Lesson 2/Week 3: Using Market Research to Gain Consumer Insights

I had no idea about how Sprint conducts market research before today.  I reached out to a Market Researcher and was able to learn a lot.  Sprint conducts both primary and secondary research, although we try to lean on the latter as much as possible for costs.  A primary research study can cost from $20-60K.  When we do commission primary research, we will internally design survey questions and then reach out to outside resource partners to execute the survey.  Once we have the results, we will synthesize all the data in-house.  Our core consumer marketing groups do more primary research than our business segment marketers, with the former doing a lot of CSAT surveys.

Peg, the employee I spoke with, explained how her job is in our MVNO segment, which include companies looking to use Sprint's network but do not own the infrastructure.  Sales will ask Peg's group help with very specific business partner requests for analyzing a market for them.  She'll utilize resources like MRI or Personicx for demographic research and IDC, ADI, E-Marketer, or Nielson for market information.  The requests can involve producing qualitative or quantitative research.  Only if the request is so specific that answers can't be found with our existing relationships will she seek out a primary study.  An example she gave of something that would require primary research would be 'What ethnic group in the U.S. buys mobile phones for their kids under 10 years old in major metropolitan areas?'

My group has started with the IU library resources to find secondary research applicable to the hybrid and electric vehicle industry.  We've already looked at Frost&Sullivan, Gartner, Marketresearch.com, and Passport.  I was able to find a report from 2010 about the worldwide electric vehicle and plug-in hybrid markets.  The price tag was over $3K for the report!  Glad IU is footing the bill for that one.

Lesson 2/Week 3: Using Market Research to Gain Consumer Insights

We watched a fascinating YouTube video for a Hans Rosling TEDTalk this week.  I don’t know how Dr. Rosling was able to animate his analysis on the slides he had in the video, but the insight is so much more powerful watching motion convey the differences over time.  Time series data graphed as multiple lines on a chart are very helpful, but watching motion is so intuitive for seeing the magnitude and speed with which values are changing.  I remember my first Kelley Connect week, where some tools for data visualization were presented that blew my mind.  I had never really seen a bubble chart before, where 3 variables can be represented in 2D space by having the bubble size correspond to a third variable.  Another example occurred this week as we were presented a collage of our wiki responses from the first week of the definition of marketing.  More common ideas showed up in the collage as larger words to convey their relative frequency.  These ideas are causing me to be less and less patient with the traditional way of presenting data, where teams believe that an overwhelming number of line and bar charts in a PowerPoint deck will get the point across.  I think the goal is for anyone in your target audience to be able to instantly grasp the information that’s conveyed visually. 

The overall insight Dr. Rosling found was that the ‘we’ and ‘them’ characterization of the world is rapidly changing.  It’s not just developed vs. Third World anymore.  Even developing countries are seeing families shrink and live longer, looking more and more like developed countries.  Family planning was cited as a key driver.  Dr. Rosling points out that we need to look at the data rather than just make assumptions that lead to myths.  He also pointed out that even regional perceptions can be wrong, because there are huge differences among the data within Arab states, Africa, Eastern Europe, or Asia.  For instance, he discussed the strong correlation between GDP/Capita and Child survival percentage, but within a given region there are huge differences depending usually upon governmental attitudes towards trade, etc.  We just need to be cautious of the averages we use and the context in which we use them.

What’s amazing is that he was using publicly funded data and advocating strongly that we improve the ability to search these free databases.  A lot of insights can come from it.  It certainly shattered my impression of the Third World being a place where life expectancy dramatically trailed the West because of income disparities.  Dr. Rosling may not have been using these data for market research for a product, but the big takeaway was seeing how real data will provide the insights to make good, informed decisions.

Lesson 2: Obsess over the customer (My own company)

I've only been with Sprint for a little over a year, so I had to do some research about what our mission/vision statement is.  We must have one, but it isn't easily accessible and visible.  I asked another employee and they didn't know either.  As best as I can tell, our vision is "to be a world class company, the standard by which others are measured."

If this is our mission, it's difficult to interpret how a marketing plan could support something so broad.  We face numerous external challenges to our wireless businesses, as there are significant trends towards price competition.  The industry hopes to compensate for this by going away from a decade-long model of subsidizing phones for customers.  Networks have been upgraded to provide fast 4G LTE data speeds, although still not competitive with wired broadband from cable internet providers.  The main threats to my company is in trying to improve our network through our "Network Vision" initiative.  Sprint sees an opportunity to differentiate by being able to offer unlimited data to our customers when the competitors cap data consumption.  Wireless data consumption is growing at an extremely fast pace, and capacity constraints are going to be challenged.  Our particular technology can be aggregated in a way that will potentially provide breakthrough speeds over the next two years.  In time, a big opportunity exists to potentially compete with cable internet providers.  The problem is that we have to completely rip out our old equipment on every tower and replace it with our new equipment, rather than just upgrade side by side as our competitors have been able to do.  As a result, our base sees degraded performance during the upgrade process and customer satisfaction takes a huge hit.

