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February 2004 Consumers Don't Always Know What They Want
by Joyce Routson Since the late 1980s, Business School marketing professor Itamar Simonson has looked for ways to understand how consumers make choices. Much of his work debunks the accepted theory that giving consumers what they want and making a profit are the most basic principles of marketing. Customers may not know what they want, and second-guessing them can be expensive, says the professor who teaches MBA and PhD marketing and consumer decision-making courses. In Simonson's words, "The benefits and costs of fitting individual customer preference are more complex and less deterministic than has been assumed." That's because "customer preferences are often ill-defined and susceptible to various influences, and in many cases, customers have poor insight into their preferences." In one of his recent papers, Simonson tackles the issue of one-to-one marketing and mass customization. Supporters of these marketing approaches have suggested that learning what customers want and giving them exactly what they want will create customer loyalty and an insurmountable barrier to competition. In an example taken to the extreme in the 2002 movie Minority Report, Tom Cruise's character runs through a shopping mall past talking billboards that recognize him by name and urge him to buy products he had earlier expressed an interest in such as jeans and Ray-Bans—the ultimate in personalized advertising. But Simonson has this to say: "The fact that consumer preferences are often fuzzy, unstable, and manipulatable is unlikely to change. So, the effectiveness of methods to give customers exactly what they (say they) want has been grossly exaggerated." His take on the long-held assumption that individual marketing will supplant targeted marketing is "not so fast." In studies, he has learned that "even when customers have well-defined preferences and receive offers that fit those preferences, it is far from certain that the response to such offers will consistently be more favorable than those directed at larger market segments." It's all psychology. Consumers with well-defined preferences may be skeptical that a marketer could match expectations. Those who don't know what they want may not ever see the fit with what the seller wants them to buy. So, individualized offers depend on customers' preferences—how the offer was extended—and on trust. "Effective individual marketing requires not only an understanding of individual preferences and matching offers to those preferences, but also a thorough familiarity with the various factors that impact customers' responses," Simonson writes. This is a tall order, one that some companies have been able to fill, at least to some extent. For example, Amazon keeps track of customers' purchases and suggests other books they might like. Dell builds computers from mass-made parts to customers' specifications. But Simonson argues some companies can take the concept too far, like the Custom Foot chain of shoe stores that took detailed measurements and specifications from each customer to design one-of-a-kind shoes. Custom Foot didn't take into account that some customers were put off by the individualized attention, Simonson says, and felt obligated to buy the shoes because the store went to so much trouble. They often didn't come back. Indeed, an Internet search produces no website. Joyce Routson is a freelance writer living in the San Francisco Bay Area. |
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