Customer Psychology: Why Don’t People Buy Your Stuff?
Know your customers and how to satisfy their needs, and you’re on the road to success.
Welcome to Grit & Growth’s masterclass on marketing, featuring Jonathan Levav, Stanford Graduate School of Business professor of, you guessed it, marketing. Levav provides insights and advice on the psychology of customer marketing so you can learn how to get into the heads and hearts of your customers, influence their decision making, and get them to choose your brand over the competition.
Professor Levav has a PhD in marketing with a passion for exploring the brains and guts of decision making — digging deep into why customers gravitate to one brand over another. Talking to customers is the best (and according to Levav, the only) place to find the answers.
“People think that their task is to make a product. Their task is to understand customer needs and to create a product that meets those needs. And I think that if you’re the CEO of a company and you don’t speak or interact with customers at least once a week, you’re not doing your job,” advises Levav.
His research and teaching focus on the psychological dimension of marketing — or why we consume. As he says, “If we just consume things because of functionality, there’s no way we would pay what we pay for Apple phones, for Nike shoes, for clothes, like nobody would do it.”
Top Six Masterclass Takeaways
Entrepreneurship is personal. Levav encourages you to figure out what type of problems you like to solve. “Some people like construction, some people like rice, some people like technology, some people like chicken wire. There’s plenty of needs you could potentially address — some more profitable, some less profitable. Ultimately, the decision is kind of: What do you like to do most?” he explains.
Don’t be so literal. Levav encourages marketers to go beyond describing simply what a product or service does. He says, “You can appeal to people in lots of different ways, and you can create competitive advantages along values that are way beyond the very literal thing the product does.”
Marketing is three-dimensional. The first is the functional dimension or what the product does. The second dimension is economic — how sensitive customers are to price. The third dimension is psychological. And according to Levav, this is the biggest opportunity: to explain how the product can make customers feel better.
Get out of the office. Levav believes that observing customers is critical to figuring out what customers want … and why. “You’re never going to solve these problems staying in the office,” he says. “And by the way, you, the boss, need to get out of the office. Not just your underlings, not just your marketing person. You need to feel it on your flesh.”
Map your customer’s journey. It’s important to understand every interaction your customer has with your business — step by step and over time, what led them there and what actions they take next. This applies equally if you’re B2C or B2B. “As long as you’re not selling to computers, you’re selling to people, and people in this firm that are buying from you have a journey, too,” Levav says.
Don’t undervalue simplicity. Nobody buys things that are ambiguous, says Levav. So, make sure your message is crystal clear to you and your customers. If you don’t get it, they won’t either.
Listen to Levav’s insights, advice, and strategies for how to better understand your customer and create a cohesive story to meet their needs.
Grit & Growth is a podcast produced by Stanford Seed, an institute at Stanford Graduate School of Business which partners with entrepreneurs in emerging markets to build thriving enterprises that transform lives.
Hear these entrepreneurs’ stories of trial and triumph, and gain insights and guidance from Stanford University faculty and global business experts on how to transform today’s challenges into tomorrow’s opportunities.
Jonathan Levav: When’s the last time you got out of the office and talked to a customer? And by talk, I mean in the broadest sense: observe people, ask them a single question, ask them 10 questions. When’s the last time you did that?
Darius Teter: How well do you know your customers? Chances are — not well enough.
Jonathan Levav: People think that their task is to make a product. Their task is to understand customer needs and to create a product that meets those needs. And I think that if you’re a CEO of a company and you don’t speak or interact with customers at least once a week, you’re not doing your job.
Darius Teter: Welcome to the second season of Grit & Growth from Stanford Seed, the show where Africa and South Asia’s intrepid entrepreneurs share their trials and triumphs, with insights from Stanford faculty and global experts on how to tackle challenges and grow your business.
This is the last episode of our second season. And for the season finale, I want to do a little thought experiment. So think about the last purchase you made. Picture it in your mind’s eye. Now, given all the other options you had, what made you pick that item? Was it cheaper, sturdier, more eco-friendly? Did it promise convenience or longevity? Sophistication? Was the decision conscious or unconscious? It’s deceptively complex. Whenever someone makes a purchase, they’re weighing dozens of factors, some of which they may not even be aware of. That decision-making process and how to affect it is at the core of marketing. But to influence decisions, you have to understand them. So on our last episode of the season, we’re getting into customers’ heads and exploring the psychology of marketing: how to assess customer needs, differentiate yourself from your competitors, and capitalize on the key dimension that’s often overlooked in emerging markets, and — steel wool. We’re going to talk a lot about steel wool. Our guest today has no competition: Professor Jonathan Levav.
