sub-bundles should be small and focused.

Building fences around original TV content of one company and barring streaming services of other companies from offering those programmes will not benefit anyone, neither on the provider side nor on the customer-viewer side. A TV service provider can differentiate itself by protecting the exclusivity of a greater part of its original video content (as ‘anchors’) while allowing a flavour of it to be experienced by customers of its competitors. It is no less logical doing so than licensing rights to other broadcast TV networks, cable and satellite TV providers to screen their programmes. Content has to be shared between the TV service providers, for the appropriate credit and fee.

Television viewers are looking more afar and broadly across the TV spectrum to find the kinds of programmes they wish to see in the few hours they have spare to watch TV. But there is probably a limit to the number of different streaming sources they will be ready to subscribe to in order to access a satisfying variety of programmes and films for viewing. Adding streaming services will not help if they become too secluded. That is why cable and satellite TV providers can still have an advantage, yet they need to give more flexibility of choice to their customers. To gain the awareness and interest of TV viewers in the series and films produced by media and TV companies, they have to share their works instead of raising fences between them.

Ron Ventura, Ph.D. (Marketing)

Note:

[*] “Disney’s Latest Blockbuster Isn’t in Theaters”, Adam Lashinsky, Fortune Magazine, 1 May 2019, 179 (5), pp. 5-6.

Read Full Post »

Interfaces of knowledge management (KM) systems can be applied to support and empower customer service via two key channels: (1) directly — used by customers (e.g., adjunct to self-service utilities, web-based or mobile app), or (2) indirectly — used by employees (customer service representatives [CSR]) to help them provide a better service to customers (e.g., more effective, timely, and accurate). These channels have some very different implications in form, scope and intensity of use of KM capacities.

The ‘library’ of a KM system should provide the customer with relevant background information that can help him or her make decisions (e.g., choosing between product attribute options, selecting among investment assets). The knowledge resource may also assist in completing technical tasks at one’s home or office (e.g., setting-up a software or device).  The content may include explanations on specific concepts or procedures, product reviews, and articles on related topics (e.g., an overview of a technology, medical condition, class of financial assets).

A crucial question is how the customer gets exposed to information relevant for the task at hand. General search queries often lead to many and spurious results requiring the customer to work hard to find and collate relevant information. The system has to do better than that in recommending truly useful information, to bring the user more precisely and quickly to a set of relevant knowledge sources. The customer may start by filling a short questionnaire that lets him specify his interests and goals. But as the customer accumulates more experience in using a KM portal and accessing some documents, the system can learn from his or her behaviour and update its recommendations. Alternatively, references to a KM resource may be embedded within a self-service facility (e.g., application for travel insurance) so that the system can refer the customer to supplementary information based on his or her progress in the service process (e.g., explanation of healthcare procedures in the country of destination, recommended features of coverage for the planned trip). As the system learns it may add a visual display of relevant statistics for guidance (e.g., distribution of options chosen by similar customers or in similar situations). Furthermore, a company can use its discretion to provide premium customers secured access to resources available only to its employees within the organisation.

Knowledge management portals for customers are not so common. References are more likely to be implicit, such as being embedded within the self-service platform of the company. More companies now provide an interface for interaction (chat) with an intelligent virtual agent (IVA) to get assistance. Such a robotic agent may give a brief answer and perhaps add a single resource for further reading; if the customer insists on asking a follow-up question, the agent may refer the customer to 1-3 more documents. Sometimes this kind of help is not sufficient and the customer has to make extra effort to drill more useful information from the IVA (a face wearing a smile to the customer is not always comforting). In more complex, sensitive and risk-prone domains, it is advisable to accompany the IVA with a portal that will display more resources in a coherent and viewer-friendly format, explicating what each resource would be most helpful for.

