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Winning new customers: your four-step strategy

Understanding how consumers make purchasing decisions will help your company win more customers and beat the competition, says Niraj Dawar, writing for Strategy+Business. The author provides a four-step marketing strategy, and it starts with getting to know your consideration set.

Before you can start playing “win the customer”, you need to be clear about who your main rivals are. You might think your biggest competitors are the companies that vie with yours for shelf space, resources, employees and SEO rankings. But, Dawar argues, your true rivals are the handful of brands your customers consider alongside yours when deciding what to buy. Your idea of the competition and your customers’ views might be very different. It’s the latter that counts, the author advises.

You and your rival brands form what’s called “the consideration set”. The customer assesses the brands in the consideration set, checking off a number of criteria before selecting the one they will purchase.

Dawar proposes a four-step marketing strategy:

  • Get your brand into the consideration set.
  • Limit the number of other brands in your consideration set.
  • Influence who else is in your consideration set.
  • Win the trade-off; be the compromise.

1) Getting your brand into the consideration set. Customers apply cutoff criteria, or must-haves, to whittle a large market down to a small consideration set, Dawar explains. Your first aim is to encourage as many consumers as possible to use cutoff criteria that point to your brand.

Cutoff criteria for automobile customers, for instance, can include price, fuel economy and/or number of seats. Cars are marketed according to these cutoff criteria. Automobile marketers may pitch to the big car segment, the green segment, the economy car segment, the city car segment or the German car segment, among others.

The marketer of a German car brand could not hope for a better cutoff criterion than “German”, argues Dawar. Although the big German car brands still have to compete with one another within their consideration set, they have a collective interest in promoting the German engineering myth. A large segment of consumers is so convinced by the superiority of German engineering that it cannot be swayed, even when less expensive non-German models do better in consumer tests.

And being compared between themselves is far preferable for high-cost German brands Audi, BMW, Mercedes and Porsche, than unfavourable comparisons with less expensive global brands.

2) Limit the brands in your consideration set. Keeping your consideration set as exclusive as possible means fewer competitors and less competition, says Dawar.

A differentiated position will limit the size of your consideration set. Apple’s iMac plays a “niche-player approach”. Its unique operating system, great design and a high price are cutoff criteria that all limit competition.

Dawar’s research shows that the iMac customers consider just 2.11 brands compared with the 3.35 brands considered by purchasers of Windows-based PCs.

Raising the consumer cutoff bar is another way to keep the competition out of your consideration set, says the author. Smartphone brands use this technique, aggressively marketing new technological features, not as extras, but as must-haves. Competitors are forced to match the new advances or risk being left behind.

An exclusive consideration set means fewer competitors, but it also means fewer customers, warns Dawar. For this reason marketers will need to choose between the niche-player approach adopted by Apple and the wider-market approach of, say, Dell.

3) Influence who else is in your consideration set. You can also influence the composition of your consideration set, says Dawar. Honda’s website provides a comparison tool which essentially suggests a consideration set to the consumer. Not including the brand’s most serious competitor is Honda’s attempt to keep it out of the consideration set.

Comparative advertising is another technique that can influence the makeup of your consideration set.

This technique is used by lesser players to put themselves in an exclusive consideration set with the market leader, highlight those criteria in which they excel and piggyback on the brand awareness of the market leader. Second player Pepsi frequently uses comparative advertising to do battle with market leader Coca Cola.

How and where brands are sold can also limit the consideration set, says the author. Car manufacturers favour brand-based dealerships, where dealers sell non-competing brands, making comparison difficult for the customer. Consumers are deterred from choosing between too many cars because to do so, they would have to visit several different dealerships.

A similar technique is used by ice cream giant Häagen-Dazs. It offers display freezers to retailers on the condition that they are only stocked with Häagen-Dazs ice cream – an attempt to limit the consumer’s consideration set to one brand only.

4) Win the trade-off; be the best compromise. “Once your brand is inside the consideration set, the competitive game changes”, says Dawar. Consumers are now ready to pick the best fit for their needs. Several criteria are evaluated simultaneously and there will be trade-offs.
 
For car buyers, price might trump reliability, comfort might trump style, and so on. The brand that is ultimately chosen will be the one that offers the best compromise to the consumer.

You must, therefore, understand which are the more important criteria and “the exchange rate” consumers will use in trade-offs, Dawar advises. How much will customers compromise on fuel efficiency to get more space in a vehicle? If you know that roominess is the more important criteria to the family car segment, you can emphasise this in your car design and in marketing materials.

So how can you influence these trade-offs? By pushing the importance of criteria your brand excels at and then demonstrating your brand’s performance in that area.

Volvo want their customers to use a high exchange rate for safety – their speciality. So Volvo advertising plays the safety card. And Volvo buyers are sufficiently convinced as to accept poorer design and fuel efficiency in return for this feeling of safety.

In the game of winning the consumer, Dawar concludes: “You can’t play if you’re not considered, and you can’t win if you don’t exert strong influence on the elements of consideration.”

Source
Niraj Dawar

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