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A. “Consumer Concerns”
The focus is on several major new issues in studies and strategies related to consumer
marketing. After considering the privacy issue related to the consumer’s right to privacy, the
discussion flows to the different types of consumers and the implications for marketers in the
future.
Teaching Objectives
To stimulate students to think about the privacy issue, pro and con, for a firm when it
attempts to achieve a better understanding of its customers.
To communicate the role of various types of information that help the firm achieve a
clearer understanding of its customers and the consumer behavior environment of the
present and future.
Discussion
INTRODUCTION
Americans today feel more protective of their privacy than they did during most of the 1990s.
That is the fundamental conclusion of two surveys on privacy issues. Polls by Yankelovich and
Louis Harris & Associates indicate continued high levels of concern over the way business
obtains, uses, and disperses consumer information.
The more alarming figures arise from the Yankelovich survey, in which nine out of ten
respondents favored legislation to regulate business uses of consumer information. Forty-five
percent of those polled strongly feel the need for privacy legislation, up from 23 percent in
1990. According to a Yankelovich partner: “Very seldom do we get 90 percent agreement on
anything. That really attests to the fact that this is an enormously important issue to people.”
The Harris study is more reassuring, providing a less negative message. Although 82 percent of
the respondents say they are “somewhat” or “very concerned” about threats to their personal
privacy, their uneasiness is more focused on the government than business. The majority of
respondents (57 percent) think businesses that handle personal information “are paying more
attention to privacy issues these days.” An interesting aspect of this poll is, however, that 72
percent of the respondents agreed that “if companies and industry associations adopt good
voluntary privacy policies, that would be better than enacting government regulations.”
There are some very consistent messages that have gotten clearer in recent years. They are:
People regard their transaction information as something they feel they have lost
control over, and that concerns them.
People are different. Some don’t want any direct marketing, some want
everything you can give them, and in between there are people who want some
say in what gets to them and what doesn’t.
People in the last group (those who want a say in what comes to them) comprise the largest
segment of the total (55 percent). This group recognizes the benefits of using personal
information for business uses. However, they have to be convinced that the data being sought
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are relevant and subject to fair information practices. For these people, notice and the ability to
opt out are very important. This group “favors voluntary standards,”” but they will back
legislation when they think not enough is being done by voluntary means. As it is, over half the
respondents (54 percent) do not believe current laws or business practices adequately protect
their privacy.
At the same time, the Direct Marketing Association (DMA) reports that consumers purchased
over $700 billion through direct marketing channels in 1998. This is not the contradiction it
might seem. A 1994 survey regarding interactive services revealed that the respondents who
were most interested in subscribing were also the most likely to have made purchases through
direct marketing. They were also the most concerned about privacy, and their willingness to
release personal information for interactive marketing purposes was contingent on the presence
of policies that protected their privacy.
According to various surveys, the best customers for direct marketing are many of the same
people who are looking for proper safeguards in the relationship between the marketer, the
service provider, and the consumer. The apparent message here is that it would be a mistake for
direct marketers to assume that their customers are not interested in privacy. Clearly, they are
the people concerned about privacy.
Respondents to one of the surveys actually expressed a desire for better relationships with
marketers. The survey indicated the people are tired of having to be vigilant about everything
they do, and they would like to be able to trust a little bit again, but still they are looking for
protection. The theme seems to be that it will take more than individual effort. A company
could be doing everything right, but 10 other companies are doing everything wrong, so in the
consumer’s mind all marketers stink. The point is that businesses have to make much more of a
marketing passed and pending in various state legislatures is clear evidence of this point.
Legislators are showing that this is an issue that people care about.
BEHAVIORAL ANALYSIS
There is a substantial question about how well the American consumer is faring in this era of
passive.
To support this perspective Langer Associates, Inc., conducts an annual survey of American
consumers. Langer specializes in qualitative studies of consumer marketing issues. The firm
conducted focus groups with thousands of people across the United States and discovered that
the following attributes and concerns are widely shared:
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they do have: jobs, family, community, possessions—a change reflected in
economics and politics.
Localization. A new protectiveness following 9/11 has translated into increased
interest in issues like school budgets and neighborhood crime. Advertisers can
oConnection with others
oAvoiding intrusive interaction
The message is that stores, restaurants, and clubs similarly can satisfy both
needs by building zones of “alone-togetherness” into their layout.
Topsy-Turvy Retail. Focus group members often give higher marks for customer
beginning to tire of superstores, business remains brisk. Smaller stores will have
to maintain excellent personal service, find niches to fill, and do more direct
marketing to stay afloat.
“Woo-Me” Marketing. Customers today will not seek out products or services;
reason for buying (even if it is the reason) are likely to appeal to this crowd.
Clothing Cutbacks. Until a new style of dressing renders their current wardrobes
obsolete, most consumers feel they already have all the clothing they need. The
trend toward more casual dress for work and socializing has added to their
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closet is being spent instead on homes, travel, and investments despite national
and global economic and political issues.