Jonathan Levav: I am the King Philanthropies Professor of marketing at Stanford’s Graduate School of Business.
Darius Teter: You probably remember Jonathan from our last episode. He’s pretty hard to forget.
Jonathan Levav: I’m not here to hold your hand. I’m not here to make you feel good about yourself. I’ll make you feel good about yourself at lunch, but I’m not making you feel good about yourself in class. That’s not the point. I’m here to shake you.
Darius Teter: I want to get into some of your research interests in a moment, but I thought I might just start by saying: What brought you to marketing?
Jonathan Levav: It’s an interesting question. So people think you somehow grow up and at some point in your life you’re like, wow, I want to be a professor of marketing, which — I can’t imagine anybody’s actually had that cognition. And if they have —
Darius Teter: Well, I’ve had one, which is that these ads I’m watching on TV suck so bad, surely I could do it better.
Jonathan Levav: So that doesn’t require a PhD, necessarily. That requires some knowledge in how ads work and competence, which it turns out there isn’t an abundance. But I never thought I’d be a marketing professor. I didn’t even know anything. But when I was a junior in college, I took a course on the psychology of decision making and judgment, and I really loved it. I really loved the material and I really loved the professor. And so then I wrote my senior thesis under his tutelage, and I wrote about valuing public goods. So among other places, I applied to Duke. And I remember at the time the way you find out about the grad programs was pamphlets. So I had a little pamphlet from Duke, like a little three-panel pamphlet, and it said, like, “management,” it looked like they had a bunch of people who did research on decision making — at least kind of — that would say Professor XY does da da decision making, Professor ZW, da da da da, decision making.
And so I wrote on the envelope “management” and I gave it to my adviser, who was also my recommender, and he took it. And then a couple weeks later, I get it back and he had crossed off “management” and wrote “marketing.” And that’s how I’m a marketing professor.
Darius Teter: Wow.
Jonathan Levav: Because I got into the marketing program at Duke. I got into other programs elsewhere, but when I decided to go to Duke, it meant I was going to get a PhD in marketing. And then five years later, I had a job as a professor of marketing.
Darius Teter: And here you are.
Jonathan Levav: But if he doesn’t cross out “marketing,” then maybe today I am an OB professor.
Darius Teter: Despite being conned into the field, Jonathan is passionate about marketing. Over the past decade, he’s shared that passion with CEOs in Africa and South Asia as a faculty instructor in our Seed Transformation Program.
In all those years of teaching entrepreneurs in Africa and India, I’d love to hear some of your observations from the kind of questions they ask, your impression of them. For example, are there some common or persistent misunderstandings about what marketing is and why it’s important?
Jonathan Levav: So I’ve been going to Africa and India probably for seven or eight years and it feels like I’m taking a tour through something 50 to 57 years ago.
Darius Teter: Wow.
Jonathan Levav: The number one most common mistake, and it’s almost universal, is that people segment based on descriptors and not on needs. What does that mean? They say — I ask them, okay, what’s your market segment? They say, oh, our product is for women ages 35 to 45. And then you ask them, “Well, which women? All women?” “Well, no, I guess not all women.” Okay, well, what characteristics do they have? What need are you actually meeting? Which relates to the second thing that I’ve seen almost universally: when you ask people what need they’re actually meeting, they almost can never articulate what that need is, anything beyond very, very basic functionality. And the answers they give you suggest a business that would be so easy to basically outcompete.
Darius Teter: So they’re not describing any differentiation, and they’re not describing a specific customer need.
Jonathan Levav: They have a very difficult time describing what differentiates them, and they have an equally difficult time describing when, it’s related, obviously what the customer need is. That, I would say, is the number one most common complaint that I have about the way these entrepreneurs are thinking about the business. The second thing I would say is that they are extremely literal. In other words, when they want to convey a benefit, they convey it extremely literally. The world has moved on from these ads that say, I am hungry. Heat your Stouffer’s dinner in front of the TV, and you have people sitting eating Stouffer’s in front of the television and the moms serving them. And so sometimes you travel to these countries and you look at — I used to take pictures of the street ads because it felt like I was walking through this history of what advertising was about and what the conception of marketing was about.