Having said that, there are circumstances in which the customer cannot manage on his own and needs to talk to a skilled person to resolve an issue. It may be because the customer encounters difficulties in fulfilling the task using the computer-based self-service tools or because the domain at issue is relatively complex and involves more significant personal implications (e.g., financial investment, insurance, medical conditions, sophisticated technological products). Researchers Shell and Buell of Harvard Business School suggest in a recent working paper [1] that having customers know that access to human contact is available to them for assistance, even without their taking advantage of it, can improve their feelings, particularly mitigating anxiety, and in turn recuperate their satisfaction and confidence in decisions they make during a self-service session; this will show especially in situations of heightened anxiety. Hence, making notice of access to human contact salient is essential.

Of course in some cases customers will choose to actually turn to a human agent for assistance and guidance; on many other occasions, however, merely knowing that human assistance is reachable may instill some more confidence and encourage the customer to continue independently to the extent that he or she can avoid calling for assistance (i.e., knowledge that human contact is available acts as a safety net). A company can offer human assistance from an agent by phone or chat (not an IVA/chatbot), yet as Shell and Buell propose, the company may also enable customers to get advice from customer-peers (though with more limited effect). Mitigating anxiety through offering human assistance as needed can help to reduce negative effects of customer anxiety on choice satisfaction and subsequently on trust in the company.

The utilisation of knowledge management portals by company’s CSRs aims to work at a different, professional level, to enable the CSRs address concerns and issues raised by customers in a more proficient and timely manner. For instance, it should save CSRs the time and effort of referring to a number of platforms (e.g., marketing, CRM, product) by bringing together different types of relevant and practical information onto one place from which the human agent can access it more easily and quickly. A KM portal display may integrate most recent history of interactions with the customer, relevant offers of products or service packages, or links to additional background articles (e.g., product profiles, technical materials). The KM portal may include essential customer information (e.g., identification and key flags) but it may not free the CSR completely from turning to a CRM system for more information (e.g., previous purchases); likewise, it may not free the CSR from turning to the billing system or a product database resource. The challenge of a KM system is to pull together those portions of information deemed most relevant and useful to the issue at stake from the broad knowledgebase of the company and lay them closer to the service agent (e.g., in a portal or dashboard display). An agent who listens to the ‘story’ told by the customer can give the KM system more clues to allow it to make the best recommendations. Information may be presented explicitly or as links to recommended documents and other external resources. This is expected to be part of the future mode of operation of contact centres, and it is already in motion.

It is important, nevertheless, to take into consideration the time a human service agent needs to review some of the information proposed in the KM portal, in relation to a customer’s enquiry during a live interaction with the customer. The CSR may have to trace, learn, judge and extract relevant information before delivering his or her insight, recommendation or solution to the customer, and all that within a few minutes. Some of the knowledge may be included, as suggested above, in resources like articles that the agent should access and read — think for instance of an article on a new travel insurance offer: the agent has to understand the terms before communicating it to the customer, and being able to answer questions. Three observations are in order on this matter:

  1. Human service agents (CSRs) should receive adequate training on choice, comprehension and evaluation of materials from the company’s knowledgebase, and also should be allocated paid “off-duty” time for reviewing new and updated content (e.g., products and service offers, technical support procedures) to reduce learning ‘time-breaks’ during customer interactions;
  2. The CSR agents should be ready and willing to learn and assimilate information they utilise as their own knowledge, together with experiences they accumulate, to be able to use that knowledge again with subsequent customers without having to process information from the KM portal every time and again — a KM system will be much less effective if CSRs rely heavily on what they see on the screen in every event, rather than using it as an aid and supporting tool;
  3. A key capacity of KM systems is to allow employees share among them experiences, lessons and information they have learned which proved pertinent to the service events they have been treating — by adding notes or updating a special forum, service agents can turn implicit knowledge into explicit knowledge that can help their colleagues in handling similar events in their own future customer encounters.

