Shazeeye's Blog Thoughts on User Experience, Technology and Business

31Mar/120

7Ps to help you institutionalize user experience in your company

At some point a tech company decides it needs  a user experience team to champion the voice of the customer. The smart ones start this journey early as it is more challenging to institutionalize user experience in companies with a few hundred employees. The following 7Ps will help you institutionalize UX in your company:

Posters : Use posters to communicate the critical components of the UX message - UX principles, customer segments, etc. For example, Walmart.com had posters of its customer segments on the walls around the office to always remind its employees who they were designing for.

Process: Define the UX Engagement process. Usability.gov has a well defined design process. This may vary based on how departments are structured in your company, resources available and team dynamics but a process is a start to including all the critical elements of the user experience.

Procedure: Create standard UX templates to define the procedure to conduct a specific aspect of the UX. Usability.gov has many templates. For example, a  moderator guide or guidelines to conduct and write a heuristic report will establish a set of standards and improve the consistency and quality of work.

Protocol: Create a UX repository on the company intranet to educate everyone in your company about the UX team and their work, how to engage with them, what to expect, timelines, schedules, etc.

Publish: Get noticed in the greater UX community by publishing research and presenting at conferences. This brings visibility and credibility to the UX group.

Proof of productivity: User Experience improves the customer's experience in many ways. For example, it could reduce time, reduce help desk calls, increase enjoyment and trust, improve safety, etc. It is critical to measure this improvement in productivity to translate the value of the UX activity and to communicate it to employees and management.

Partner: This is the most important step in institutionalizing UX in a company. Unless you have a partner in upper management to rally around the UX cause this would be a very difficult struggle. It is critical to get support to ensure the message does not get lost and more importantly give UX the attention it deserves. After all, some of the top tech companies have made it their mantra. Google says "Focus on the user and all else follows" while Apple uses UX to drive its innovation engine.

26Feb/120

How do drugs get their labels?

On March 1st I went for a talk on Target Product Profiles at UCSF. Patrick Scannon, Xoma's Founder and CSO spoke on how drug discoveries can be made into commercial realities with the help of a Target Product Profile (TPP).  A TPP is the first step towards creating a drug label. A TPP is defined as a communication tool to help people in academics (discoverers of drugs in labs) to communicate the value of a drug to investors (people with $ but not convinced). This takes the drug from discovery through development to approval/market entry. It also helps keep various departments/functions such as regulatory, manufacturing, sales, marketing, etc. on the same page.

As drug discovery takes many years to commercialize (about 12 yrs) it is important to have clear goals (TPP) and to start with the end (FDA approval) in mind and work backwards. The TPP defines who the drug is for, what disease it cures, how large is the market, how is it administered and more details as seen in the image. Defining the unknowns upfront helps communicate the goals better to the FDA (governing body that ultimately approves if a drug can be commercialized). The TPP helps in thinking of launch strategies too. For example, some drug companies first launch in an orphan market (diseases affecting fewer than 200,000 people) and then larger markets as its faster to get approval in orphan markets and grants are available to support you in this process. Some companies also choose to launch in international markets before local markets as approval is faster for certain diseases.

Often changes in the IP landscape or manufacturing processes or technical difficulties result in changes to the TPP and CEOs are forced to make a difficult decision  to move ahead with the changes or drop the product. If the CEO agrees to go ahead she/he needs to update the TPP and keep all in the loop. The TPP can be used to increase the value of the company by finding ways to create additional IP, communicating improved benefits and decreased adverse events. CEOs can also use the TPP to forecast different scenarios of the drug. For example, a target scenario, a minimal scenario and an optimistic scenario where the CEO predicts the characteristic of the drug and thus his strategies under these three scenarios.

29Jan/120

Value Proposition and Positioning: IKEA Case Study

A key concept in marketing is identifying value of a company (value proposition) and communicating (positioning) it to target customers. To define these concepts we answer the 4 key questions below for IKEA.

What does IKEA do well? IKEA’s cost leadership and unique Swedish designs provide its target customers (young buyers) excellent value.

What are the trends in the industry? Americans love to keep furniture. Ikea tried to change these attitudes with an advertisement (lamp has no feelings). The trend is to update furniture based on lifestyle changes (single, married, student, starting a new family, etc). Providing interior design expertise is a critical part of this industry. Manufacturers and distributors are joining forces. Flexible furniture (example: bed plus sofa in one) and furniture that serves dual purposes add value (example: bed has storage too). Distinctions between rooms disappearing – kitchen and living room furniture (example: chairs) is interchangeable. Personalization of furniture is on the rise (color, upholstery, wood stains, etc) and so is experimentation with new materials (jute, etc).

