A customer driven point of view on your offering

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A customer driven point of view on your offering

• Consumption Chain Analysis

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A sample of users

• Intel, HP, Microsoft
• Air Products, DuPont
• Citibank, American Reinsurance, Chubb
• Swiss Re
• Michelin
• Nokia
• Philips
• Matsushita
• LG Chem

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Smart companies know how to take strategic
advantage of non-intuitive customer behavior

• An example
• In the history of classical music, 14 compact
  disks have sold more than a million copies.
• Name the label that released five of those 14
  best-selling albums

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Contrast with

• A recent conversation about Apple iPod with a
  highly talented group of European Telecom
  Engineers
• Its not innovative its just a hard drive in
  a fancy case!
• Why would anyone want one of those the
  technology is out of date
• Who cares about the colors on the box?
• So why has Apple sold millions of them since its
  launch?

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Whats wrong with these all-too-common ways of
segmenting customers?

• Consumer sales
• Age
• Geography
• Income Brackets
• Profession
• Gender
• Social/Ethnic background

• Industrial sales
• Size
• Geography
• Type of installation / location type
• Sales channel
• Technology usage

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Tool 1 The consumption chain
Awareness of need
Search
Selection
Ordering/ Purchasing
Financing
Final Disposal
Servicing
Paying
Repairs Returns
Receiving
Installing
Storing moving
Using
Source MacMillan McGrath, 'Discover New
Points of Differentiation' HBR, 1997
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A Consumption Chain for a service business
Awareness of need
Search for solution
Selection of Provider
Agreement to sign up
Arranging Financing
Contract Renewal
W.O.M Referrals
Contract completed
Complaints/ Problems
Paying for service
1st Service Encounter
Ancillary Activities
More Encounters
Source MacMillan McGrath, 'Discover New
Points of Differentiation' HBR, 1997
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Exercise

• Map the chain for a book user using Amazon.com
• Where does the chain outdo a bookstore?
• Where does bookstore outdo Amazon?

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Quizzing the links to understand customer
experience

• Analyze each link to
• Understand the customers experience at each link
• Find places to differentiate from competitors

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QuizQuestion analysis

• Use QuizQuestions At each link ask the
  journalists key questions
• Who is at the link?
• What are they doing at the link?
• When are they at the link?
• Where are they when at the link?
• Why are they at the link?
• How are they experiencing the link?

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Mobilizing creativity Quizzing at each link
Take usage link, for instance
Where can one use the product
Where within that space
Who are they with?
What occasions prompt the use?
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Quizzing at important links Blyth Industries
and candles
Where does one see candles used?
Where within that space?
Who are they with?
What occasions prompt the use of candles?
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Winning Products for Blyth
The Picnic Candle
The Holiday Candle
The Romance Candle
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Some Blyth Brands
Frolicking Frostys
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Some guidelines for QuizQuestion Analysis

• Use sub-questions
• Else are., else could., what concerns.?
• Who else is at the link? Who else could be?
• When else are they at the link? When else could
  they be?
• What are their concerns at the link?
• The order you use QuizQuestions doesnt matter
• Some QuizQuestions may not work, so if one is not
  working, try another

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QuizzQuestions Amazon.com versus traditional
bookstores

• Awareness of need What book should I buy?
• Search Where do I get book?
• Select Why should I buy this book?
• Purchase How do I buy?
• Payment Who else can pay?
• Receipt When can book be delivered?
• Disposal How do I dispose?

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The attribute map
Source MacMillan McGrath, 'Discover Your
Products' Hidden Potential' HBR, 1997
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Service Best Western International

• Focus budget-conscious travelers
• Sub-segment of interest Over-55 couples
• Strategic question Should they cut prices below
  existing 10 senior discount to attract more
  business?

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Consider computer servers

• Bought by companies to provide computing /
  network / telecommunications / data services
• Usually, nurtured in specially built rooms
  surrounded with special floors
• They look...well...
• Thought experiment How would you find growth
  opportunities by differentiating the design of a
  server?

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Is IBM wasting its money?
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Customer responses
Your products have a sophistication and a
dynamic that signals to me that your focus is on
advanced technology Weve put our servers
behind glass walls so that we can demonstrate to
our customers how sophisticated our solutions
are These save me a fortune in space
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Differentiating Commodity-like products

• Variations on the Consumption Chain theme

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High fructose corn syrup
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Differentiating commodity-like products Ready
Mix Concrete

• What is the customers Consumption Chain? Their
  whole chain (not just your part of it)?
• Plant construction Excavate, (shutter, lay bar,
  pour) finish, equipment installation,
  wiring/piping
• What are the customers problems?
• Early arrival of trucks
• Late arrival of trucks
• Key link delivery window

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Differentiating commodity-like products
Electric Cable

• What is the customers Consumption Chain? Their
  whole chain (not just our part of it)?
• Small Construction Contracts
• Chain Estimate, bid, order, receive,
  build/execute, payment, debug
• Payment link When can they pay?
• You have skills they do not have
• Bridging financing
• Project Delay insurance

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Differentiating commodity-like products Auto
paints

• How are customers segmenting? How can we help
  them with their segments?
• DuPont auto paints
• Auto manufacturers in developing
• vs developed economies

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Differentiating commodity-like products
Sulphuric acid

• How do the customers make money?
• Who is winning? Losing? Why?
• How can we help them?
• Usage Chemicals, manufacturing, mining
• TYPES OF MINES High ore Low ore
• variability variability
• Nearby location 1 2
• Remote location 3 4
• Chain Check inventory, order, receive, pay,
  store, use
• Which links matter most to each category ?

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BOC

• Certified gases
• Control systems
• Beverage cans

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QuizzQuestions Amazon.com versus traditional
bookstores

• Awareness of need What book should I buy?
• Other books like this one
• Other books that people like you have bought
• Search Where do I get book?
• Search, On-line auction
• Select Why should I buy this book?
• Reviews, then ratings of reviews
• Recommendations, then ratings of
  recommendations
• Purchase How do I buy?
• Shopping cart then one-click
• Payment Who else can pay?
• Send to a friend?
• Receipt When can book be delivered?
• Christmas rush
• Disposal How do I dispose?
• Used books