According to a research report by Aberdeen Group [2], companies that have a formal agent experience management programme gain a higher rate of annual increase in customer retention, above two times more than in other companies (12% versus 5%). These companies can also expect to benefit from about two times higher rates of year-over-year increases in revenues and customer satisfaction. At the same time, agent productivity is also likely to be better with a formal programme for supporting and enhancing the agent working experience (11% annual increase versus 7% in other companies without such a programme). Greater service agent satisfaction is linked to greater customer satisfaction; it requires that the agents feel they can do their work serving customers more easily and successfully with proper guidance and direction.

The Aberdeen report identifies three top factors influencing the agent experience. First, the prospect agent should bring to the job good technology knowledge and skills as well as strong communication skills to be fit for the job assigned. Second, the company should provide on its part the means in technology tools that will facilitate the ability of agents to perform their day-to-day tasks. A smart and effective knowledge management system that can quickly and pointedly lead agents to relevant information (e.g., instructive articles) should have a great role to play in improving the agent experience. Making agents spend extended valuable time seeking background knowledge and insights and delaying their handling of customer enquiries are key deterrents to agent productivity; it may be added that these impediments also are likely to lead to increased agent frustration. Nevertheless, side by side with the skills agents bring with them and the information and technology tools the company provides, agents should be given more autonomy while interacting with a customer (e.g., offer discounts, account credit, free shipping etc.). Aberdeen describes this third factor as providing agents the “sense of empowerment in addressing customer needs”. Employees-agents could be made to feel empowered when respecting their judgement in utilising knowledge resources and allowing them leeway in deciding how best to help the customers.

A knowledge management system incorporates knowledge resources with different types of information and technology tools to access that knowledge. The tools are expected to become powered more extensively by artificial intelligence and machine learning capabilities, to enable users to access relevant and practical information or knowledge more quickly and precisely. However, it should be appreciated that knowledge is most often what people make of information made available to them, and also the knowledge they can return and add to the system for the benefit of others. Whether the interface is used by any company’s service agents or the customers themselves (e.g., applying self-service facilities), the support and guidance of a KM system can enhance the service quality in important ways.

Ron Ventura, Ph.D. (Marketing)

Notes: 

[1] “Mitigating the Negative Effects of Customer Anxiety Through Access to Human Contact”; Michelle A. Shell & Ryan W. Buell [2019]; Harvard Business School Working Paper 19-089 (unpublished paper).

[2] “Agent Experience Management: Customer Experience Begins with Your Agents”, Aberdeen Group [Omer Minkara], September 2017

 

Read Full Post »

Many companies are well-known to consumers by their corporate names, including manufacturers, chain retailers and service providers. The corporate name may serve as the leading brand identifier (like an ‘umbrella’ name) for the company’s products or services. But furthermore the corporate-level brand name is the gate to access the organisation’s image as held in the public opinion of consumers. In the last decade companies are increasingly judged by their values, culture, and market and public conduct. Consumers are more strongly influenced in their choice of products or services of a company by what they think of and how they feel towards its corporate brand.

A Tel-Aviv-based strategic management consulting firm, TACK, constructed a two-dimension metric for assessing the image strength (or sturdiness) of companies in Israel. The metric comprises a rational-oriented ‘pillar’ named Logic and an affective-driven ‘pillar’ called Magic. Each dimension of the image strength metric is measured by two (rating-scale) items.

Logic represents how much a company is appreciated by consumers, and to what extent the company makes it worthwhile for consumers to be its customers.

Magic expresses how much a company is loved by consumers, and to what extent consumers believe that the company cares about its customers.

Magic pertains to the emotional ties between the company and its customers and is therefore particularly important to the relationships built by a company with the customers. We cannot underestimate the importance of the logical or cognitive-based evaluation of the company, by weighing its advantages and disadvantages, as the basis for the interest and preference consumers show in using the company’s products and services. However, reasoned appreciation of the company and its offerings will likely not hold-up a relationship without developing an attachment to the corporate-name brand.