So the conception of marketing used to just be, “Hey, we just explained specifically what this thing does.” And then companies realized that, wait a second, you can appeal to people in lots of different ways, and you can create competitive advantages along values that are way beyond the very literal thing the product does. Why do people pay a lot of money for Nike shoes? I could pay less money for some other pair of shoes. Well, I pay it because Nike is connected to all kinds of things that are kind of psychological variables, and that’s what they communicate to you. They don’t communicate to you just the specific functionality of the shoe.
Darius Teter: Jonathan pays special attention to the psychological dimensions of marketing, which includes a whole social element.
Jonathan Levav: So think about psychologists, including everything that’s both intrapersonal and interpersonal. So things with respect to myself, like the feelings something gives me and things with respect to other people and my interaction with them, the feelings I have from those other people, the things I do in order for those other people to interpret me in a certain way. When I was growing up in Israel, we didn’t have a lot of imports. And so when somebody would go abroad, this was in the early ’80s, somebody would go abroad and bring a pair of Nikes or Adidas shoes. My uncle from America would come and bring me a pair of Nikes. You were the president. You were the greatest thing ever with that pair of Adidas shoes where everybody had the domestic brand and you had it. By the way, that’s pure psychology. A hundred percent. There’s nothing functional about it, it’s not that those Nike shoes would make me walk any faster, they just made me feel way better and be cooler.
Darius Teter: There are plenty of needs in the world. So how should an entrepreneur determine which ones to address?
Jonathan Levav: The first thing to understand is that entrepreneurship is a personal decision. The needs that you address, you address them because you find them interesting. There’s plenty of needs you could potentially address, some more profitable, some less profitable. Ultimately, the decision is kind of: What do you like to do? What problem do you like to solve? What type of problem? Some people like construction, some people like rice, some people like technology, some people like chicken wire. I quote all kinds of different products that I’ve seen.
Darius Teter: We have a guy who makes steel wool, and he’s the most passionate guy I’ve ever met about his product. But it’s steel wool.
Jonathan Levav: It’s actually a great example because even for steel wool, there’s psychology. It’s easy to imagine that there’s psychology for a medical practice, right? It’s easy to imagine there’s psychology for a construction project, architecture, anything related to design. But if you can put psychology into steel wool, you will be the number one steel wool manufacturer on the continent, period. End of story.
Darius Teter: Eventually, though, entrepreneurs have to turn their focus outwards, because while the entrepreneur decides what needs they’re going to fulfill, the customer decides if they did it well.
Jonathan Levav: o then you have to look at that space and ask yourself, “What type of people are out there?” Well, there’s three types. There’s people that are in the market and consuming. There’s people who are not in the market but would consume. And then there’s people for whom it’s just not relevant. So I don’t know — if I’m allergic to steel, maybe I’ll never, ever, use steel wool. It’s not relevant to me. But maybe I really like to wash my dishes, but right now I use a sponge, but I would use steel wool, right? So I’m not a consumer of it, but I would potentially be in the market.
Now, within that, you want to think about three potential dimensions. The first dimension is the functional dimension. So how this steel wool feels against my skin. Different people have different preferences with respect to that. Different people have different preferences with respect to cleaning, with respect to ease.
Second dimension is economic, how sensitive they are to price. What is the cost of what they’re currently doing versus the cost of what you would potentially solve for them? So someone who cleans all the time, for them, the economics of buying the steel wool might be very different than somebody who cleans only occasionally or someone who uses their fingernails. I mean, I think the interesting thing about Seed companies is they function in environments in which people have relatively little disposable income and consuming anything requires an enormous amount of trade-offs. And as a result, you have to really be worth it. You have to really, really be worth it. It means the sharpness of the benefit has to be so obvious to consumers.
The third dimension is psychological, and that’s the part that I feel is the biggest hole and the biggest opportunity. People hate this term, but it’s a total blue ocean, especially in Africa and India as I’ve seen it, to create products that people will resonate with on a psychological dimension. And so then you say to yourself, “Okay, what are people’s attitudes with respect to cleanliness? What does it stand for in their minds? And how does it make them feel about their status? If they’re the ones cleaning, do they feel low status? So then maybe I have to create a brand that will make them feel empowered. Then now they’re powerful cleaners,” something like that.
