Book Review: How Customers Think: Essential Insights into the Mind of the Market
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Book review: Why do so many new products fail? Harvard Business School professor Gerald Zaltman offers some insights into the sobering statistics.
How Customers Think: Essential Insights into the Mind of the Market
By Gerald Zaltman
Harvard Business School Press, January 2003
352 pages $29.95
Why do so many new products fail? Sure, some (like blueberry bagels and the XFL) deserve euthanasia right out of the box. But you can't blame stupidity alone for the fact that 80 percent of product introductions are history six months after they appear.
When you reduce the question of why most new products fail to its most basic, the answer is simple. Most products fail because not enough people bought them. But why not? Quality across the board is getting better (even Detroit is turning out fairly well-made cars), as is the relationship between price and value (the irrational exuberance companies brought to pricing their products in the 1980s is long gone). So the easy explanations for product failures don't work.
The typical solution is to ask customers what they don't like about a product, and that is exactly the problem, argues Zaltman, a Harvard Business School professor. They can't tell you, or they can't tell you in any meaningful way that can help you sell better next time. Consumers could tell General Motors Corp. that they didn't like Oldsmobiles, but they couldn't offer any suggestions that could help GM save it.
Instead, Zaltman lays the blame for new-product failures directly at the feet of marketers. "The world has changed, but our methods for understanding consumers have not. We keep relying on familiar but ineffective research techniques and consequently misread consumers' actions and thoughts. The products ...we create based on those techniques simply aren't connecting with consumers," he says.
To figure out how to connect, Zaltman starts by explaining how consumers think. He turns to neurology and biology to understand how we process information, and looks at fields such as psychology and sociology to understand how we put that information into context. His conclusion? Some 95 times out of 100, consumers cannot clearly explain why they buy a product. ("Because I like it" is not helpful.)
What consumers can do is use metaphors to help explain their decisions. And knowing that can be key for marketers. Ideally, you want to have consumers internalize your product's attributes. By this measure, "I feel safe driving a Volvo" represents perfect marketing since Volvo sells on the basis of being a safe car. If you're selling computers and up-time is vital, you might want to call your new line "Sunrise," as in "Our computers are as dependable as the sunrise."
This book is not easy reading. Zaltman is not big on demonstrating how to put his findings to work. And he tends to combine the worst of business-school speak ("paradigm") with accurate but off-putting phrases from biology and neurology: "Memory is story-based; that is, it involves the use of prior events stored as engrams to help explain or interpret new events involving cues and goals."
And yet it is worth the effort so you can understand critical distinctions such as the difference between facts and truth in the way customers process information. Facts may show that the generic is just as good as the branded product, but for many consumers, the truth—what they actually believe—is that the national brand is better.
You need to know how your customers think.
Reviewed by Paul B. Brown, the author of 13 business books, including Customers for Life: How to Turn That Onetime Buyer into a Lifetime Customer (written with Carl Sewell). A revised and expanded version has just been published by Doubleday. Please send comments on this story to firstname.lastname@example.org.