Learning From Extreme Consumers

Jill  Avery; Michael  Norton

Technical Note | HBS Case Collection | January 2014

Learning From Extreme Consumers

Abstract

Traditional market research methods focus on understanding the average experiences of average consumers. This focus leads to gaps in our knowledge of consumer behavior and often fails to uncover insights that can drive revolutionary, rather than evolutionary innovation. This note outlines a process for studying extreme consumers—consumers who fall in both tails of a normal distribution of customers—with needs, behaviors, attitudes, and emotions atypical of the average customer. Different tactics for leveraging the power of the fringe, product category virgins, customers with constraints, and lovers, haters, and opt-outers are presented.

Keywords: Market research; marketing; consumer behavior; ethnography; design thinking; innovation; New Product Development; Research; Marketing; Consumer Behavior; Innovation and Invention;

Language: English

Format: Print

9 pages

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Citation:

Avery, Jill, and Michael Norton. "Learning From Extreme Consumers." Harvard Business School Technical Note 314-086, January 2014.

Shiseido was in the midst of a six year corporate turnaround, trying to reverse the effects of decades of under-investment in R&D and marketing which had led to a cycle of declining customer support and brand value. Would the CEO’s VISION 2020 plan, centered on four strategies: 1.) increasing R&D spending from 1.8% to 3% of sales, 2.) investing an incremental ¥120 billion in brand-building marketing, 3.) moving to a “think global-act local” matrixed brand management structure, and 4.) rethinking brand portfolio strategy, be enough to achieve aggressive 8% per year sales goals while simultaneously increasing the company’s operating margin from 8% to 10% in the highly competitive and slow growing beauty industry?

Case | HBS Case Collection | April 2019 (Revised July 2019)

Kraft Heinz: The $8 Billion Brand Write-Down

Jill Avery

On Friday, February 22, 2019, following an unexpected and disappointing earnings report, The Kraft Heinz Company’s stock price fell 27%, wiping out $16 billion in market value. CEO Bernardo Hees had announced that the company had taken a $15.4 billion asset write-down, that the company would be cutting its annual dividend from $2.50 to $1.60 and that it was under SEC investigation for accounting irregularities related to its procurement process. $8.3 billion of the asset write-down was related to a loss in value of the firm’s intangible assets, specifically its Kraft and Oscar Mayer brands. As Kraft Heinz looked ahead to the future, it was time to recalibrate its brand management strategies. With $50 billion in brand assets remaining on its balance sheet, effectively managing its brands going forward was critical to avoiding another brand asset write-down and to regaining the $8 billion brand value the company had just lost. Was Kraft Heinz's brand asset write-down the beginning of the end of the market dominance of "Big Food" brands across the board or was it idiosyncratic and a result of the firm's brand management resources, capabilities, and strategies?

Keywords: brand management; Brand Value; Brand equity; marketing ROI; brand storytelling; Intangible assets; brand valuation; Marketing; Marketing Strategy; Brands and Branding; Management; Corporate Strategy; Consumer Behavior; Food; Marketing Communications; Advertising; Private Equity; Consumer Products Industry; Food and Beverage Industry; United States; North America;

Citation:

Avery, Jill. "Kraft Heinz: The $8 Billion Brand Write-Down." Harvard Business School Case 519-076, April 2019. (Revised July 2019.) View Details

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How do consumers assess their mastery of knowledge they have learned? We explore this question by investigating a common knowledge consumption situation: encountering opportunities for further learning. We argue and show that such opportunities can trigger a feeling-of-not-knowing-it-all (FONKIA), which lowers consumers’ confidence in their mastery of the knowledge they already possess. Specifically, listing optional follow-up readings at the conclusion of a course lowered students’ confidence in their mastery of the course material they had already learned (Study 1). Encountering an optional learning opportunity increased the FONKIA, which mediated the decreased confidence (Studies 2 and 3). We also document two moderators consistent with our conceptualization. First, participants primed with mastery (vs. instrumental) motivation were more negatively impacted when they encountered optional learning opportunities. Second, the more related the optional opportunities were to the target topic, the lower participants’ confidence in their mastery of what they had already learned. We conclude by discussing the implications of these findings, such as encouraging further learning or harming teaching evaluations.

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Learning From Extreme Consumers

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