And so that kind of understanding actually requires a fair amount of anthropological work. So a fair amount of first observation, unintrusive observation, and then really talking to people and trying to understand; What’s the context of this cleaning experience in their life? Kind of, what does it mean, how much do they think about it? And so on and so forth. What type of concepts would appeal to that kind of person? So think about it as answers to three questions or there’s three potential advantages. One is my product can work better. Second is my product can be cheaper. And third is my product can feel better.
Darius Teter: Successful marketing positions your product as the solution to a customer’s need. But how do you know what they need? To find out, you’ve got to do some leg work.
So how do they go about understanding their customer needs?
Jonathan Levav: I’m going to return a question with a question, but the question is, not to you, Darius, but to the actual entrepreneur. When’s the last time you got out of the office and talked to a customer? And by talk, I mean in the broadest sense, observe people. What are they consuming? Ask them then about what they’re consuming. Do it in a systematic way. Ask them a single question. Ask them 10 questions. See what they post on social media. See what they click. When’s the last time you did that? People think that their task is to make a product. Their task is to understand customer needs and to create a product that meets those needs. And I think that if you’re the CEO of a company and you don’t speak or interact with customers at least once a week, you’re not doing your job.
I had a participant once, so she had some company that made rice. She needs to go to a grocery store and watch people choosing rice, see how much time are they spending, what are they looking for? Intercept somebody and say, “Hey, why do you choose this rice over this rice?” See what kind of answer you get. Maybe they say, “Oh, I like this one better than this one because it’s cheaper. Or I buy this one because my mom used to buy it, or I buy this one because I like the color pink. And the packaging is pink.” It gives you a lot of information, but then you can follow up on and sort of study more systematically.
So you got to get out of the office. You’re never going to solve these problems, staying in the office. And by the way, you, the boss, needs to get out of the office. Not just your underlings, not just your marketing person. You need to feel it on your flesh. Maybe you don’t go out that often — as often as the marketing person does — but you need to feel it on your flesh. Unless you feel it on your flesh, it’s not going to work. Just as kind of a side advice, one of the good things about leaving the office and hearing from your customers and finding out maybe your product isn’t that good, is it allows you to put your ego in check a little bit and to find humility. Humiliation is part of getting better.
Darius Teter: To fully understand your customers, you’ve got to walk a mile in their shoes. And one way to do that is with a customer journey map. What is the customer journey? Why do we care?
Jonathan Levav: The customer journey is a fancy way of saying: What is a customer experiencing? In other words, what is this other person’s experience? And that’s a step-by-step process. And we call that a journey because it’s something that’s expressed over time. And so the customer journey is people that are out there. What are the factors that are influencing their goal-directed behavior? How are they engaging with the world and how are they using different tools in order to be able to fulfill their goals? And so why is it so critical? It’s so critical because you want to be the tool that they use to fulfill their goals. And the only way to be the tool that’s used to fulfill their goals is twofold. One is, I got to understand what their goals are. Secondly, I have to create a tool that out of the whole plethora of tools that they have available to them, they’ll say, “Ah, that’s it.”
Darius Teter: A good customer journey map includes every interaction a consumer has with your business, how they become aware of your product, where they find it, how they compare it with competing products, and why they decided to buy yours. The experience of purchasing the product also matters, as does the interactions with your business after the purchase. Now, this may all sound obvious, but a lot of entrepreneurs fail to consider many of these steps on their customer’s journey.
I was in the C transformation program module in Lagos, and Stephen Anderson-MacDonald was teaching marketing. And we asked everyone to do a simple customer journey map. And there was a guy who owned a hospital, and this customer journey map had one touchpoint, and it was “people arrive and check in at the receptionist.”
Jonathan Levav: Oh, goodness. Gracious. This just ruined my day. I won’t be able to work the rest of the day.
Darius Teter: I sat down with them and I said, have you ever been to a hospital as a patient? Because there’s like 19 touchpoints and 17 of them suck. It’s like every step of the most —
Jonathan Levav: And two of them are mediocre.
Darius Teter: Mechanically, how do you do all this analysis?
