Who "Owns" the Consumer?
Bold words!
And, some of you may be cringing at the word “own” – no one really owns the consumer in today’s consumer-driven world. In fact, more than ever consumers “own” everything in the buying process: why they buy, what they buy, whom they buy from, where they buy, how they shop, when they take possession.
But, what if we did, or could “own” the consumer? And, what if we used the notion of ownership as a principle of stewardship and service. We would be asking ourselves how do we best serve the consumer for whom we’ve been commissioned with this onerous responsibility. How many of us actually use that mindset to drive why we do things, what we do, and how we do it?
There are companies that do.
Yeah, I know everyone picks Apple due to its success. But, this isn’t a story about Apple. It’s a story about how to “own” the consumer. And, Apple, very purposefully strives to “own” its consumers. And, do a relatively good job of it.
Apple largely controls every aspect of what they provide consumers – from the products they make to how their consumers buy the product. All in the name of creating the best experience possible for the consumer – and “owning” their loyalty.
But, there are other companies, too, that try to use a model like Apple’s:
First, one could argue they are either vertically integrated, or at least exert significant control over every aspect of value chain for their business. Vertical integration is making a comeback of sorts – from the early days of manufacturing like Ford who owned the mines the ore came from to make the steel for their cars. Now it’s often used in high tech circles, and called a “full stack” model.
Second, they specifically try to control the consumer buying experience. Given reach to consumers is unprecedented, it is now possible to control, or at the least influence every step of a typical consumer buying cycle.
If we use the following diagram to illustrate the steps in consumer buying – what steps are critical for consumer products (CP) manufacturers to control?
Clearly, the first few steps in this process, one would argue have been largely controlled/owned by CP manufacturers since the inception of the industry to today – product, brand awareness have been in our purview.
But, what about helping consumers consider the product? How about helping them in their evaluation process?
In many parts of the industry, we have taken a minimalist view. Let’s only put the information in the hands of the consumer that will help promote the product, and meet regulatory requirements.
Leaders, like Burberry, are taking a different view. What information about the product will help the consumer decide? Using this approach, Burberry provides as much information as consumers wish to know – what material is used, where did it come from, who manufactured it, who designed it, what was the intent behind the design (oh, would you like to interact with the designer to suggest new versions or improvements?). It is a ‘give them whatever they want’ orientation, and consumers love it. Granted, some now categorize Burberry as more of a retailer, than manufacturer, but how have they gotten this reputation? And, what has it done for their business?
Next – the actual buying process – ordering, arranging for pick up or delivery, purchasing and checkout. This is most commonly done by going to a retail store, or providing consumers e-commerce capabilities.
Oh, but this will cause channel conflict, and could ruin our relationship with our retail partners. How many times have we heard this? But, again, these boundaries are being pushed – Nestl, sells Nespresso machines through high end home stores, but only sells the “cups” to make the coffee through their e-commerce/service center capabilities. It has been the fastest growing part of Nestl.
In fact, if you were starting a CP manufacturing company today, and trying to get into the market to establish your brand, you would most likely provide your consumers the ability to purchase online. Almost 90 percent of new start ups have e-commerce capability for their consumers. Do these new companies know something more established companies don’t?
Why are they doing this? Is it because they can? They don’t have some of the entanglements of more established companies? Is it because they can more easily sell online, and not have to wade through the complex, difficult processes many retailers use to select products for their stores?
Or, is it that they want to “own” this portion of their channel to their consumers? Is it that they can gain more insight into their consumer by helping them through this part of the process, than they can in almost any other part of the process?
All of these are great questions. But, rather than thinking about “why not to sell online”, perhaps turn the question around and ask “why not sell online?” Many are already — our products are being sold through e-tailers like Amazon. Moving forward, it will likely be a “must do” to have online sales capability. Companies like Apple, Burberry and Nestl are already moving in that direction.
How long will it take for the rest of us to catch up?
This is intended to be a thought-provoking blog. Is it doing its job? If so, post a comment below. The idea is to get some ideas flowing around the subject of “owning the consumer”. Your comments will fuel this as potentially a series of blog and other forms of dialogue, to gain insights, share current best practice, and try and predict future best practices.
ABOUT THE AUTHOR
Peter is an enterprise technology executive who is passionate about helping consumer-related industries serve their consumers with better products, when, where and how they want them. He has worked to use enterprise technologies to solve key challenges in consumer industries since the Efficient Consumer Response initiatives in the 1990’s. This led him into ERP, CRM, and advanced planning and analytics. And now working to create even more effective solutions by integrating cloud, social, mobile, and big data technologies.
He has held roles as a consulting partner with PwC, executive roles with SAP and Salesforce, and roles with smaller consulting and technology firms.