Our company obviously provides a service that has an extremely broad customer base.  The vast majority of adults (and even children 7+) have a need to communicate with others and exchange information while mobile.  Our CEO and Chairman have both publicly advocated consolidation in the industry so we can more effectively compete with AT&T and Verizon by realizing purchasing and operating synergies with a company like T-Mobile.  Regulators have been reluctant to support a merger or acquisition, showing the political stance in Washington is still favoring four national carriers.  Our argument has been that the industry is really a duopoly, so allowing a merger will really increase competition from 2 to 3 national carriers.  If the external political environment shifts, a huge opportunity for a combined Sprint/T-Mobile will open up.    

Lesson 2: Obsess over the customer

I've spent a bit of time this week thinking about what it means to obsess over the customer and targeting the right segment for your business.  One area that I follow a lot is the cable industry.  As a cord-cutter, I fall in the camp that doesn't think the $150 I had to pay for AT&T U-Verse each month was a good value, no matter how many channels I received.  I use U-Verse as an example, but I've compared every offer I get in the mail almost daily and they seem to be close in price regardless of company.  We haven't had cable for several years now and rely on OTA HD broadcasts for the networks and Redbox for movies.  We still have to pay for broadband internet though.

The rallying cry for the cord-cutters is 'give us a la carte pricing and we'll save a bunch of money'.  I'm not sure that's the case, but it sure seems like there is a sizable market out there who are all feeling the same way.  I'm wondering why no company has come up with a model to serve this segments needs.  Who really wants to be hostage to renting the equipment monthly too?

Comcast is trying to merge with TWC, which I am absolutely against.  The link below discusses how some people think the merger will give the combined company the leverage it needs with ESPN and other content providers to finally get prices down to where they can offer a la carte programming.  Whether or not this occurs, I spent more time thinking about whether I am the customer Comcast and all the other cable companies are even trying to serve.  Southwest Airlines was successful because it had a unique value chain with decisions that supported low costs, like no meals or pre-assigned seating, while offering point-to-point service instead of using a hub-and-spoke system.  Herb Kelleher once wrote a letter to a customer who habitually complained about such choices, "Dear Mrs. Crabapple, We will miss you.  Love, Herb" (I think this was in the book Understanding Michael Porter).

Kelleher knew that the toughest decision is how to stand by your choices of whom not to serve.  Cord-cutters are perhaps the most price conscious out there.  Maybe we simply aren't who the cable companies want.  An argument can be made that the cable companies are just being product focused though, and not consumer focused.

They are standing pat knowing there are some key external factors that indicate a shift in the market.  The trend is that people want access to everything on-demand, and will continue to watch sports live most likely.  Additionally, the trend is that people perceive the value they get for cable is sub par.  With streaming capabilities, this market is changing rapidly too.  They may be safe as long as they also provide internet service, because cord-cutters still have to pay them to get entertainment through the computer.  Nevertheless, there sure seems to be an opportunity out there for some company to obsess over us.

http://www.newyorker.com/online/blogs/elements/2014/02/the-real-problem-with-the-comcast-merger.html

Lesson 1: What is Marketing

The key learning point this week is that marketing is a lot more complicated and broad than I had ever assumed.  Without much experience in business (I have spent over 12 years of my career as a Naval Aviator), Sales and Marketing have always been blurred roles, and it is easy to think of the two as the same thing.  The first reading from Marketing Plan Handbook dispelled that notion.  Sales is basically selling, but Marketing is so much more.  The text states that marketing is "everything the company is and does to consistently provide competitively-superior value to win customers and earn their ongoing loyalty."  Looking at the contents of a marketing plan makes it clear that marketing involves every aspect of the business, from creating a thorough understanding of customer needs to develop a product to the marketing program's mixture of the 4 P's, financial and operational plans, and metrics to ensure an initiative is successful.

The material I read/watched/reviewed this week included:

Chapter 1, Marketing Plan Handbook
Jeff Bezos video on YouTube
Week 1 Slides
HBR Article: Marketing Myopia

Additionally, I contributed to the class Wiki, where I took a stab at the definition of marketing.  I wasn't too far off, as I knew that the concept of creating value for the customer is a key pillar. 

Marketing Myopia was an outstanding article, and really helped me gain perspective on how critical and wide-ranging the subject is.  I have often wondered why more companies don't engage in creative destruction to ensure their ongoing competitiveness.  It was interesting to read the critical views on the oil industry not taking the lead in new energy development.  The idea of framing your industry in terms that permits managers to see new opportunities is key to long-term survival.  Levitt argues that the railroad industry wouldn't have suffered its decline had it thought of itself as simply being in the transportation business.  However, it is always easier to see in hindsight why a company should have anticipated how new industry, products, or production methods would make old ones obsolete.  But the overall point was well-taken, that companies like Exxon or BP should be the ones to develop alternative energy forms so they control their destinies.  Better technology will eventually win out.

Bezos' video was really interesting.   While he had multiple things he 'knew', the one that sticks out to me is obsessing over customers.  I have no trouble believing that this is crucial to exceptional performance, but the problem is learning what that means.  Learning 'how' to obsess over customers is what I'm hoping to learn in the coming weeks.