What is the competition doing? The competition is using four (or a combination of these 4) strategies: cost leadership, design differentiation, catering to certain market segments (international, demographic segments-young and old, psychographic segments-improves self image, retail, office, etc) and enhancing the shopping experience (design consultants, in house restaurants, etc). Image on right shows cost leadership and design differentiation for a few competitors.

What does the customer want? Customers want great designs in unique styles to match their lifestyle for low prices.  They would like an expert to do the interiors of their home for free. They don’t want to burden themselves with transporting furniture from store to home or having to assemble it. People are willing to spend more on furniture items such as a bed (indicated by the wide range in prices) or items that serve dual purposes (futon serves as a sofa plus a bed). It should be easy to maintain (odors, scratches, etc).

What is Ikea’s positioning strategy relative to its competitors?

Cost Leadership (30-50% lower than competitors): This global furniture retailer based in Sweden targets young furniture buyers who want style at low cost. Buyers trade off service for cost. Ikea designs its own low-cost modular ready-to-assemble furniture (big part of their cost leadership).  Customers do their own pickup and delivery or get it delivered for a fee.  Employees are trained to save electricity and managers always travel coach and take buses instead of taxis. Cost is so important that first a price point is established, and then the manufacturer, materials and design are chosen. Expensive wood is used only on top visible layers of the furniture. Suppliers are chosen from a pool of 1800 to maintain cost leadership.

Shopping Experience: Ikea owns the furniture buying experience. It displays every product it sells in room-like settings so customers don’t need a decorator to help them imagine how to put the pieces together. Ikea's in house Swedish restaurant is as popular as its furniture and provides respite to customers who walk through 25,000 sq m (average space of Ikea store). Customers move along a predetermined path through a maze of rooms. Ikea offers services aligned to its customers who are young but not wealthy, likely to have children but no nanny and because they work for a living and need to shop at odd hours they are open late and on weekends. They also offer furniture delivery services for a fee.

Swedish Designs (functional and simple): Ikea creates functional cookie-cutter Swedish designs (designs are part of their ‘matrix’). That one table only comes in 4 Scandinavian styles at 3 price points. Design is usually the last step (after choosing, the price point and manufacturer) in the process. Other than its staff of 10 designers it also depends on freelancers highlighting that design was to focus on simple yet functional styles.

30Nov/110

Micromarketing: Location data to better serve your customers – Part 1 of 2

Location data such as using a zip code to find out how much revenue a grocery store can make is critical in your decision to decide if you want to open the store at that location. This is just one example of the powerful potential of micromarketing. Let's go through an example of using location data to open a grocery store in Orange County. We will be using SRC's Allocate to help analyze the location data and MapInfo Professional to map the data.

Mapping propensity and density to determine revenue potential of the store: As we see in the images below, we use SRC's Allocate to determine the revenue potential of  a grocery store in Orange County (OC). We choose the retail store option as the input variable and the dollar per store as the output using the software. Data is also available for furniture stores, sports stores, etc. After the variables are input a map is produced (below) which can be interpreted as follows. For Orange County, the average grocery expenditure per house hold per month (propensity) across a block group (a group of zip codes) where darker green shades indicate  higher expenditure for groceries per household per month is approximately $5800-$16900/month for the darkest or most expensive parts. The hashed region shows total dollars spent for groceries per square mile per month in Orange County (expenditure density). The darkest hashed regions indicate people in OC spend a total of $18,000,000 to $103,000,000 per month on groceries. This data helps you determine if the revenue potential is close to what you expect and can help compute your approximate profit given all the expenses you will incur. It also helps you compare revenue potential across different locations to help you determine the ideal/optimal location for you.

Choosing a Store Location by Mapping Competitors Location Data: Using the Yellow pages we identify the zip codes of the competitors. For this example - a grocery store - let's assume it's Trader Joe's and Whole Foods. We identified 19 Trader Joe's and 2 Whole Foods store in the OC area and mapped their trade areas (area from where customers visit the store - usually a 5 minute radius for a grocery store) using the software.  The blue areas represent the Trader Joe's and the red and fluorescent green represent Whole Foods. This is mapped on the propensity and density map from above using MapInfo Professional. With this information we choose a location (in yellow) that is far from competitors and has good propensity and density. You will also check for magnet stores, customer demographics and traffic (info in next paragraph) and ensure that the information provided by these parameters will help drive your store's growth. You can also compute the break even demand (average retail demand per square mile) as seen below to inform your decision.