Jonathan Levav: It’s obviously much easier said than done. This is a process that has a couple of steps. The first step is observation, just going and seeing how people are consuming what they’re doing. And they’re —
Darius Teter: You’re literally hanging out in the stock, in the aisle, in the grocery store.
Jonathan Levav: In the aisle, in the grocery store, wherever it is. You’re hanging out on their website, whatever the place, whatever business it is, wherever it is that potential consumers are. You just watch and you watch for what it is that they do, and you note what it is that they do. And then you go back and you say, okay, of all these different things that they did, all right, what are some questions I can ask them? Now you ask yourself, okay, well what are the motivations for why they did what they did? And a lot of that is kind of through survey work or sort of individual interviewing. And unfortunately, some of these things, you can’t ask people about it because they either don’t understand their internal mental process of why they’re doing something or because they don’t want to tell you the truth.
Darius Teter: But what’s the first thing you want to know? You want to know how they even became aware that your product exists.
Jonathan Levav: Not even. The first thing you want to know is, let’s go back to our favorite example, the steel wool. You want to understand, okay, people, what do they do to clean? Who cleans the dishes? When do they clean the dish? How much time do they spend? Do they have the water on or do they have it intermittently on?
Darius Teter: Are they cooking stuff that makes a sticky mess in the pot?
Jonathan Levav: That’s right. If they have a pot that’s sticky, what do they do to get around the stick? When do they do it? Do they do it immediately, or do they postpone it? Do they have pots that sit around for days and they don’t touch them? Do their pots look stained? Do their pots look shiny? Do they have black pots? Do they have silver pots?
Darius Teter: Does abrasion matter?
Jonathan Levav: That’s right. Do they have a dishwasher? Who does the dishes? Okay, who does that?
Darius Teter: Who seems key, right? Because now you’re honing in on the buyer
Jonathan Levav: Potentially, but if it’s, like, I make my teenager do it, he’s not the buyer.
Darius Teter: Sure.
Jonathan Levav: He’s just the user, right? He’s not the decision-making unit. I am. So we have to figure out: Is the user the decision-making unit? Then there’s the process of purchasing this stuff. When do they purchase it? How much stock do they have to have left before it triggers a purchase? When they go to the store, how much time do they spend in front of the aisle where they’re making that selection? Do they feel different things? Do they touch them? Do they read the text? How sensitive are they to promotions? How frequently does this stuff happen? All that is part of the journey, right? Because it’s all part of elements of this goal-directed behavior that relates overall to cleaning. And each one of those steps, each one of those little sub-goals, is an opportunity for you to create value and to stand out.
Darius Teter: Can you give me — can be steel wool or another one — an example where you’re creating value along some of those key milestones or those key inflection points in the customer journey?
Jonathan Levav: Sure. Let’s take steel wool.
Darius Teter: Okay.
Jonathan Levav: Just because I know you want me off steel wool.
Darius Teter: I do.
Jonathan Levav: I think steel wool is a great example because if you can do this for steel wool, you can do it for anything. And surely there’s listeners now that are saying, ah, why is he only talking about steel wool? It’s a business-to-consumer product. I’m in business-to-business, and people in business-to-business world — what they forget is that they’re selling to people. As long as you’re not selling to computers, you’re selling to people and people in this firm that are buying from you have a journey too, and the firm has a journey and the firm has a context and you got to understand those things in the exact same way. It’s not a different skill. So I’m going to annoy your listeners and talk about skills.
Darius Teter: Just keep talking about steel wool.
Jonathan Levav: Keep talking about steel wool. So now I have these touchpoints where I can create value so I can create value in the simplest sense, when the person is washing the pot, how much you charge, how big the package is. These are other touch points. These are all opportunities to influence people’s goal-directed behavior to give them a tool. And in those different places, you have different opportunities to differentiate yourself.
Darius Teter: Do I need a behavioral psychologist to help me make these surveys?
Jonathan Levav: No. You don’t necessarily need a behavioral psychologist to help you make these surveys. You have to have someone who’s sensitive to behavior and who asks the question in a way that’s going to give you information that allows you to make a decision as opposed to creates a question that just gives you a piece of information that you want to hear, but that doesn’t help you make a decision.
Darius Teter: This point is important. It’s not enough to just ask questions. You have to work with a goal in mind.