TACK applied its Logic & Magic metric for the third continuous year in 2019 to 71 Israeli companies (e.g., food producers, retail chains, telecom service providers, banks). Measures were collected in a survey of 503 adult Israeli consumers (Hebrew-speaking). The companies are not necessarily managed purely as a ‘branded house’; however, this study is not concerned with additional brands owned by the company (e.g., brands that may be endorsed by the corporate brand name or products positioned as sub-brands). The demonstrated mappings of corporate brands (in Hebrew), along the dimensions of Logic and Magic, bring forward some sobering realizations shared below:

Firstly, it is noticeable that, from a consumer perspective, companies that are doing better on the logical-functional front are also more successful on the emotional front, and thus are doing better overall in connecting with consumers. We cannot conclude from this a cause-and-effect relation. But the findings do suggest that a wise strategy that is sensitive to consumers (i.e., it sees things through the eyes of consumers) can win on both fronts. In other words, a company as such that succeeds, through its strategy, in gaining the appreciation of consumers for its performance and advantages of its products and services, is also likely to win the affection, trust and approach of the consumers.

There are hardly any corporate brands that seem to get a high score on Logic but relatively lack in their score on Magic, and vice versa. This implies that a company cannot sustain a ‘cold-minded’ appraisal of its performance and offerings while failing to win the hearts of its customers; and just as well, a company cannot sustain an affectionate connection with its customers without establishing the foundation of approval of its functional benefits to customers (e.g., being relevant and attractive). Nevertheless. it should be noted that the spread among corporate brands with relatively higher Logic and Magic scores is greater than among brands with relatively lower scores on both dimensions (there are more of them and they are more condensed). There is still much variability among the best performing companies — they are not consistently doing better in the same way.

Secondly, the quality of products and services is just one of the factors consumers likely consider in their logical-functional evaluations, and is possibly not the more prominent one. There seem to be large differences in perceived quality of the products of at least some of the companies or in the weight assigned to quality. Moreover, companies whose products appeal in their high quality or expertise to only a relatively small segment of consumers (a niche) seem to fall behind and do not come out favourably in this type of all-market brand rankings. It is not so surprising to realise that the stronger and leading corporate brands are those of companies that aim to fulfill the needs and preferences of the wider common base of the mass market.

Let us look at a few examples:

