25 January 2013

The Shortcomings of Marketing Based on “Who the Customer Is” and the Alternative

In recent posts on my blog I have described and discussed several personality traits and I will continue to do so in the near future. I guess, now it is time to discuss several shortcomings of relying on personality, especially from the perspective of marketing research and marketing execution (designing and implementing marketing actions).

I have to make a note: In this post I use the word “personality” with a broader meaning which includes everything that is intrinsically related to the individual and relatively stable. This includes aspects such as gender, age, beliefs etc.  

Let’s start with the deeply rooted belief that behavior is the outcome of personality only. This is called in scientific terms the fundamental misattribution effect and I have discussed it in “Are you a jerk?”. 

The established philosophy (in the sense of way of thinking) in marketing is that a company/ brand should get to know its target audience as good as possible. Then the company / brand should adapt itself and its products and services to “who the consumer is”. The better a company knows its target audience and the better it responds to its public’s needs is directly and causally linked to the success of the company.

In other words, getting to know “who the consumer is” means getting to know the personality of the consumer. (I use personality in the broad sense described at the beginning).  

Honestly, this is not wrong. In fact it is very good. It is hard (or virtually impossible in a free market) for a firm to make profits by selling things that the public does not want or that inadequately fit for the target audience’s needs. Take for example a shoe making company. It is virtually impossible to sell shoes that do not fit the feet of the people in the target audience. If this company wants to sell to basketball and rugby players it should better have “extreme” measures for the shoes it sells. Similarly if this company wants to sell men shoes in The Netherlands it should have shoes size 46-47 (European measures) or it will lose a significant part of the market. For the readers of this blog who are not familiar with men shoe sizes in Europe, usually measures larger than 45 are very rare in most European countries. However, the Dutch are the largest men and women in the world (on average).

The established philosophy in Marketing is to get to know “who your consumer is” and what are his or her values, attitudes and preferences. The first “line” of information that a marketer wants to get (or simply gets) from consumer research is demographic data. The second “line” is represented by psychographic data which, in a nutshell, measures the beliefs, values and attitudes of the target audience.

A consumer description goes something like this: “your target audience is 70% female and 30% male; they are aged between 40 and 55 years old; the average gross income per household is X0.000 Euros; they live mainly in urban areas; they have moderately conservative beliefs and values and they have above average scores on price conscientiousness.”

To make a long story short, the marketer gets a description of the “average consumer’s personality”. Or who the average consumer is.

The marketer who receives this information has the job (responsibility) to adapt the product or service, the distribution, the pricing and the marketing communication to the profile of the consumer. More or less, a marketer’s career is centered on these (meta) tasks.

Since I have entitled this post “shortcomings of personality” there are several questions that should be answered. Let’s take them one by one.

First, Is this information completely irrelevant? Of course not! Not knowing who you are targeting is the first step in “screwing it up”. The basics learned in “foundations of marketing” are not obsolete and most likely they will never be.  

Second, Is it wrong trying to adapt products, services, pricing, distribution and marketing communication to who the consumer is? Is it Useless? Of course not! Again, these are the basics of marketing. It’s impossible to sell your product if it is not sold in the shops where your “average consumer” goes shopping. You get the main idea, right?

Third, is it wrong to go beyond demographic information and into things like values, beliefs, way of life etc.? Again, the answer is NO. In largely globalized markets and with a population more diverse than ever, it is hard to rely only on demographic information. Without trying to be dramatic, the reality is that in the entire history the population has never been larger and neither has it ever been more diverse than it is now. This means that “who your consumer is” is significantly more complex than it used to be 100 years ago.

The legitimate question is now “if none of this is wrong, then what is the problem? Why do you say there are shortcomings”.  The answer is that IT IS NOT WORNG to get information on who the target audience is (personality), but IT IS SEVERELY INCOMPLETE. Let’s take a look at why is it so.

