2/14/2005

Consumers vs. Customers

What is the difference between a consumer and a customer? Consumers just make purchases where as a customer is an active participant in helping design and sell a companies products. For example the company that produces Legos. The Lego has been around since almost the entire plastic age. They are good quality toys that have for the most part remained unchanged from when our parents were kids. Their standard sized Lego bricks will merge and connect with our kids' Lego bricks.

The Lego company soon discovered a group called the AFOL (Adult Fans of Lego) community. Before finding this community they thought that they were mostly selling to children, and only a few crazy adults who refused to let go of their childhood. They came to find out that about half their sales of Legos were to adults involved in this AFOL community. Now the Lego company has involved their consumers by adding a fan-created Lego kit to their product line-up. By doing this and getting their consumer's feedback they have turned their consumers into customers. By doing this Lego has eliminated a major risk in business. This risk is that the consumer might not want to buy your company's product, and then you have to cover all your costs of this product within. By doing what Lego did and turning your consumer into a customer, you can eliminate this risk almost completely. I think this is a brilliant concept that alot of businesses may overlook. This goes to prove that studying your consumer carefully and completely can contribute significantly to the success of your company

4 comments:

Lana said...

It looks like the market niche strategy worked well for Lego. Now they have one more group to target, and make profits from.

Jim said...

Yes, I agree that in order to know how to get your company in the green is to first know what the public needs, you would do well in marketing. So tell me which one are you, a customer or a consumer?

Dr. Tufte said...

I like this post a lot. I think what Lego has recognized is that serving this extra segment does not increase their marginal costs much, and allows them to capture extra marginal benefits.

Dale said...

Building long lasting customer relationships is the way to do business now days. The business world is so competitive now that it forces companies to really focus in on customers. Companies really try to get the full life time value of consumers, and in order to do this they must convert consumers into customers