May 13, 2008

Can We Tell Who Buys What?

Tip: read getting what we want by distorting our spending on Riscario Insider, which describes research into the new consumer as described in Treasure Hunt by Michael Silverstein of the Boston Consulting Group. Today's consumer trades up in a few categories (can't buy better) and trades down in many (can't buy cheaper). The middle market is toughest: you aren't the best and you aren't the cheapest.

Our clients are unique in what they're willing to spend their money on. They spend more in some categories and less in others. Here are examples:
  • movies: some go to movie theatres, some buy movies on DVD or Blu-Ray, some rent, some watch for free on commercial tv
  • dining out: some love this while others think what the same food would cost at home (e.g., $15 can buy pizza for one person at a restaurant but for a whole family --- assuming no teenagers --- at home)
  • vacations: some go on extravagant vacations while others relax at home
  • food: some pay extra for organic while others buy the cheapest
  • family: (grand)parents may spend extra on their (grand)children and save on themselves
More Variety
Business gets tougher when we can't tell what a client wants. An owner of a Mr. Sub franchise reminded me that in the beginning there was only one type of bread and four types of subs. Now there's much more choice due to competition. Order a cream cheese bagel at Tim Horton's and slow down the line while you select the type of bagel and type of cream cheese.

More than choice, consumers want value. No one wants to overpay for anything, but that doesn't mean the cheapest price for those trading up. When reducing a client's financial risks, intangible factors matter. Your expertise matters but few charge separately for wisdom.

If choice can overwhelm when ordering a submarine sandwich, what of products like life insurance? There's probably too much choice already. Our fact finding helps narrow down the solutions but then our biases can get in the way of what we offer the client. For example, a leveraging strategy could be inside the client's comfort zone but not presented because it falls outside yours.


No comments:

Post a Comment