January 19, 2004
How To

How John Deere Increased Mass Consumer Market Share by Revamping its Market Research Tactics

SUMMARY: Do you make the all-too-common mistake of relying on current customer feedback to decide how to acquire new customers? Last year John Deere (radically) revamped its market research tactics for the mass consumer marketplace, including:

- Hiring a new in-house team

- Changing focus from product-centric to consumer-centric

- Mixing qualitative and quantitative data

The results were fabulous. Deere achieved a 62% market share gain in the consumer mower arena.
Although John Deere's been selling in mass consumer marketplace for a more than 12 years, the Company based marketing decisions on dealer feedback -- which was a problem because a typical dealer rarely met typical consumers.

"Agricultural products are sold to small specialized markets, dealerships were located in small rural areas, and dealers would have the opportunity to understand their customers on a one-on- one basis," explains David van Nostrand, Manager of John Deere's Global Market Research.

"For consumers, it's different. They're in the cities or suburbs rather than agricultural communities, and transactions number in the hundreds of thousands rather than tens of thousands, "so you cannot interact one-on-one."

John Deere needed a radical market research department change. Here's how van Nostrand attacked the problem by switching tactics and hiring an entirely new in-house team:

Van Nostrand identified three problems and their solutions:

-> Problem #1. Product-centric attitude rather than consumer-centric

In the past, "they'd say, Here's the product, find out how people feel about it," van Nostrand explains. "A lot of companies do that." Instead, they should be saying, "Let's start with the customers: what do they want, what do they need?"

The solution? A new in-house program called 'Category Experts' brings the product-group employees over as full team members working on specific research projects with van Nostrand's team.

These staffers handle items that don't require a research background: scheduling, meetings, logistics, communication and vendor management. The actual task they handle is less important than the fact that they serve as human cross-pollinators, bringing consumer-centric sensibility back to their product- focused groups.

For example, if van Nostrand's team is doing research about a vehicle, they bring in staffers from the Vehicles product groups. "The information about vehicle consumers needs to be out there in the vehicle marketing groups, not locked in here in the heads of the researchers."

-> Problem #2. An over-reliance on qualitative rather than a balance of qualitative and quantitative work

While qualitative research has huge value, you must have qualitative data on order to put learnings into perspective.

The solution? Van Nostrand now uses what he calls “exploratory” research to generate testable hypotheses. This exploratory work uses in-depth interviews, one-on-ones, dyads, triads, small groups and the more traditional focus groups.

This allows him to build a "really good questionnaire" for quantitative research, "because you understand what the issues are."

-> Problem #3. Research based on current customers rather than potential buyers

"If I have 16% buying from us, I don't want to keep studying the needs of that group over and over. I want to know why the other 84% aren't buying from us. Before, advertising was aimed at that 16%"

The solution? Ongoing and massive studies of many thousands of homeowners, to find out awareness, attitudes, associations, and buying behaviors.

"You can build something and try to convince [consumers] they want it. Or you can find out what they want and then build it," he says. The latter, he says, is the essence of serving customers.

-> Two Specific Results

Result #1. Segmented ad creative

Based on research, van Nostrand's team has segmented consumers into groups based on motivations.

"The category of consumers we have the most success with is people who enjoy yard work," he says. "They have an interest in the yard as well as the lawn. It's the agricultural heritage of people in heartland America." So, ads geared towards this segment promote the nurturing aspect of yard work.

Another homeowner segment sees yard work as a chore. So, products for these folks are marketed as efficient, durable, reliable tools that ease workload.

As a result, sales to both segments have grown. One example: Sales for John Deere's compact utility tractors have increased 37%.

Result #2. Relying on the strength of the brand

Based on the team's research, John Deere decided to stop selling mowers at Home Depot under third-party brands such as Sabre and "Scott's by Home Depot"; and, to build and sell a consumer product under the John Deere brand.

"John Deere is well-recognized and has a huge amount of brand equity. What we needed to do was transfer that brand equity from agriculture to consumer durable goods," van Nostrand says.

The switch resulted in a 62% share increase in a market that was growing at a rate of 2-4%, which translates to hundreds of thousands of additional units sold. 92% of people who bought a John Deere mower through The Home Depot had never bought a John Deere product before.

Even Deere dealers, who had been concerned about Home Depot competition, were thrilled: sales actually increased by 72% among new-to-Deere customers. "Some people see the displays at Home Depot and say, Hey, I'll go find a dealer," says van Nostrand.

-> Three tips on hiring a top-notch market research team

Here are Van Nostrand's hiring tips:

Tip #1. Insist on the right background

"People were accustomed to being able to apply internally, so when we posted for jobs we got 200 people who wanted to come work here, none of whom had the background for research," he says.

He knew he needed staff with advanced degrees in the social sciences (psychology, sociology, anthropology, statistics, etc.) and a strict structural background in understanding consumer behavior and measurement, and stuck to his guns about only hiring them.

Tip #2. Moving the under-qualified old guard out

John Deere didn't want to fire anyone on the old research team who didn't fit in the new regime. Van Nostrand says, "It's not their fault they don't have the training, now that the definition has changed and the bar has been raised."

He began sitting down with members of the department to understand their skills, interests, and where else they'd be productive within the company. Though they considered themselves capable of learning on the job, van Nostrand explained he required the proper combination of advanced formal training and applicable experience.

As he moved former staffers to other positions in the Company, he was able to bring in new blood, one by one.

Tip #3. Hire functional specialists - not generalists

Because the department is no longer doing work piecemeal but aligning their strategies with the needs of the company and planning ahead, van Nostrand was able to divide general research positions by function into highly focused positions, each with a different required skill set.

Even though the salaries were higher for experienced specialists, the department became so streamlined and effective, that the department required fewer staff members.

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