If we are selling jelly beans, there is not much the customer do not know, be it they are buying the regular ones or the regular ones branded as “Bertie Bott’s All Flavour Beans”. Customers know
- about the product
- what they are buying
- why they are buying
- what they should pay
But what if customers do not know what they are buying and the value from it?
Economist Brad DeLong from UC Berkeley writes in his 1999 paper titled, Speculative Microeconomics for Tomorrow’s economy,
In many information-based sectors of the next economy, the purchase of a good will no longer be transparent. The invisible hand theory assumes that purchasers know what they want and what they are buying so that they can effectively take advantage of competition and comparison-shop. If purchasers need first to figure out what they want and what they are buying, there is no good reason to assume that their willingness to pay corresponds to its true value to them.
What DeLong wrote in 1999 is even more applicable to the information driven products and services of the new decade.
One way marketers solve this problem today is by way of unusually long free trials in the form of free products. The argument is, “customers do not yet know they need this product but when they start using it they fall in love and start paying for it”.
That would work, if businesses have the time and resources to wait and competition will do the same as well. There are just too many uncertainties and this method of waiting for customers to figure out the value from an offering is too passive.
The alternative is to take a more active role. Instead of letting customers tell us, “what job they are hiring the product for”, we define, “what job we want them to hire our product for”.
This starts with segmentation, targeting and positioning.
Are you passive or active?