Identifying magnet stores, traffic, customer demographics and trade areas for the new store location: The software helps to draw the trade area for the new store location (for this example a 5 minute radius as seen in black) and can identify the magnet stores or stores that will help pull traffic (for example, drug stores).  It computes traffic - 32,800 cars/day. It also helps define the type of people in the trade area. Types of people are defined by PRIZM clusters (for details check  PRIZM Clusters) and gives you demographics and characteristics of the population you are likely going to attract. According to the report this store will attract 54% of people belonging to the PRIZM cluster defined as White-collar Suburbia. This group can be described as "upscale, college-educated baby boomers living in suburban comfort in expensive new subdivisions". For more details on this segment visit Experian's description. Now that you have such a wealth of information on your customers you can tailor your marketing message as well as grocery needs to better suit them.


31Oct/110

Using the Four Actions Framework to Craft a Firm’s Strategy

A firm has to have a clear vision in the form of a strategy to define who it is and where it wants to go. Sometimes somewhere along the way this strategy gets blurred and its customers can't differentiate it from its competitors. The four actions framework asks four questions to sharpen the focus and realign the firm's game plan. The four actions framework can also be used to reconstruct customer value in an industry to identify a gap or find new value. The four questions as seen in the image identify factors that reduce, eliminate, raise and create value.

Let's apply this to a case study- PetSmart vs. Petco. You can read the detailed analysis in my paper here - Petsmart vs Petco - 4 Actions Framework or get the highlights below.

Industry analysis

PetSmart and Petco compete in the Pet Care Industry which includes pet food, clothing, healthcare and other pet services. This is an attractive industry based on Porter's 5 forces analysis (read paper for details) with spending reaching $41 billion/year (number which doubled from a year ago). Americans spend more on pet care than what they spend on movies, video games and music put together.

PetSmart’s strategy was to connect emotionally with pet owners by providing services (services strategy) such as adoption, grooming, training, day care and pet hotels. These luxurious pet services made pet owners feel that their pets were being treated as well as family and thus commanded the higher market share (30%) of the pet care industry. Petco their rival which held 20% market share concentrated on selling a larger variety of pets at a premium price (11% more than PetSmart). As PetSmart was a services strategy it partnered with alliances such as Banfield to help in hospital needs and its stores were located in “power centers” unlike Petco whose stores were “neighborhood pet stores” and much smaller in size.

Recommendations to PetSmart to Refine their Strategy using the Four Actions Framework

Raise: Continue to focus on services and add to these based on trends. For example pet obesity is a big trend hence providing pet diet plans and support will grow the pet food (diet meals for pets) vertical as well as services vertical (customer support), which is recurring revenue and ties into their current strategy. A limitation of this suggestion is that existing diet plans companies can easily enter this market with some modifications to their food to cater to animals.

Create: Provide pet super stores: hotel, grooming and hospital all in one. Owners will be willing to come to pet super stores. Based on maximum revenue based on location super stores that are a one stop shop for all pet owners can attract and even take away from mom and pop stores. Visiting vets from Banfield (PetSmart's already existing pet hospital) can be a part of this super store. This will also increase revenue for other verticals. For example, after the dog is treated at the vet the owner may pamper him or her at the spa and then buy the month’s food supply at the pet supply store. A limitation of this suggestion is that a lot of capital is required to create this and Francis is already working on expanding his pet hotels so this suggestion can probably wait once that is implemented and a detailed cost-benefit analysis of this suggestion is carried out.

Raise: Owners like to be a part of the pet grooming ritual as it fills an emotional need for the owners. Provide see -through rooms where owners can watch pets being groomed or trained while they wait (instead of waiting in waiting rooms). Remember, this is a business that caters to human needs through the pet. Feelings of belonging, care and connections are expressed through pets and sharing in these activities only strengthens the connection. A limitation of this suggestion is that this may be a small market (or not). In today’s busy world few may want to watch their pets being groomed. Again market research and testing will clarify this point.

Eliminate: As only 2% of their revenue comes from selling other pets such as birds and fish, etc evaluate if you still want to keep that business or use the revenue from there to better focus on the lucrative services, supplies and food verticals at PetSmart. A limitation of this suggestion is that this will change or limit the scope to only dogs and cats.

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