THE BLOG

Post Recession Economic Growth Means Challenging Our Concept of "Normal"

03/18/2010 05:12 am ET | Updated May 25, 2011

In my last blog, I wrote about the contribution of marketing strategy, and more specifically marketing research, to develop new recipes and ideas that will ultimately contribute to post-recession economic growth. I suggested that marketing managers need to pay more attention to the methods and approaches that will allow organizations to create customers, shape markets, and alter consumer behavior. Ideas that others will want to imitate.

I thought I would take a moment to provide some interesting examples to illustrate just how important it is to question the assumptions we hold of the market and the attributes that define a market if in fact innovation is our goal. The central message behind these examples is not to accept the mental models we hold of a market as being somehow cast in stone because to do so might result in missed opportunities to innovate.

In 1960, Theodore Levitt wrote a famous article in the Harvard Business Review called "Marketing Myopia". In it he provided a quote from a 1936 National Wholesale Grocers' Association Conference to describe the reaction of the Association towards supermarkets. Basically, the advice of the Association spokesperson was that there was nothing to fear - supermarkets would fail because all customers really wanted was a friendly neighborhood store:

... there [was] nothing to fear. ...the supers' narrow appeal to the price buyer limited the size of their market. They had to draw from miles around. When imitators came, there would be wholesale liquidations as volume fell. The current high sales of the supers was said to be partly due to their novelty. Basically people want convenient neighborhood grocers. If the neighborhood stores cooperate with their suppliers, pay attention to their costs, and improve their services, they would be able to weather the competition until it blew over.

We all hold our own mental models of what "normal" is. Back in 1936, customers may not have imagined the concept of a supermarket, a larger store that offers more choice and lower prices. Similarly, customers may not have comprehended the need to travel further, to buy less frequently and to buy in slightly bigger quantities. Therefore, if I conducted a study to investigate how to better serve customers of neighborhood stores, I would likely focus on the product range and aspects of customer service.

If I expanded the scope of my study to identify ways to create a new store format (in this case, a supermarket), then the concept might not test well because respondents would likely base their answers on what they know, that is on the current mental model they hold of grocery retailing. The outcome might have been an apparent unwillingness to buy from a supermarket. Yet, as we all know, supermarkets quickly became the new normal.

I came across more examples in the latest issue of BusinessWeek (October 12, p. 21), in which Ellen Gibson reviewed a book by Dennis Barron called A Better Pencil: Readers, Writers and the Digital Revolution. Barron outlined early reactions toward telegraphs, telephones and typewriters:
• The telegraph might not succeed because "Maine and Texas, it may be, have nothing important to communicate".
• The potential of the telephone was not recognized because it did not provide a permanent record of a conversation.
• Typewriters should not succeed because it would give too many would-be writers authorship.

These examples, yet again, illustrate the mental models held at the time - that is, perceptions of "normal" ways to communicate and write. Of course, and with the passage of time, consumers do adopt these new innovations, change their behavior and new markets form.

We have already seen the impact failing businesses have on the economy, this is why Peter Drucker always argued that it is the responsibility of managers to develop a competence in entrepreneurship, such that the organization can adapt and innovate in times to change - change that might offer the organization a sustainable competitive advantage. The challenge, however, is to understand the mental models currently held of the market and instead of being constricted by these mental models, to use them as a starting place from which innovation and change occurs.

Jenny Darroch is on the faculty at the Drucker School of Management. She is an expert on marketing strategies that generate growth. See www.MarketingThroughTurbulentTimes.com