First, some of the assumptions on which “learning who the consumer is” is based are flawed. For example a lot of psychometric research focuses on preferences and the assumption is that preferences are stable. At the same time we know that it is not so. Some preferences are stable; other can change depending on context or on the mere choice set. Similarly for attitudes, the assumption is that they are strongly linked to personality, but it is not fully so. Attitudes can be influenced to various degrees.

Second, most of the “traits” that compose the profile of “who the consumer is” are assumed to be valid predictors of behavior (in the case of marketing, buying behavior). In fact these “traits” are predictors of behavior, after all people in market research are not idiots. However, things such as personality traits and attitudes are valid, but week predictors of behavior.

Third, Personality is not the only source of behavior; in fact it is the weakest source of behavior. To put this differently, who a person is influences that person’s behavior, but only to a reduced extent. Personality is not equal to behavior and behavior is not equal to personality. In the same line of thought, attitudes influence behavior, but attitudes are not the same thing as behavior and behavior is not the same thing as attitude.  

Fourth, a big problem with assessing personality, especially psychological aspects of personality is that all these traits follow the rule of “a normal distribution”. We know that people who score High on conscientiousness do this and that, while people who score low on this trait do exactly the opposite. It’s all very nice, but these conclusions are drawn from many studies that use statistical analysis to identify the slightest differences. In practice the above mentioned information is still relevant, but quite hard to use because most marketers don’t go to the extremes of a normal distribution.

Let me clarify the issue of a Normal distribution. Take a look at the picture below:

As you can see about 70% (68 to be more exact) of a population is more or less in the middle intervals of a normal distribution. For any personality trait (including IQ) it means that 70% of people (in a general population) score very close to the mean. In other words, 70% of people are neither high, nor low on a personality trait. Being slightly to the left or slightly to the right means that a person will sometimes (quite rare) do what people “low” or “high” on that trait do. For example if someone is a bit above average in need for uniqueness it means that that person will seldom buy personalized products, but more often than not they will not do so.

Looking at the same picture we see that “extremes” are composed out of only about 8% of the population (4% very low and 4% very high). Is this a viable target audience? Could be, but more likely it isn’t.

I guess you got the idea. Information on “who the consumer is” is not irrelevant. But quite often has a low level of usefulness in practice and a relatively low predictive value, especially in the case of non-niche products. And by niche I mean really narrow audience.  

Fifth, by focusing (mainly) on personality (who the consumer is), marketers limit their possibilities for action. An inherent characteristic of personality is that it is (roughly) stable. In other words, nobody can change the personality of another person. Focusing (mainly) on personality implies that the only changes that can be made are on the side of the company / brand. With the risk of repeating, adapting a product, offer etc. to the customers’ needs is good. However, there are more things that can be done.

A marketer’s job is to create behavioral change on the part of consumers. To put this differently, a marketer’s job is to influence the behavior of consumers. Some examples of behavioral change are: to buy more, to use more, to choose one product over another etc.

The most common approach in creating behavioral change is to adapt the firm’s offerings to the personality of the consumer. We know, however, that personality is not the only source of behavior and that it only offers a base-line for behavior. This means that trying to adapt one’s offering to the base-line of behavior will not do everything that can be done in creating behavioral change.

My belief is that using the other three sources of human behavior – Environment, Internal state and Social influences – will give considerably better results in creating behavioral change. This use of the other three dimensions of the 4D Model of Behavior can be two folded.

First, when doing market research marketers can take into account all four factors, not only personality. Understanding the influences that the other three sources have on behavior will lead to more opportunities for adapting brands and offerings not only to “who the consumer is” but also to the “context” of behavior.

Second, although personality can’t be changed, the other three dimensions can be controlled (or to be more honest manipulated). By controlling elements of the other three dimensions from the 4D Model of behavior, marketers will be more effective in creating behavioral change.

To conclude this post, focusing on “who the consumer is” is in no way wrong. However, it is dramatically incomplete. By extending the focus to other three sources of human behavior – Environment, Internal state and Social influences – new opportunities open for both better adaptation of the offer and creating behavioral change.

Don’t ignore personality! Look beyond it!

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