No. 39 The User-Centered Approach Era (August 29, 2008)

Naoki Endo,
President and Representative Director

Summary

• The user-centered approach was born when markets matured and consumer needs became more and more individualized
• This approach is highly compatible with the Internet and will continue to be used to increase the ROI of Internet marketing

From mass to individual, quantity to quality

In the period of high economic growth in the first half of the 1960s, Kyojin, Taiho, tamago-yaki・(the Giants, sumo wrestling, and omelets) dominated everyone's thinking. These were the things children of the day were said to like most.

During that same era, every family across Japan longed to have the new three sacred treasures: a color TV, air conditioning, and a car. The desires of both adults and children could be summarized in this one expression.

Now, however, there is a wide of variety of products available in Japan and the market environment has become significantly more complex. In the 1960s, a certain beer manufacturer only produced four types of products at one factory. Now, the same factory produces more than 20 types of products.

There are two likely reasons for this change. One is individualization of consumer needs. When you're hungry, you'll eat anything; but when you've got a full stomach, you have a heightened sense of interest and those interests become more individualized. The other reason is the increase in variety due to tough competition. With the end of the economic growth period in the 1980s, the entrance into a mature market period resulted in fiercer competition and a need for differentiation from other companies.

Now, some people want an expensive, premium beer while others are more concerned about reduced sugar content. The beer manufacturer has to consider those who want non-alcoholic beer for daytime meals as well as sours and cocktails for people who do not like beer. The manufacturer must continue to make sound economic judgments while the needs of their customers continue to expand limitlessly.

Time for a new methodology

When daily essentials were in short supply and a company had only to satisfy the basic needs of consumers, a company could identify all consumers as a mass. The developer of a product or service was in much the same shoes as the consumer, so that even a developer with an extra measure of self-confidence only had to dig a little deep, understand his own needs, and then convert that idea into a tangible form in order to gain market acceptance.

Now, however, the market has matured and consumer needs have become more individualized. As long as the company is in a position where they themselves are also the target users of a product or service, it is not so difficult. However, when that is not the case, the company needs to understand the needs of others.

In pursuit of a return on investment (ROI), companies must take a departure from the sometimes you win, sometimes you lose・method. It is also important that a company not rely on the competence of an individual developer when it comes to consistency. It is against that historical backdrop that the methodology of accurately grasping user needs was born. That method is the user-centered approach.

Ascendancy of user-held information

Along with the increase in prevalence of the Internet came the establishment of a base enabling the transmission of information by anyone, via bulletin board postings and blogs. Then information transmitted this way became easily circulated to appropriate users via highly accurate search engines.

With only the Internet at one's fingertips, it has become easy for anyone to obtain a great deal of information. The leading Japanese website product review and price comparison website Kakaku.com is visited by more than 24.7 million per month (as of July 2008) and continues to trend upward.

This has significantly changed the position of companies who were previously in control of information. No matter how nice a company's advertisement sounds, the product assessment will be reversed if consumers of the product raise repeated concerns about its shortcomings.

When companies lose control over information, they must offer products and services that customers approve of in order to survive. This transition of information control from company to user means an even greater requirement for accurate understanding of the customer.

User-centered approach and Internet marketing

The user-centered approach is one that not only develops products but also can be used to design and utilize services provided over the Internet.

Since the customer's reaction can be felt immediately in face-to-face service, for example at a retail store, quality improves daily without any express awareness simply because of the desire to provide better service.

A website is different, however, because the user is unseen. It is difficult to know whether the user is satisfied with the site in its current state. Information that would help contribute to improved quality cannot be obtained without careful attention to user trends. Since it is also not possible to provide training to the user on how to use the site, it is important to envision ahead of time what the user will be looking for and in what order they will view which information and try to provide support accordingly.

Internet users also compare multiple sites using search engines. If the consumer is at an actual retail store, there is a cost associated with moving to a different store. Online, however, the cost is only a few clicks at most. As a result, competition between websites intensifies and only the companies whose websites are chosen by users are able to successfully generate business results.

The user-centered approach is commonly practiced in the Internet industry in the United States. In the U.S., the Internet has permeated the lives of the people and companies place a high level of importance on the Internet in their marketing efforts. Companies also invest a great deal in the Internet, indicating just how much pressure they are under to find a methodology that really works.

The amount of money invested in Japan on Internet advertising is steadily growing every year, and the Internet is steadily achieving a place of greater importance in marketing efforts. To create a website that will succeed on the self-service channel that is the Internet, it is essential to accurately understand the unseen, fickle user.

The user-centered approach is the key to increasing your ROI in Internet marketing. In future columns, we plan to provide more details and success stories using this approach.