Sunday, September 30, 2007

Not so average

People like averages, when people look at a market, collection of figures or a country they often look for the average of everything, what is the average income, average age, average height etc, because it provides an easy to understand figure that tries to express usually quite a complex situation. However there are times where this is not always the best course of action, and often the average can disguise the reality of a situation.
This was illustrated to me recently in a marketing video shown to my class about Mexico (I acknowledge that I may be inaccurate about this, but for the purpose of what I am trying to explain it will do just nicely) and marketing research conducted by Unilever into the clothes cleaning product market there.

From what I gathered Mexico seemed to have two very distinct classes, those that were washing there clothing in rivers and barely had enough water to survive, and at the same time there are those that have their clothing washed by their maids. The divide in wealth was so large that there was not much of a middle ground between the two, and therefore the company had to launch two very different product lines with two very different pricing strategies. Had they looked at the average income of an individual in Mexico and pursued a strategy to target this almost non existent middle ground, they would have been attempting to execute a marketing strategy that didn’t work for any party and ultimately would have failed.

Another example would be to take the average growth rate in Transport energy usage in the UK and Ireland over the last 15 yrs (not exactly thrilling I know) which averages at 75%, however this disguises the fact that the figure for the UK was a mere 18% where as the Irish figure stood at 132%, so a company or individual wishing to enter the region be totally wrong using this figure for either market.
Beware of the averages, they are coming to get us all.

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