  1. In the category of retail food chains, a heavy discount retailer, Rami Levy, is positioned close to the top-right corner of the map (both in its category and overall) with high Logic and Magic scores, while a delicacy retailer Tiv Ta’am is at the bottom-left corner of the map. The two major food retail chains are in-between, one in the top-right quadrant (Shufersal) and the other in the bottom-left quadrant (Bittan [Mega]). Tiv Ta’am may bring better-quality products (e.g., fresh produce, imports of delicacies) than other food retailers, but its stores are considered too expensive, lucrative, and they are not liked. Rami Levy and Shufersal are listed among the Superbrands of Israel for 2018 in the retail category.
  2. In the category of coffee houses, we find in relatively high positions the low-cost, basic-service chain of Cofix, and the espresso-bar, self-service chain Aroma. In the worst position we find Arcaffe, an Italian-style chain of coffee bars serving fine coffee, sandwiches and other products, but it fails to receive the appreciation of the greater public for their offerings and service. Aroma is much more popular although their products and its serving standard are moderate. Yet Arcaffe is considered more ‘top-notch’, made for European-connoisseurs, and is relatively more expensive. Eventually, Aroma and Coffix are also much more emotionally appealing to Israeli consumers than Arcaffe. Roladin, a bakery and coffee-house chain, can be argued to be much closer in quality and service standard to Arcaffe than to Aroma; yet, Roladin is appreciated and considered worthwhile (Logic) similar to Aroma and is even a little more loved and cherished (Magic) than Aroma —  the advantage of Roladin over Arcaffe seems to be that they understand better what the greater part of Israelis like to eat and expect to find in a coffee-house for a light meal. Aroma and Roladin are listed among Israel’s Superbrands of 2018 (dining out) whereas Arcaffe is absent.
  3. In the media category, among the news press publishers, HaAretz holds a much lower position on both Logic and Magic than Israel HaYom; Yediot Aharonot is located closer to HaAretz. Two marked differences between them: (a) HaAretz is left-leaning (affiliated with the Guardian and New-York Times) and Yediot is oriented to the centre-left, whereas Israel HaYom is right-wing; (b) HaAretz is superior, especially in some areas, in quality of commentary and analysis to the two other newspapers (tabloid-fashioned). But the political left, and the HaAretz newspaper associated with it, are out of favour in recent years, and perhaps as a result the tolerance to its reporting by large circles of society is low, no matter its apparent news quality. [It is noted that all three also have a news website, though in the case of Yediot the online channel is branded separately as ‘ynet’ — it is positioned close and just a bit better than the press edition]. Yediot (+ynet) and Israel HaYom are listed in the media category of Israel’s Superbrands for 2018 but HaAretz is absent (its economics and business branch TheMarker is included).
  4. Interestingly, the researchers of TACK report that preference for Arcaffe and for Tiv Ta’am, each in its category, is stronger among consumers who describe themselves as leaning to the political left. The relevance of political attitudes to dining-out and food shopping is a little obscure, but it gives an indication of the portrayal of their more likely customers. More importantly, this research evidence amplifies the argument that corporate brands more entrenched in niches — like HaAretz, Arcaffe and Tiv Ta’am — are much less likely to be considered strong leading brands.

Thirdly, response to price and value perceptions are not free of an emotional loading. An economic approach views the calculation of value as a rational procedure of weighing the benefits and cost of a product or service offer. However, when an offer is judged as unfair to the disadvantage of the buyer, this may stir anger and resentment of the consumer in response to the price offer. The resentment is more often directed to the retailer, but it may be pointed towards the manufacturer of a national brand as well, depending on whom the consumer believes to be more responsible for a price differential or increase.

The judgement of unfair price differentials is contingent on the reference price used (e.g., a price paid by a friend for the same product at another store this week). In the case of a price increase, the reaction is subject to whether consumers can see justification to a price increase by attributing the increase in retail price to a rise in cost that retailers or manufacturers could not control (e.g., price of raw materials). In the past decade much resentment developed because consumers failed to find such justifications. Instead, the perception more accepted was that retailers and manufacturers were rolling their cost rises mostly to consumers, and they raised prices merely to improve their profits. In Israel this problem was evident especially in the food category where consumers were witnesses to continued feuds between the food chain retailers and manufacturers. More broadly, many Israeli consumers appear to these days to have little tolerance to retailers, service providers or manufacturers that seem to raise prices unfairly or try to position themselves to be more up-scale and luxurious — disappointment and anger at them motivates consumers to punish them in some way. This kind of resentment and urge to act in revenge is apparent also in the results of the study by TACK.

Price is given priority by more Israeli consumers, and it seems to overweight possible advantages in quality of products, services or the environment of shopping. In some cases consumers may fail to appreciate any such advantages while in others they simply consider the price premium as unjustified or unaffordable (which may add frustration to their evoked emotions). This can be another aspect that explains the differences between companies described above: (a) for instance, the gaps on Logic and Magic between coffee-house chains like Cofix and Aroma compared with Arcaffe,  and vis-à-vis Roladin, or (b) Rami Levi which is probably perceived as making greater effort to charge affordable prices (although it declined a little from last year), far better than a delicacy chain such as Tiv Ta’am. In other categories, it is more difficult to make clear inferences. In telecom services (mobile, TV, Internet), for example, all major companies receive relatively low appreciation and are less loved. A specialised dairy producer (Tara) is positioned less favourably than the two major and larger dairies (Tnuva and Strauss) which happened to be more shaken by consumer protests of several years ago (Tara is more preferred though among ages 55+ according to TACK). Among fashion retailers, a low-cost retailer of casual wear (Fox) is positioned just slightly higher on Logic but lower on Magic than some major main-stream retailers (H&M, Castro, Zara); yet another retailer (Renuar) that is probably somewhat more exclusive appears to be considered less worthwhile and having moderately less of magic (as reference, Polgat [for men], which has visibly better quality clothing, is not included).

