Historical Roots, Early Concepts, and Research Heritage

As early as the 1920s, Prof. Dr. Wilhelm Vershofen was convinced that business administration and economics paid too little attention to the actual core of market activity. Indeed, he identified a blind spot where all market decisions are made and where the success or failure of products is decided: with the consumer. On this basis, he began lecturing and researching at the Nuremberg School of Management on “The Study of the Human in the Marketplace.”

In doing so, he strongly criticized consumer research by traveling interviewers using quantitative scales, which was common in the U.S. at the time. Vershofen criticized the fact that this method produced rather superficial figures since the interviewers, who were only “passing through” an area, did not understand the daily reality of the respondents’ lives and were therefore unable to fully interpret figures that their scales yielded. He was certain that the actual background and motives – the “why” of a market decision at the individual level – could not be adequately captured by the methodological approach dominant in the U.S. at the time

To solve the problem of the lack of an empirical basis for a deeper understanding of the consumer, Vershofen founded the Gesellschaft für Konsumforschung e. V. in 1934 as a close partner of his institute for the economic observation of German finished goods (Institut für Wirtschaftsbeobachtung der deutsche Fertigware). His approach was to build up a network of correspondents to overcome the empirical deficits he had identified in understanding consumers’ market decisions:

In 1934, Prof. Dr. Wilhelm Vershofen had already begun to unearth a rich treasure trove of information on market decisions. At the time, a large-scale study cost 20,000 Reichsmarks – comparable to around €100,000 today. Such Studies were used to gather up to 10,000 consumer voices. The basic idea was always that, after an embargo period of five years, the data from the specific studies conducted on behalf of individual companies should also be available to the scientific community to allow thorough analysis and the generation of more general insights on market decisions.

Together with his colleagues, Vershofen pursued the goal of “making the voice of the consumer heard” like no else at the time – and he achieved it. At the time, his research approach and the resulting understanding of consumers’ motives and habits were unique in the world. Today, we would speak of qual at scale – a discipline that was only “rediscovered,” as it were, by leveraging the internet and advances in the field of computational linguistics

In addition, Vershofen and his team dealt early on with substantive issues such as the impact of new technologies on markets and the problems they created. Cost-efficient mass production, for example, also led to negative consequences in the market because products could be produced more cheaply in large numbers than before, though at the cost of a reduced variety of variants. This led to a poorer fit between supply and individual demand. This problem – having to accept paying for features you did not need, or the lack of features you did need – was what Vershofen called “exchange residuals.”

Vershofen criticized the fact that the economic advantages of standardized mass production created a temptation to overcome the sometimes poor fit through increased marketing efforts, rather than actually solving the underlying problem by developing more precisely tailored offerings to match consumer needs. He thus explicitly went into opposition to Henry Ford, who demanded that his salesmen convinced their customers that the offer met their needs – even if the customers disagreed. Ford’s approach resulted in the famous statement: “Any customer can have a car painted any color that he wants as long as it is black.”

Vershofen, on the other hand, saw raising the quality of our understanding of what benefits customers really valued as a central factor for a well-functioning and efficient market. The effort to fully understand and explore the implications of microeconomic decisions of producers, retailers and consumers and their aggregated macroeconomic impact on the market and society as a whole runs through Vershofen’s writings. This macroeconomic perspective was later developed further by Prof. Dr. Ludwig Erhard.

Both Vershofen and Erhard also looked closely at the tension between increasing consumption and sustainability in the face of limited natural resources from the 1940s onwards. Both were convinced that in a society, each individual consumer must decide how to value money and material goods on the one hand and time, nature and quality of life on the other.