And, some of you may be cringing at the word “own” – no one really owns the consumer in today’s consumer-driven world. In fact, more than ever consumers “own” everything in the buying process: why they buy, what they buy, whom they buy from, where they buy, how they shop, when they take possession.
But, what if we did, or could “own” the consumer? And, what if we used the notion of ownership as a principle of stewardship and service. We would be asking ourselves how do we best serve the consumer for whom we’ve been commissioned with this onerous responsibility. How many of us actually use that mindset to drive why we do things, what we do, and how we do it?
There are companies that do.
Yeah, I know everyone picks Apple due to its success. But, this isn’t a story about Apple. It’s a story about how to “own” the consumer. And, Apple, very purposefully strives to “own” its consumers. And, do a relatively good job of it.
Apple largely controls every aspect of what they provide consumers – from the products they make to how their consumers buy the product. All in the name of creating the best experience possible for the consumer – and “owning” their loyalty.
But, there are other companies, too, that try to use a model like Apple’s:
- Zara in apparel.
- Luxottica in eyewear.
- Burberry also in apparel/fashion.
- Starbucks in coffee or as they might define it… the coffee experience.
First, one could argue they are either vertically integrated, or at least exert significant control over every aspect of value chain for their business. Vertical integration is making a comeback of sorts – from the early days of manufacturing like Ford who owned the mines the ore came from to make the steel for their cars. Now it’s often used in high tech circles, and called a “full stack” model.
Second, they specifically try to control the consumer buying experience. Given reach to consumers is unprecedented, it is now possible to control, or at the least influence every step of a typical consumer buying cycle.
If we use the following diagram to illustrate the steps in consumer buying – what steps are critical for consumer products (CP) manufacturers to control?
Clearly, the first few steps in this process, one would argue have been largely controlled/owned by CP manufacturers since the inception of the industry to today – product, brand awareness have been in our purview.
But, what about helping consumers consider the product? How about helping them in their evaluation process?
In many parts of the industry, we have taken a minimalist view. Let’s only put the information in the hands of the consumer that will help promote the product, and meet regulatory requirements.
Leaders, like Burberry, are taking a different view. What information about the product will help the consumer decide? Using this approach, Burberry provides as much information as consumers wish to know – what material is used, where did it come from, who manufactured it, who designed it, what was the intent behind the design (oh, would you like to interact with the designer to suggest new versions or improvements?). It is a ‘give them whatever they want’ orientation, and consumers love it. Granted, some now categorize Burberry as more of a retailer, than manufacturer, but how have they gotten this reputation? And, what has it done for their business?
Next – the actual buying process – ordering, arranging for pick up or delivery, purchasing and checkout. This is most commonly done by going to a retail store, or providing consumers e-commerce capabilities.
Oh, but this will cause channel conflict, and could ruin our relationship with our retail partners. How many times have we heard this? But, again, these boundaries are being pushed – Nestl, sells Nespresso machines through high end home stores, but only sells the “cups” to make the coffee through their e-commerce/service center capabilities. It has been the fastest growing part of Nestl.
In fact, if you were starting a CP manufacturing company today, and trying to get into the market to establish your brand, you would most likely provide your consumers the ability to purchase online. Almost 90 percent of new start ups have e-commerce capability for their consumers. Do these new companies know something more established companies don’t?
Why are they doing this? Is it because they can? They don’t have some of the entanglements of more established companies? Is it because they can more easily sell online, and not have to wade through the complex, difficult processes many retailers use to select products for their stores?
Or, is it that they want to “own” this portion of their channel to their consumers? Is it that they can gain more insight into their consumer by helping them through this part of the process, than they can in almost any other part of the process?
All of these are great questions. But, rather than thinking about “why not to sell online”, perhaps turn the question around and ask “why not sell online?” Many are already — our products are being sold through e-tailers like Amazon. Moving forward, it will likely be a “must do” to have online sales capability. Companies like Apple, Burberry and Nestl are already moving in that direction.
How long will it take for the rest of us to catch up?
This is intended to be a thought-provoking blog. Is it doing its job? If so, post a comment below. The idea is to get some ideas flowing around the subject of “owning the consumer”. Your comments will fuel this as potentially a series of blog and other forms of dialogue, to gain insights, share current best practice, and try and predict future best practices.
ABOUT THE AUTHOR
Peter is an enterprise technology executive who is passionate about helping consumer-related industries serve their consumers with better products, when, where and how they want them. He has worked to use enterprise technologies to solve key challenges in consumer industries since the Efficient Consumer Response initiatives in the 1990’s. This led him into ERP, CRM, and advanced planning and analytics. And now working to create even more effective solutions by integrating cloud, social, mobile, and big data technologies.He has held roles as a consulting partner with PwC, executive roles with SAP and Salesforce, and roles with smaller consulting and technology firms.