Consumer's Risk Analysis
Marcos Fava Neves
12 Mar 2011 06:26
Consumer's Risk Analysis - Published on China Daily Newspaper, 11/03/2011
Do our companies have contracts with consumers? First of all, contracts are relationships, and are either formal (written and signed) or informal, like oral contracts based on trust, with higher value in many societies than written and formal agreements.
The difference between consumer’s expectations and what is received when a product is purchased (dissonance or gap) is something well studied in marketing. Companies face an era of high expectations and these bring an extra responsibility. Most companies would like to have loyal consumers buying what is offered, and giving returns. But how to do it? How to establish these contracts?
A traditional analysis could be done here, telling that companies should have a good product with quality, nice price, nice service, good communication, marketing channel, sales process and others. But we can move on a different direction, which involves studying risks and looking at our offer with the consumer’s lens.
This focus should be done using an opposite way of looking and coming backwards, analyzing possible risks that consumers are avoiding when buying something, starting a relationship or building a sustainable contract. What are these risks? How to avoid them, modifying our strategy? Here goes the list of 10 questions.
1 - What are the risks of bad performance (the product will not solve the need completely)? Understand what consumer thinks in terms of quality, conformity and other criteria used to measure performance are important. Several companies show the economic benefits of using the offer, in case of new technologies and it is an idea.
2 - What are the risks of extra-time (energy expenditure) or lack of convenience in the purchase process? Consumers need simple purchase experiences, so all the processes as seen by consumers (credit, deliver, showrooms, and internet, among others) should be mapped and analyzed to become faster and simpler. Losing time nowadays is almost a crime!
3 - What are the risks of money expenditure, (sensation of less value for the money spent)? Understand how the consumer is putting value on our offer and what really is being offered. If there is a gap, probably the company has done a mistake on advertisement or other marketing activity.
4 - What are the risks of not belonging or not receiving pleasure, comfort and well being within the community? Several products are purchased based on opinions, and will be used in situations where consumers will face other opinions, coming from friends, family, neighbors, colleagues and other relations. Consumers are searching for acceptance and sometimes buy a product or service linked to a wish of belonging, of “making part”.
5 - What are the risks in health or security related to the product? If it is a food or beverage, how is the health risk seen, and what is valued in terms of certifications and other associations.
6 - What are the risks of payment (consumer finances)? Will consumer be able to pay, how this question could be solved in order to facilitate, offering credit or other.
7 - What are the risks in not fitting consumer’s values towards society, environment, employment and other values a consumer might have? Production processes, marketing and others should be linked to what is valued by the buyer.
8 - What are the risks in reselling? We can imagine here the case of durable goods, that are used and then sold (like cars, for instance).
9 - What are the risks in understanding? These risks are sometimes neglected. In most of the industries, consumers want simple solutions, or products that are easy to use and to understand.
10 - What are the risks in maintenance, services, or post-sales interactions? Costs related to insurances, maintenance, the inputs needed, energy consumption and other variables.
Successful consumer relationships nowadays focus on experiences. To be successful in this equation means performing better than the competition in avoiding consumer risks and delivering benefits.
This will bring a relationship with consumers, which tend to be loyal if we keep on searching for a better value equation. If the consumer perceives accommodation then will be surprised with his new contract with a competitor. This is our risk.
This consumer risk analysis may give positive results and ideas. The suggestion here, as in other articles and methods proposed, is to use this list of 10 questions in focus groups with consumers and also internally within the company, gathering knowledge of sales and marketing people, and other specialists in order to reduce risks. The consumer will then have a sustainable contract and a profitable relationship with our company, with common benefits.
The author is professor of strategic planning and food chains at FEARP School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org – email: [email protected]) and international speaker.
