Getting Close to the Customer: Quantitative vs. Qualitative Approaches (page 1 of 3)

New ways to gauge customer feelings and attitudes are increasingly complementing numbers-oriented methods, although companies should never take an either-or-approach, according to Wharton faculty. "Thanks to technology and other innovations we know far more about our customers than we ever did before, but I would contend that we don't understand more about our customers than we did 40 years ago," says Wharton marketing professor Peter Fader. "We can put each customer's order on a microchip, but as far as having a sense of what's inside making him tick," the answers remain elusive.

New technology to gather and process data can be overwhelming for marketers, he adds, noting that some companies are tracking consumers with radio devices and installing video cameras in homes. "It sounds compelling [as a way] to understand how people are using and consuming the products, but in the end you have miles of videotape," says Fader. "It's not a complete waste of time, but it's a matter of knowing when to say, 'When.'"

Companies need to weigh the benefits of launching huge data projects against the cost. If the payoff isn't there, Fader suggests, then marketers risk a backlash in which general managers give up trying to understand the customer at all and rely solely on quantitative information. The end result could be that "the marketing function shrivels up and goes away and gets replaced by order-takers or inventory control specialists."

Fader points to Wal-Mart's technological focus, which has been used to wring costs from the company's supply chain, as one effective strategy. "Companies have to pick their position. Wal-Mart has chosen a position of being on the 'cost' side. Many other companies claim to be on the customer intimacy side, but they are really just giving it lip service." Fierce competition, he adds, has led companies to build proprietary marketing models that replace broader data formerly collected by industry associations. "In the old days there used to be much more transparency. The models were simpler. Industry associations had a bigger role. Companies said, 'If we can't get data, then let's share.'"

From Data Collection to Creative Insight
Wharton marketing professor George Day suggests that quantitative approaches such as data mining - in which data is processed to find trends - are valuable for companies with established products. However, companies searching for new organic growth - in markets that are evolving or where technologies are converging - may not even have data, so in those areas qualitative methods are useful. "Even when quantitative data is most preferred you still need the qualitative [approach] to interpret what's going on, to give it depth," says Day. "You can't hand an ad copywriter behavioral data and expect him to do a lot. He needs a more refined, colorful, multi-dimensional picture of the target customer."

The real issue for companies is how customer insights are used, no matter what method is chosen to gather them. One interesting application, says Day, is occurring at Whirlpool and Procter & Gamble where customer information goes into building "concept banks" that drive new product development. This information, which might include consumer reaction to certain product attributes, can be mixed and matched to develop new concepts. Then, Day says, the company can take an intermediate, more qualitative step by getting an in-house group to brainstorm ways to translate those concepts into products.