The study of image strength by TACK sheds light on the relative positions in which consumers hold corporate brands both in their minds (Logic) and in their hearts (Magic).  It is somewhat surprising to find such a strong association between the logical-functional dimension and the affective dimension — it suggests that a company cannot sustain a positive stance on one dimension without the other for a long time. There is some discomfort also in realising that price could be more dominant than quality, but it is important to acknowledge how perceptions of value, and especially unfairness, can influence the emotional reaction of consumers to the corporate-level brands. Effectively, being attentive and sensitive to what the wider circles of consumers in the country need and expect to have is a key to be regarded overall as a favourable, strong leading brand.

Ron Ventura, Ph.D. (Marketing)


Comment on Methodology:

The brand scores are given in percentages. More detailed values reported for 2017 help to understand the metric’s structure. The score on each dimension (Logic or Magic) seems to be calculated as the sum of the ‘top-box’ proportions for the two items it is composed of (e.g., % who give a rating of 6 or 7 on a 7-point Likert-type scale in agreement with each statement of Logic, where 25% on ‘appreciate’ + 20% on ‘worthwhile’ = 45% on Logic). However, summing up those percentages is not a proper procedure — this sum does not have a meaningful interpretation because the proportions cannot be accumulated. It would be correct to take their mean rather than the sum. Another valid option is to add-up the rating values of the pair of items for each respondent and then calculate the percentage who have given a total score on that dimension of above a threshold (e.g., a score on the index of Logic of above 12) in order to produce a score that may be more easily related to.

Reference on price fairness:

The Price is Unfair! A Conceptual Framework of Price Fairness Perceptions; Lan Xia, Kent B. Monroe, & Jennifer L. Cox (2004); Journal of Marketing, 68 (October), pp. 1-15.

Read Full Post »

When going through a surgery, the surgery itself would almost unquestionably be the major and focal treatment of the patient during hospitalisation. However, there is an envelope of procedures, treatments and other activities that make up the experience of the patient at the hospital. Furthermore, pre-surgery and follow-up procedures can also be accounted for in the whole experience. Patient experience is receiving increasing attention and greater weight in managing healthcare systems in recent years, side by side with the clinical demands of medical care. Although we cannot fully equate the status of ‘patient’ with ‘customer’ because of the highly specialised aspects and requirements of the medical domain, there are many activities and moments of interaction in which it is fair and right to view the patient as a customer.

Healthcare services are not immune to the growing power of consumers and their higher expectations, as customers, that have become omnipresent in many fields of services and products. Consumers expect greater awareness of their needs and respecting their rights. Yet there are unique challenges in adopting a ‘customer-centric’ approach with medical patients because clinical considerations come first in the responsibilities of medical professionals.  It is a challenge, for instance, to convince doctors and nurses that improved patient experience is more than ‘nice but not necessary’ or that this is not ‘a luxury given their tight schedules’. Another challenge is balancing between the undoubted authority of medical doctors in their domains of clinical specialisations and the need of patients to be informed, assured and comforted about treatments they should receive. How a clinical treatment is communicated and delivered to a patient can influence considerably his or her experience in a positive way; moreover, there are many less critical procedures and interactions through which doctors, nurses and assisting care providers can further improve the patient experience.