Jonathan Levav: One of the big issues that happens just kind of in research in general and experimentation in general in businesses is that people say, okay, I’m going to run an experiment. No, the thing should be: What decision do I want to make? Okay, what data do I need in order to be able to make that decision? Okay, how do I set up an experiment to give me the data to be able to make that decision?
Darius Teter: I thought you said it so well. You need to have a question you’re trying to answer, a decision you’re trying to make. So what data do you need to make that decision? What questions do you ask to get that data?
Jonathan Levav: Yeah, that’s the difference between someone who’s just like an average leader versus someone who’s actually a leader. That’s going to be someone who’s going to make decisions that matter. If you start the data collection only after you figure out what decision do I have to make, then the data collection is open-ended, right? You have to have the flexibility to be able to say, “Hey, depending on what the data say, I’ll make the decision.” That’s different than saying, “I know a decision I want to make. I know the answer I want it to be. I’m going to look for data to support that answer.” Careful, that’s different. If I was to make a decision between A, B, and C, what information would I need? Imagine, let’s just do a thought experiment. What information would I need in order to be able to decide between A, B, and C at a level of sufficient confidence that I feel comfortable with?
Darius Teter: If you’re not intentional about what questions you ask, you risk oversaturating your customers or focusing on information that’s actually irrelevant to your decisions.
It’s funny, we just had a meeting the other day because at Seed, we tend to survey everything. We’ll do a session and then we’ll ask everyone immediately online, was that session useful or not? And we count it all up. We do like 140 surveys a year. We literally ask people about everything.
Jonathan Levav: It’s terrible.
Darius Teter: Well, my question is, if the answer is “no,” what information do you actually have?
Jonathan Levav: Yeah, you didn’t get any information. It’s not just that, but I don’t want people to like me when I teach them. I want people six months later when they’re facing a decision and they remember something I said in class and they’re like, oh yeah, I should do this because if I do this other thing, it’s a mistake and I understand why it’s a mistake because that guy told me. And that’s when I want you to have warm and fuzzies about me. I don’t want you to have warm and fuzzies about me because I was entertaining or nice. I want you to have warm and fuzzies when you go out. And if I was able to transmit information in such a way that was sufficiently impactful for you to hold onto it, that’s when I know that I’ve done my job, and that’s teaching. The issue with feedback — feedback is invaluable, but the issue with it is if it becomes too much of a festival of constant, constant, constant feedback where you’re asking people, then actually you’re influencing people’s mindset about whatever experiencing they’re in. And that’s true in the Seed Transformation Program. But in any business, there’s some experiences where you don’t want someone to be with this constant eye towards criticism and evaluation. You actually need them to absorb a little bit. And also they might not have the tools to be able to evaluate what it is that you’re asking them about. And yeah, that’s true in a classroom setting. And it’s true in —
Darius Teter: And it’s like you said, the medicine may not taste good, but that’s not what I’m asking you.
Jonathan Levav: Yeah, exactly right.
Darius Teter: So how do we go from truly understanding customer’s behavior, their needs, to how we position our own product?
Jonathan Levav: So now I’ve done that homework, I understand the market, which is the set of people in their preferences. Now I say, all right, where’s the space for me to solve problems? Okay, I’m going to solve this problem, this problem, this problem, this problem. And then my positioning is: I need the potential user to understand that the solution that I have for him or her is the best thing since sliced bread. That’s what’s going to solve their problem, that thought process and that formalization between your solution and them perceiving that your solution is the solution to their needs. That’s positioning, right? Understanding what makes you different, understanding what makes you similar so that people don’t find you so foreign. You need to be familiar enough to be safe, but unfamiliar enough to be exciting.
Darius Teter: So how are you doing this? Is this in the packaging? Is it in the promotional items?
Jonathan Levav: Yes.
Darius Teter: Is it in the placement on the shelf?
Jonathan Levav: Yes.
Darius Teter: What is it?
Jonathan Levav: Why does it have to be one of those three? It can be all those things. Everything that you do to your product and what you communicate through your product. Those are all ways in which you’re actually positioning.
Darius Teter: With so many variables, it can feel like the possibilities are endless, so be careful not to overcomplicate things.
Jonathan Levav: Don’t undervalue simplicity and simplicity of message. And if you’re not going to be clear, it’s not clear to you, it won’t be clear to your customers for sure. And nobody buys things that are ambiguous.
