April 12, 2014
All US based financial institutions are required abide by KYC (know your customer) guidelines since 9/11 with a view to ensuring they know who they do business with. However, following KYC does little to really knowing a customer from a marketing standpoint much less predict customer behavior in terms of tailoring products and services to meet their needs. It does even less to create new markets and products, the subejct of a research paper that appeared late last year in the Journal of Consumer Research.
The JCR piece examines whether "consumers have the power to do more than just respond to products that companies put on the market; they can actually change and develop new markets." The researchers took up the case of the "minimoto", a miniature bike derived from a toy bike which progressed to its present size despite the two-wheelers being illegal to use it on public roads and pathways. The Journal's researchers noted that such "organic market emergence" helps distribute the risks and the costs associated with developing a market to consumers and away from the firm.
Seeking to fathom both consumers' minds and create new markets at a human and interpersonal level the insurance giant, State Farm, recently set up an interesting marketing laborartory in Chicago named Next Door. The insurer's objectives are to "really wanna learn what people really want. Then, we'll shoot those wants back to the Farm. We help you. You help us innovate." A fairly quick benefit realized by the company was that people did not really want to discuss long term goals but instead sought solutions for short term needs. Perhaps Next Door will generate new policies that cater to that unmet need.
Perhaps there is no better exemplifier of the power to create markets than Google whose latest forays in that area include an Android TV that is reputed to be able to "read your mind and offer you recommendations of what to watch before even you thinking about wanting to watch something." Besides taking the power of suggestion to new levels, Android TV together with Google Glass may well be able to influence consumer choice at an unprecedented scale. Underscoring that is the tech leader's move to follow consumers from their websearches to their visits to brick and mortar stores.
In less dramatic fashion, Google is setting about doing the foregoing in the hotel industry with their recently announced acquisition of Room 77 a metasearch site with bells and whistles that include a "concierge service". By adding it to their travel arsenal that includes ITA for airlines Google expects to be the pre-eminent source for travel. Beforelong, given the wealth of data on consumer behavior, the search giant can be expected at the very least to determine when, where and how anyone travels.