A commonly accepted definition of patient experience developed by the Beryl Institute defines it as “The sum of all interactions, shaped by an organization’s culture, that influence patient perceptions across the continuum of care“. First, having a supporting culture is paramount to the successful assimilation of a patient experience approach. Second, there is a recognition among researchers and experts that patients’ experiences should be addressed through their perceptions reflecting what has happened to them (e.g., during clinical procedures, interactions with doctors); measures of satisfaction are inadequate because satisfaction is construed relative to individuals’ prior expectations, without informing what might have to be corrected. Third, steps along a whole journey or continuum of medical care of the patient should be accounted for (e.g., from hospital admission to discharge, covering care given within and outside the hospital walls). A customer-centred approach in the context of healthcare is recognised as Patient-Centred Care which focuses on improving patient experiences.

In a special report of the NHS Confederation (UK) on patient experience, the authors note the complexity of improving patient experience on top of striving to provide high-quality clinical care. In addition to the latter, it should be acknowledged that “Experience is also determined by the physical environment the patients are in and how they feel about the care they receive, including the way staff interact with them“. The report authors state punctually: “Improving the experience of all patients starts by treating each one of them individually to ensure they receive the right care, at the right time, in the right way for them” (boldface highlight added)[1].

Improvements in patient experience in a hospital ward (e.g., cardiology, orthopaedic) seem to happen in small steps, in small details; the staff may not fully appreciate their value to patients and their family relatives . Better experience may arise from greater awareness of the worries, concerns or inconveniences of patients by doctors, nurses and assisting caregivers. It may be achieved by listening to the patients and being more patient and soft with them. It is not an easy demand: the staff may have two or three dozens of patients to attend to in the ward, and yet the staff has a duty to help and make the hospital stay as easy as possible for each patient. One should not overlook the importance of an emotional touch, feelings shown by and with patients. Keeping a peaceful and calm atmosphere in the hospital ward also contributes to patients’ experience and prospects of healing. Doctors in particular can help to improve the patient experience by willing to explain and inform a patient (and family) in plain words and empathy about his or her condition and treatments required, especially upon request (i.e., respecting the right of a patient to be informed). Additionally, doctors should not leave patients out of decisions made about them, where the patient demonstrates interest and capacity in being involved.

Much of the conduct described above can be seen happening more frequently than say five or ten years ago. One may encounter specific members of staff who make an extra effort to help, talk with a patient a little longer, answer questions at the nurse counter or in the patient’s room, and they do it kindly and voluntarily. Yet there is also observable variability where some members of staff appear less committed to providing a better treatment to patients with dignity, compassion and respect; patient experience does not seem to concern those staff members. Efforts in hospitals to increase awareness and training of staff about forms of conduct that improve patient experience, and their value to patients, have to address remaining pockets of inconsistency.

We should also look at processes in administering care to patients as they may have further impact on patient experience in addition to the quality and safety of medical care. For example, it is greatly important to pass and share information about patients between nurses and doctors within a shift and between shifts. Understandably, medical staff may not be able to give a full detailed update about every patient in the brief during change of shifts. But even during a shift there may not be enough time to pass information between staff members (e.g., a change in treatment for a particular patient). It is therefore crucial that staff members update patient records in the computer information system regularly and consult the records frequently to make sure information is not lost, forgotten or missed by the next staff member attending to the same patient. It can matter, for instance, when the patient or family inform staff about medication the patient is taking regularly (or should avoid), or regarding any change ordered in medication administered during hospitalisation. More generally, it would help to avoid situations where staff members ask patients or family the same question several times. Failure to record and pass customer information is a problem well-known and documented in customer service, yet in this case shortcomings in passing patient information can have more critical consequences. Therefore, ensuring that information is available to administer the right treatment at the right time would improve the quality and safety of patient care and thereby his or her personal experience.

