-By Scott Kohno

Kohno is President and CEO of L.A.-based Retail Element. With over 20 years of experience, he has worked with clients including Macy's, Federated, May's Department Stores, NASDAQ Times Square, MGM Grand, Disney and Geary's Beverly Hills, and is known for creating distinctive, brand-building retail environments. His firm specializes in branding strategy and marketing, merchandise planning, store design and graphics, visual presentation, and point-of-sale communication. For more of Kohno's retailing insights, visit www.GourmetRetailer.com and click on Retailing within the Category Features area of the site.

Last year, we were involved in the launch of a revolutionary food product. The traditional focus groups, exit interviews and test market analysis were completed, and the concept and product received a 96 percent approval rating. But three months after the July 2006 launch, we knew that the concept had failed. So what happened?

Our customers had lied!!!

It is not that our test customers intended to lie, it is just a fact that today, customers are so conditioned to focus groups, interviews, etc., that they are trained to say the right things. Of course, they don't lie on purpose, but rather because: a) they really don't know; or b) they want to avoid confrontation.

In focus groups, the customers don't know if they will buy a product or how they will react, because in a real life setting, there are so many variables of time, money, traffic, schedules, stress, habit, etc., that any one of these can influence their decision to not buy your product or visit your store.

Second, if customers really don't like your product, they may not tell you the truth, because it is much easier to tell you a lie to avoid confrontation. Marketing has taught us to "ask our customers what they want," yet that method can get you into trouble.

In 1985, Coca Cola, the world's most valuable brand, "asked" customers if they would prefer the "New Coke," and customers gave the 'thumbs up.' Shortly after introducing the "New Coke," Coca Cola had to back-peddle and bring back the "Old Coke" in one of the biggest marketing blunders of all time.

In 2006, when Yahoo was renovating its home page, it asked customers what it wanted, and customers replied that they wanted world news, financial information, etc. However, in actual live mini-launches, customers were clicking on stories about Britney Spears.

So our challenge in retail is to understand what customers really want, and it is our job to anticipate their needs. We as retailers are not just order-takers -- we need to have a good understanding of our customers' problems; we need to understand their needs; and we need to deliver every day.

In a 360-Degree Branding Process, one of our first steps is to take consumer product companies and retailers through a "Sequence of Service Analysis," where we dissect the entire sales journey from the parking lot to the check-out counter.

For example, at the time customers have the product in their hand, we have to honestly ask ourselves, what do they really want? In the food industry, customers want to know ingredient and nutritional information the most. The days of hiding this information on the back in small print are over. Today, this information is starting to appear front and center. In the apparel and hard-goods industries, retailers must get creative with price, product information and country-of-origin tags. Fixtures need to be designed with this type of communication in mind.

Because today's customers are the most informed and educated customers in the history of retailing, it is our job to find out what they really want.

Editor's Note: Kohno is also one of the three gia expert jurors serving on the International Housewares Association's panel reviewing excellence in international retailing. This year's U.S. national gia winner is Cook's Warehouse in Atlanta, Ga. The Gourmet Retailer Magazine is currently seeking nominations for the 2009 gia program. The Global Innovator Award program honors housewares retailing excellence in close to 25 countries around the world. Its global sponsor is the International Home & Housewares Show which honors this year's gia winners at its fair, March 22–24, 2009. For more information, visit www.housewares.org./gia or contact mmoran@gourmetretailer.com.

To continue reading this three-part series, click one of the following links below:
Part I | Part II | Part III