Shop Talk - Innovation, Marketing and Alliances: segmentation

Thursday, March 20, 2008

News item: a media company grows by studying its customers

In March's Harvard Business Review, Richard Harrington, CEO of Thomson Corporation, discusses how the large financial-media company reinvented its strategy ("Transforming Strategy One Customer At A Time" - free link). With his coauthor, Anthony Tjan of the Parthenon Group, Harrington shows how Thomson, by changing its focus from the standard segmentation used by its industry to that of specific end-users, was able to better understand its market position and identify attractive new product features.

This epiphany--innovation and differentiation through understanding how end-customers utilize a product and how they do their jobs--would not be surprising to Procter & Gamble, or to Clayton Christensen, who wrote about this back in 2005 ("Marketing Malpractice: The Cause and the Cure" link - $$).

One question is why this was so novel to Thomson. My guess is that it relates to how media companies view themselves. They have grown up as mass distributors, sending standardized product out to customers via newsstands, television, radio. Focusing on specific end-customer segments was time-consuming and unnecessary when there was always a new growth medium out there. Now, with growth stagnating for most media companies, they find they are no different from the packaged-goods manufacturers who sponsor their television programs.

To wit: they need customers, and customers need a job done.

Related:
How to market a product that isn't a product
Shop Talk Podcast #4 - Tony Ulwick on Determining What Customers Really Want...

segmentation, media, innovation, marketing, Harvard Business Review

Thursday, May 03, 2007

Dunkin' Donuts searches for new tribe members

Back in our single days, my friend Tom & I would go to Tia's on the waterfront in Boston for happy hour. One time, we began chatting with a certain girl there. We asked her what she did. She said, "I work for Dunkin' Donuts. I'm the product manager for donuts." We said, "Oh boy, that seems like the best job ever." And she said, "No it's not. The best job is to be the product manager for coffee. Do you know what the margin on a cup of coffee is?"

I recalled this story when I read today's Wall Street Journal article on Dunkin' Donuts and its expansion strategy. In new markets, Dunkin' has an easy time selling its baked products, but not as easy a time inserting itself into people's coffee habits. And, as the product manager we met told us, coffee is where the profits are.

To improve their chances, Dunkin' has profiled their typical customer--part of the Dunkin' "tribe." They are more down-to-earth (read: less pretentious) than Starbucks customers. (The company calculates that one-third of the country fits the profile.)

So you probably won't be able to get your double-caf no-whip caramel macchiato at Dunkin' Donuts. But you will be able to get a large coffee approximately the size of a Slurpee. Sometimes, that's all you need.