Improving patient care and experience by physicians relies on better understanding of patients’ needs which could be achieved by working on three key priorities: competency, teamwork, and compassion; being successful would help in driving loyalty of patients to physicians (James Merlino, MD, an expert advisor with Press Ganey Associates in an interview with Micah Solomon of Forbes, 11 May 2017). It sounds, nonetheless, that this trio of priorities is fundamental and could contribute in multiple settings to patient care by physicians with the mentioned benefit to individual physicians, their clinics or hospital wards (private or public). [Note: Merlino suggests also incorporating patient segmentation and nurturing caregiver engagement as requisites to improving patient experience.]

A study of patient interviews at Royal Bolton Hospital in the UK, cited by the NHS Confederation report, identified two themes that appear to relate to pivotal concerns of many patients: “no needless pain” and “no feelings of helplessness”; the researchers were able to sort interviews along these two leading themes and later held discussions with hospital staff on the issues raised in the interviews. In another example given, the report refers to relationships built with patients and their families, and among staff and executives: a data-driven methodology, Patient and Family Centred Care, developed at the University of Pittsburgh Medical Center assesses different care pathways where each care pathway is studied and an ideal patient experience is outlined respectively. A project is developed in collaboration between professional staff and management to carry out these experience-oriented care plans.

As suggested above, a calm and pleasant atmosphere in the hospital ward can have a positive effect on patients’ feelings (e.g., soothing, relaxing). Contributors to the desirable atmosphere are the behaviour of medical and assisting (nursing) staff but not least also the design, furnishing and atmospherics of the physical environment in a hospital ward. Colours, windows and the sunlight they allow into rooms, warm materials (e.g., wood) and ergonomics, artwork hung on walls, and even pleasant odour should help in generating an atmosphere conducive to better healing (e.g., stronger improvement in the clinical condition of the patient, shorter hospital stay). In fact, research supports positive effects of the environment and ergonomics on healing of patients but also on staff sentiment and conduct (e.g., by reducing fatigue and stress).

According to a review of literature prepared by the Economist Intelligence Unit, sponsored by Siemens Healthineers (healthcare division), improved patient experience has been shown to have positive impact on clinical outcomes and care delivery for patients, financial outcomes for hospitals (efficiency, cost reduction), and morale and productivity of staff. The review further supports the importance of improving patient experience throughout the continuum of care: before, during, and after hospital admission; it should also engage patients, staff, system and interfaces inside the hospital and outside (e.g., pre-surgery and follow-up treatments and clinical examinations may be provided by the hospital and complemented in other clinics)[2].

Patients themselves also believe in the positive effect that better experience can have on their healing prospects. A consumer survey (2018) conducted by Beryl Institute found that 69% of consumers believe a good experience contributes to their healing / good health outcomes. It was also learned from consumers that being listened to, communicated to them in a way they can understand, and being treated with dignity and respect are the three most important factors to them influencing their (patient) experience.

Patient experience cannot be separated from the overall programme of care they receive in the hospital; it embodies all that happens to them, the treatments they receive and interactions they have with members of staff, and how they feel about it all. As healthcare professionals increasingly appreciate, it would be wrong to brush away this subjective and emotional viewpoint of patients on their experience in the hospital or see it as inferior to the clinical aspects of medical care. They go hand-in-hand, and as research has shown improved experience of patients is likely to have a positive impact on their clinical condition and healing prospects. A broad perspective on patient experience is nonetheless necessary, encompassing any components of care that are part of hospitalisation or tied to it; involving different types of staff (doctors and nurses, assisting caregivers, and administrative staff as well); and it could take a step forward and consider care given inside the hospital and outside it. Improvements in patient experience can already be discerned in the past decade; yet this is an area of continued work and effort where more can be done to create even better and more consistent patient experiences.

Ron Ventura, Ph.D. (Marketing)

Notes:

[1] “Feeling Better? Improving Patient Experience in Hospital”, The NHS Cofederation, 2010

[2] “Improving Patient Experience”, Siements Healthineers Global, 13 June 2018 (Whitepaper)

 

Read Full Post »

Older Posts »