High-Tech Polarization. Attitudes toward technology are polarized, with many
people still concerned about the impact of computers on employment, the
touch.”
Data Glut. Complaints about being overwhelmed by information are up sharply,
indicating a potential market for those who can help simplify it and screen out
extraneous communications.
Changed Office Structures. Downsizing means more executives doing clerical
materials.
Working at Relaxing. Nothing is easy; professional/managerial types put a lot of
effort into their down time, scheduling massages, gardening, and redecorating
their city apartments. Ads can talk about people deserving to relax, and depict
the humor inherent in striving for serenity.
technology advances, and those who do not embrace these new methods will be at a
disadvantage as consumers will gravitate to those organizations that do.
Teaching Objectives
To demonstrate how the Internet and wireless environment has enabled the consumer to
Discussion
Organizations, in their efforts to reduce cost, increase their competitivenss, and enhance
communication to consumers have greatly enhanced their Web pages with most of the
information necessary for consumers to research and purchase their products and services.
Additionally, new business entities such as bizrate.com have evolved to provide product and
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keywords for search engines when a consumer is searching for information by category and not
brand. Consumers who are armed with information acquired on the Web change the sales
process. For example, consumers are coming into car dealerships with all relative information
on a particular car’s options and what price they are wiling to pay for the car. In some cases the
method of efficiently informing the consumer with their relative product and service
information. Technology is changing quickly and the rate of change adoption varies by
consumer as well as by organization. Therefore, organizations must keep pace with both the
technology and consumer technology adoption synamics to remain competitive.
Background Article
Report, May 14, 2002.
In the five-and-a-half decades since they first began arriving on the scene, the baby boomers
have transformed every American institution with which they’ve come in contact, from popular
music to parenthood. Now that the older boomers are in their late 40s and 50s, they’re making
their mark on grandparenting.
it’s wise for retailers and other businesses to pay attention to what they are buying and how
they view their grandparenting role.
Researchers believe that baby boomers want to be more of a presence in their grandchildren’s
everyday lives than grandparents of earlier generations. This attitude stems partly from the fact
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their own relations with their parents, boomers see helping with grandchildren as one way to
keep communication going between them and their own children.
As the ranks of boomer grandparents grow, you will see more taking responsibility for
child-care. Grandparents will become more involved in day-to-day purchases of what cereals to
chauffeur duties easier.
The travel industry will be one of the biggest beneficiaries as boomer grandparents shell out
big bucks to vacation with their grandkids, particularly on trips that can broaden their
grandchildren’s minds. Eco-friendly cruise packages, river rafting, and other adventure tours
will be major attractions. Grandkids will have a major say in how the family’s travel money is
or instant messaging.
Then there’s the entertainment market. Having grown up on rock and roll, boomers will be far
more likely than their senior parents to share their grandchildren’s musical interests. That
means not only that they’ll spend more on compact discs for their grandkids, but also that
they’ll be joining them in the stands at rock concerts. Similarly, they’ll be more likely to take
will go about it with an eye toward keeping themselves informed. If an educational game is
something that grandparents can play with their grandkids, so much the better. Kathy
Whitehouse, a senior consultant with SRI Consulting Business Intelligence, says that boomer
grandparents will be more likely than their own parents to pay attention to sources such as
safety and durability.
Probably the best way to appeal to boomer grandparents is to emphasize two things: education
and shared experience. For big-ticket items, a major hook is the desire to give grandkids a
wider range of experiences, particularly to things the boomers wish they could have
experienced as kids but that their parents couldn’t afford. Adventure travel certainly fits that
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IV. Case:
“TiVo”
HBS Case: 501-038 TN: 5-501-057
Teaching Perspectives
complex electronics product that is intended radically to change consumer habits. Moreover,
with an ambiguous future impact on the television and advertising industries, TiVo needs to
demonstrate that it can play a constructive role in the future media landscape.
Fourteen months into the launch, sales are very disappointing. The VP of Marketing and Sales,
of big player Microsoft.
This case can be used to discuss classical areas of marketing strategy:
Launch strategy for a truly new product.
Preemptive positioning/first mover advantage.
The role of branding in relation to these issues.
Integrated communications strategy.
Habit formation/disruption.
Finally, the case can he used to discuss contemporary issues related to marketing in the
information age:
Empowering consumers with more control over their consumption experiences,
in order to enhance targeted marketing.
Consumer privacy.
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plan?), allowing the other topics (consumer behavior and marketing issues in the information
age) to surface as the discussion progresses. This approach has pluses and minuses. On the
minus side, the analyses of these specific topics might remain relatively superficial. On the
action plan.
Questions
2. Now adopt the standpoint of the networks, the advertisers, and the cable/satellite
companies: What do they want TiVo to be? Thinking about the competition: What are
Microsoft’s potential strengths and weaknesses in this market?
3. How would you describe and characterize TiVo’s action plan as given at the end of the
analysis suggest an alternative plan?
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