Gazing Out The Window

Sitting in HighTide, a harbourside restaurant in Devonport, Tasmania, I was enjoying the local crayfish and a glass of Ninth Island Pinot Noir from a vineyard near Launceston. While taking in the harbour view, the arrival of a van and trailer caught my attention. On the side of the van was the name of the company, ‘Indoor, Outdoor Solutions’. I was intrigued. What did this company actually do? The van driver went to the trailer, unloaded a lawn mower, and then began to mow the lawn around the restaurant. So lawn mowing was the outdoor solution. I can only assume that cleaning was the indoor solution. How is it that a business can have such a meaningless and unhelpful name?

It all started back in July 1960 when Theodore Levitt wrote an article called, Marketing Myopia, that was published in the Harvard Business Review. Levitt proposed that railways were in the transport business rather than the railway business. Customers wanted a solution to their transport problems, rather than having their goods carried by rail. And rather than a customer buying a drill bit, what they really wanted was a solution to their need for making a hole through something. It all sounded plausible and soon the idea of the need to look at a customer solution when deciding what business you were in had been accepted.

Marketing A Solution

Levitt knew he was onto a winner and progressively expanded his original idea. A useful framework for just developing a business strategy grew to a broad approach applying the solution idea to the marketing of products. In his 1986 Harvard Business review article, The Marketing Imagination, Levitt proposed that the value of a product was directly related to how well it provided a solution to a customer’s problem. Although little empirical evidence was presented to support this proposition the idea seems to have appealed to Marketing Faculties and MBA schools at universities around the world. Soon the mantra of the solution had been incorporated in course material and taught to a generation of marketing managers and business people. The solution idea has now become so distorted that in many cases it is just wrong. The indoor/outdoor solution mentioned above is one example of this. The HighTide restaurant didn’t want an indoor/outdoor solution. What it wanted was for its lawn to be cut.

Whether it is a battery company that brands its batteries as a ‘Marine Solution’, or a train company that sees itself as a world leader in environmental solutions, these are all businesses that have forgotten what they are selling.

The Total Product

Levitt viewed products as meeting an ever increasing customer problem. He proposed a core Generic Product, for example as providing a solution to the problem of the need for food. This Generic Product could be progressively developed into a more complex product, for example buying food in a shop. Finally with more solution complexity added the full problem is solved, in our example with a person eating in a restaurant.

With a series of ever increasing concentric circles, Levitt suggested that customers could be progressively moved from The Generic Product, through The Expected Product, then to The Augmented Product and finally to The Potential Product. Wouldn’t it be wonderful if customers behaved like this and they all had problems needing solutions of ever increasing complexity?

We know from the Customer Value Added research we carry out around the world in many industries, that while customers are sometimes looking for a solution to a problem when they make a purchasing decision, more often they make a purchasing decision based on comparative value. They make their decision weighing up their perceptions of a supplier’s brand image, product benefits and service provided, against price, cost and hassles for all of the suppliers that they know of. Whether they decide to buy food at a store to cook at home or to go to a restaurant is determined by their needs. It is not decided by whether they have a problem or if they need a solution.

Value Segmentation

If customers don’t progress down a path of ever increasing product complexity, what does happen? What we have found when we undertake segmentation and product development studies using our Market Recognised Value (MRV) technique is that customers can be segmented according to the value delivered to them. For example if we consider economy class air travel, there is one segment of customers who just want to get from A to B at the lowest price. Another segment is attracted by the airline brand and frequent flyer programme, while a third segment is prepared to pay a little more for better service.

While Levitt would have us believe that customers can be migrated from one segment to another with an expanded product or with a marketing campaign, this is not the case in practice. A certain segment of customers will always choose the budget option, as the generic product may be all they will ever value. Other segments will look for better service or some form of added value. For businesses this means that they must develop a different value proposition for each value segment, or decide to focus on just the one or two value segments which align with their capabilities and provide the greatest profit.

It is time for businesses to stop wasting time thinking about solutions for their customers’ supposed problems. Customers do not want to buy a solution. Many customers already know how to make a hole. They do not want a solution to a problem of needing a hole. What they want is a high quality drill bit at the right price.

Evandale

Looking through the doorway of Brown’s Village Store we were attracted into the shop by the traditional shop fittings. While having a wander round the shop we spotted ham on the bone being sold by the slice. With a few local tomatoes, some King Island smoked cheese and Cascade ginger beer we had most of the ingredients for lunch. On the other side of the street a bakery with a wood fired oven completed our luncheon menu with some wholemeal rolls.

Just up the street there was a little park next to the penny farthing bicycle sculpture shown in the photo above, so we had lunch soaking up the warm Tasmanian sun with the Evandale main street backdrop of 19th century buildings. Evandale has more of the feel of being in a town in the Cotswolds in England rather than being in Australia.

In the fine old buildings there is the usual mix of food, antique, clothes and gift shops found in tourist towns. The penny farthing sculpture reminds visitors that for the last 24 years, Evandale has been the site of the Australian National Penny Farthing championships. Enthusiasts now come from round the world to take part.

Evandale is located 20km to the south of Launceston, Tasmania, Australia. If you fly into Launceston, you will find Evandale 5km south of the airport.

You can find Brown’s Village Store in the main street of Evandale or on the web at http://www.vision.net.au/~thestables/strore.htm