Darius Teter: But let’s go back to one of the very first things you said, which is that the advertising you see as you drive down the street in some of these emerging markets looks like it’s from 1960.
Jonathan Levav: Being simple doesn’t necessarily mean being unsophisticated and not subtle. It just means being simple to digest in an appealing way. The problem with those ads is, there’s just not, they don’t appeal to anything like this. It forgets so much of why we consume. If we just consume things because of functionality, there’s no way we would pay what we pay for Apple’s phones, for Nike shoes, for clothes. Nobody would do it.
Darius Teter: Throughout our conversation, Jonathan and I kept coming back to this: Why do we consume? The psychological dimension presents a massive opportunity in emerging markets, and it’s what separates good entrepreneurs from great ones.
The part that I think is most fascinating about these three criteria — the financial, the functional, and the emotional — is: How do you actually understand the emotional piece?
Jonathan Levav: That’s super hard. And the greatest, most iconic entrepreneurs in history were iconic because they had that unusual understanding. And that sort of goes to show you both the importance of that understanding, but also the rarity of being really able to go deep.
Darius Teter: So was Steve Jobs prophetic or arrogant?
Jonathan Levav: I think Steve Jobs was prophetic and arrogant, and he was one of the most brilliant entrepreneurs of our time because he understood that when you’re using a device, the easier you can make its use, the more people are going to use it. So why do I have to remember a series of commands when I can just have them all in front of me on a menu, in an organized way, in a categorization that makes sense? That was utterly brilliant, just utterly brilliant. The next big innovation was the iTunes store. How are people consuming? They’re buying an album. I bought albums for one song. Why? He understood that. I mean, buying albums was huge. I mean, when you and I were growing up, we were buying albums.
Darius Teter: But I think he also really understood the emotional piece.
Jonathan Levav: He understood those things. And he understood that interactions with technology, even though technology feels technical, can be as emotional as an interaction with a pair of shoes or a handbag or a T-shirt. And that’s the third major innovation that Steve Jobs brought about. But he — without understanding that people could have an emotional resonance with an electronic device, he doesn’t create an electronic device that you could have resonance with. Understood —
Darius Teter: He still took away my microphone jack.
Jonathan Levav: Yeah, but that’s a little detail.
Darius Teter: In marketing, you’re offering consumers an answer, but for the answer to be any good, you have to know a question they’re asking. So talk to your customers and assess their needs using the tools at your disposal, interviews, surveys, customer journey maps. But research deliberately, know what information you will need to make a decision. Once you’ve identified those customer needs, figure out how your product fulfills them across the dimensions that we outlined, functional, financial, and especially psychological. Use positioning to make that story cohesive. If you execute on these fundamentals, you won’t just sell products, you’ll create a relationship with your customers, and that will last longer than any ad campaign. I’d like to thank Professor Jonathan Levav for sitting down with us and for his teaching work in the Seed Transformation Program. I also want to thank Bijesh Shah, director of Steelwool (Africa), Ltd., based in Kenya. Bijesh had no idea that his business would become such an interesting example in this episode. And he really is that passionate about steel wool, and it shows in the remarkable success of his business.
I hope you found season two of Grit & Growth both instructive and inspiring. We’re going to take a little break as we prepare for season three. But don’t worry, we’ve got plenty of new and exciting episodes to hold you over until we get back. So keep your eyes on the feed for some bonus podcasts, and if you have a topic you’d like us to cover next season or a story of your own, get in touch, we’d love to hear from you. From all of us here at Stanford Seed, we wish you a safe and happy new year and we’ll see you in 2023.
This has been Grit & Growth with the Stanford Graduate School of Business, and I’m your host, Darius Teeter. If you like this episode, leave us a review on your podcast app. It really helps us to share the stories of these incredible entrepreneurs with as many people as possible. To learn how Stanford Graduate School of Business is partnering with entrepreneurs in Africa and Asia, head over to the Stanford Seed website at seed.stanford.edu/podcast. Grit & Growth is a podcast by Stanford Seed. Erika Amoako-Agyei and VeAnne Virgin researched and developed content for this episode. Kendra Gladych is our production coordinator, and our executive producer is Tiffany Steeves, with writing and production from Andrew Ganem and sound design and mixing by Alex Bennett at Lower Street Media. Thanks for joining us. We’ll see you next time.
For media inquiries, visit the Newsroom.