The CMO Survey asks top marketers to rank order the following factors in terms of their importance to customers: low price, superior product quality, superior innovation, trusting relationship, excellent service, and brand. The specific question is “For your largest market, rank your customers’ top three priorities over the next 12 months” where 1 is most important. I charted these responses over the last three years to get a sense of how priorities have shifted, especially during these tough economic times.
Table 1 shows the rankings for each of the last three years as well as the average for each factor across the three years. Remembering that “1” is most important, the table indicates that marketers believe, on average, that low price is the most important priority for their customers (average rank 1.81) followed by superior product quality (1.94) and innovation (1.96). Trusting relationship (average rank 2.04), excellent service (2.13), and brand (2.22) are believed to be less important.
Both Table 1 and Figure 1 show that these figures have shifted over time. In particular, at the beginning of the recession (August 2009), low price dominated these rankings (1.66). Although superior product quality and superior innovation were not unimportant, low price was significantly more important. However, one year later (August 2010) and holding through August 2011, both superior product quality (increasing from 2.01 to 1.90) and superior innovation (increasing from 2.14 to 1.86) have gained importance. All three of these shifts are statistically significant. There were no discernible changes to the importance of excellent service, trusting relationship, and brand.
So what customers want during an economic downturn goes beyond low price. They want products that will last or that stand out in some important way. This means companies can add value beyond slashing prices. I might add that unless they are low-price leaders, companies should add value by focusing on quality and innovation. These strategies are more defensible given competitors may not be able to make these investments. These strategies also differentiate the company from competitors and help create a distinct image of the company that customers rely on to make purchasing decisions and share with others.
If I cut the data by whether the company is focused on products or services, a few important differences emerge. Reporting the August 2011 data, low price is important for service companies (1.69 vs. 1.98 for product companies) as is a trusting relationship (1.95 vs. 2.11 for product companies). On the other hand, superior product quality is more important for product companies (1.75 vs. 1.99 for service companies) as is brand (2.07 vs. 2.46 for service companies). Superior innovation is equally important to both types of companies (1.93 for service companies and 1.90 for product companies).