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Entertainment
as customer value
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Dr.
Ranjan Das |
Professor
of Strategic & International Management,
Indian Institute of Management Calcutta and
Consulting Editor, Strategic Marketing |
| Faced
with growing competition and a modest growth rate, managers
of companies across industries and countries are continuously
on the look-out for new ways to segment the market and
provide unique and sustainable value to customers. Gone
are those days when providing products or services that
met the required functional features were sufficient to
draw customer attention and build loyalty. The technology
underlying each product category has in recent years reached
a level in which the functional features are so fine-tuned
that no further sophistication can be achieved without
altering the price-performance ratio. Due to widespread
technology diffusion, functional features of products
and services offered by leading players in each category
have started to look similar, thereby reducing the extent
of differentiation among them. |
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Responses
of Companies
Faced with declining differentiation in functional terms,
managers started looking for differentiation in terms of intangibles
such as convenience, speedier business processes, more interactivity,
customized offerings, creation of imagery and so on, all aimed
at developing a brand equity in the minds of the customers.
The idea was to build the core values of the brand, around
both tangible and intangible features, in a manner that met
the functional and emotional needs of customers in a far better
way than the same offered by the competition. The tasks involved
were not easy since these required managers to understand
the demographics, sociographics and psychographics of target
customer groups and then develop creative ways to meet the
unique needs of each such group. Problems, however, continued
as all competitors started thinking on the same lines and
well-thought-out intangibles, particularly those that are
easily imitable,lost their value, as they no longer remained
unique offerings. While the inability of many companies to
(a) correctly identify customer segments (b) determine the
positioning they wish to have in the minds of customers vis-à-vis
the competition and (c) undertake high-quality communication
contributed to their underperformance, many successful companies
too faced problems since almost all intangible ways of differentiation
no more remained unique to the target customer groups. Soon,
offerings of these companies were being perceived as either
“nothing special” or “boring”. As more
and more companies faced this problem, the challenge was to
find out new ways of creating customer value that would retain
all the good features of current offerings but add new dimensions
that would be exciting and unique in terms of experience.
It became clear to managers that failure to find new ways
of differentiation that are based on unique experiences would
imply a regression to the days of intense price competition,
a situation which every manager is scared to face.
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Search
For New Customer Value
Whether it is consumer goods, industrial products or services,
any search for new customer value must take into account the
changing orientation of customers as reflected through their
stated and unstated expectations. In almost all product or service
categories, customers now want to be amused, surprised, indulged
and entertained. This does not mean that functional and emotional
needs, that are currently being satisfied, have lost their relevance.
What, however, is now becoming clear is that the customer now
wants entertainment in whatever he does, whether buying or consuming.
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Entertainment
thus has now become his additional criterion for deciding what
to buy and from where to buy.
There is a growing realization among managers that the processes
of acquiring a product or service also create value for customers
(in addition to those created through specific products or associated
services) and, this being so, customer experiences during shopping
and consumption processes need to be given |
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Due
to widespread technology diffusion,
functional features of products and
services offered by leading players
in each
category have started to look similar,
thereby reducing the extent of
differentiation among them
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emphasis in the days to come. Customers themselves are now unequivocal
in their expectation that their experience as ‘shoppers’
be given adequate importance in addition to that as ‘consumers’
of products or services. All these point to the growing importance
of experience as a source of customer value. As mentioned earlier,
entertainment lies at the heart of the new experience the customer
is seeking. |
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Why
Entertainment?
Michael J. Wolf in his book, ‘The Entertainment Economy’,
observes that we are living in an entertainment economy, and
entertainment — not autos, steel or financial services
— is fast becoming the engine of growth of the New Economy.
Most organizations operating in FMCG, consumer durables and
service industries have already taken note of the new phenomenon
and started developing programmes that focus on such elements
as entertainment, surprise, amusement and indulgence to attract
customers. In many ways, non-entertainment companies have
already begun to think on the lines of entertainment companies
operating in such areas as cinema, TV, radio, popular music,
newspapers, theme parks etc., and this has resulted in designing
products and processes keeping in mind the entertainment needs
of customers. As Wolf observes, many retail stores will soon
be designed and look like theme parks, and more and more categories
will follow this path. When this happens, the difference between
the entertainment industry as understood traditionally and
rest of the economy will just disappear.
Under the new scenario, customers will want to be entertained,
indulged, surprised, and amused in whatever they read, listen
to, watch, purchase or consume. And this will progressively
be the new rule in all categories. For example, even a teacher
delivering academic inputs to students will have to remember
that unless he or she entertains his/her customers (i.e. the
students) while giving the inputs, his/her effectiveness as
a teacher will be jeopardised since students
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will
not have the right frame of mind to receive the complex inputs.
Similarly, service industries such as banks, airlines, hotels,
insurance companies etc. will have to design entertainment-based
value to ensure the continued loyalty of customers to their
offerings.
It is thus not surprising that entertainment content is fast
becoming a key differentiatior in every aspect of the consumer
economy. Take a look at any sector—travel, commercial banking,
fast food, newspapers, books and journals, supermarkets, automobile
and so on—and you will perceive that the entertainment
content is on the rise. Our decisions on what to buy, where
to buy from, when to buy and how much to buy are |
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What
is now becoming clear is that the
customer wants entertainment in whatever
he does, whether buying or consuming.
Entertainment thus has now become his
additional criterion for deciding what
to
buy and from where to buy
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