Showing posts with label Consumer behaviour. Show all posts
Showing posts with label Consumer behaviour. Show all posts

Real Leaders Don't Do Focus Groups


Via HarvardBusiness.org 

Apple is famous for not engaging in the focus-grouping that defines most business product and marketing strategy. Which is partly why Apples products and advertising are so insanely great. They have the courage of their own convictions, instead of the opinions of everyone else's whims. On the subject, Steve Jobs loves to quote Henry Ford who once said that if he had asked people what they wanted they would have said "a faster horse."
Focus groups are all about reference points. Make it more like this, less like that. Whether it's business, social business, or charity, breakthroughs are defined by the absence of reference points, and leadership is defined by the courage to leave all of the reference points behind.
That's why it's so rare.
In 1993 my company created the first multiday charitable event that required a four-figure minimum pledge. It created what has become a $250 million a year industry — and that's counting only the fundraising. That first event was called California AIDSRide. The offer was simple: Ride your bike for seven days and 600 miles from San Francisco to Los Angeles, sleep in a tent each night, and raise a minimum of $2,000 for the privilege. If we had ever focus-grouped, the event would never have gone forward. The number of people, even in our target, who were prepared to say "yes" to the proposition on the basis of the proposition alone was less than one in a hundred. Maybe less than one in a thousand. If we had done five focus groups of 20 people each, we would have found one person — maybe — who would have said yes. And that would have been the end of it. Or the idea's demise could have been slow suffocation: We would have found plenty of people who'd have said, "I'd do it if you reduce it to a one-day ride," or "I'd do it if I could raise whatever amount I want," or "I'd do it if I could go on one a leg of the trip." Basically, I'll do it if you transform the bold idea you came in here with into something I'm more comfortable and familiar with.
So we never focus-grouped it. Instead, we went out and told people we were doing it and invited them to come. There's a profound difference between asking people what they think of an idea in the abstract versus telling them, "Here it is." The former is following, the latter is leading. People respond to leadership.
They say that the medium is the message. A focus group is a medium. And it lacks the magic of commitment. A full-page ad in the Los Angeles times that says, This Is It, is a message in and of itself. And it's loaded with commitment. You'll never find out the existential truth about anything — a product, service, or anything else — by sending the wrong message. It's the difference between "Will you marry me?" and "I'm trying to decide whether or not to marry you on the basis of whether or not you will say yes to me. I'm not really asking you, but what would you say if I did, hypothetically?
Imagine if they focus-grouped the iPhone:
"Can't you have a physical keyboard that slides out of the back, like all of the other phones?"

Imagine if they focus-grouped Disneyland:
"Can't you make it so I can see everything in a day?"

Imagine if the focus-grouped the Apollo program:
"I think the goal should be 20 years instead of 10."

Imagine if they focus-grouped any of the things that really inspire us. Imagine if they put all of the comfortable reference points back in for us.
Take people to the places where there are no reference points, and leave the focus groups — and the competition — behind.

Recovery is still some ways down the road, Cross–Industry Research Report

TrendsSpotting.com finding says, consumer’s confidence still low, consumers taking extra caution before buying into media and political reports.
TrendsSpotting has captured the consumers’ shopping behavior indications for 2009: Food & Drinks Media & Automobiles Education Communications Recession Trends
1.     
  1. Food Consumption of consumers eat dinner at home more often 56% than before the downturn & nearly the same percentage are eating dinner less often at restaurants. More than one-third (37%) of consumers surveyed report going to bars or clubs less often.
  2. Buying Habits • A greater tendency to buy larger package sizes (42%) • Buying more U.S. products (28%) • Purchasing more locally made products (25%) • Known products (23%) versus experimenting with new ones • Private label food (7.4% increase in sales).
  3. Restaurant Traffic 2.6% Decline in total US restaurant industry traffic for 09 spring quarter versus the same quarter last year
  4. Restaurant Traffic Household with kids, cut back their visits to all segments of restaurants • Over 50% of industry’s decline traced to fewer supper visits from parties with kids. • Traffic was down 2% at quick service restaurants. • Casual dining declined 4% and midscale was down 6%.
  5. Coffee Purchase 83% of American consumers drink coffee more at home ( up 5 points from a year ago). Coffee consumption pattern did not change as 54% drink coffee daily.
  6. Alcohol 50% of American consumers are actively seeking out best deals. 24% of wine consumers choose less expensive drinks. One third of beer, wine and spirits consumers order fewer drinks.
  7. Pet Foods And Veterinary Services 22% of American put a high priority on pets compared to Canadians (17%), French (15%) and Italians (12%). The pet industry is expected to generate $51.6 billion this year - 1.3% more than in 2008.
  8. Home Broadband home broadband adoption, is up from 55% in 2008. 63% 34% of home broadband users said they subscribed to a service that gave them faster access speeds, an increase from 29% in 2008. A growing share of broadband subscribers pay for premium service that gives them faster speeds. . They are also paying more for the extra speed than they did a year ago .
  9. Cell Phone Services of cell phone users (19% of all adults) report that in 22% the past year they have cancelled or cut back cell phone service. Cell phone users are economizing on service plans.85% of adults report to have cell phone service, up from 77% at the end of 2007.
  10. Smart phone ownership continues to rise, with 37% of respondents now reporting they own a smart phone. 14.4% say they plan on buying a smart phone in the next 90 days, the highest percentage ever recorded in a ChangeWave survey.
  11. Cable TV Services 22% of US adults have cancelled or cut back cable TV service in the last year. More than a quarter of consumers plan to reduce or cancel their satellite or cable TV subscriptions, according to the research, up from 15% six months ago.
  12.  Video Games Drop to $863 million in video games sales were registered in May from the same period a year ago. 23% Sales of hardware (consoles and hand-held devices) dropped 30% while sales of software fell 17%, to $449 million. In June - domestic retail sales of hardware and software fell 31% - the largest monthly drop since September 2000.
  13. Americans' dependence on the 20% family car remains strong (88% rate an automobile as a necessity) - 2009 auto sales are expected to decline by 20.5 percent, or 10.5 million vehicles.
  14. Hybrid Cars On February 2009, only 15,144 hybrids sold nationwide, down almost two-thirds from April 08, when the segment's sales peaked and gas averaged $3.57 a gallon.
  15.  Education Planning of high school guidance counselors saw an increase 71% in the number of students who this year chose less- expensive colleges over their "dream school."
  16. About the report: Food & Drinks Media & Automobiles Education Communications 50 pages detailed report across 8 industries Over 50 consumer studies and web metric trends analyses

Conclusions: TrendsSpotting finds that contrary to some optimistic public statements, for the majority of industries, recovery is still some ways down the road. After initially cutting back across the board, consumers have reassessed their personal situation and begun to employ a new set of priorities. They are checking out private labels and, if found satisfying, they will become loyal to them. Consumers aren’t sacrificing electronics, but are reconsidering their options. Recovery will bring a new age of consumers, much more aware of their expenses and their priorities. Consumers will not revert to their previous habits as those were proven to be unsound. Recovery will come from markets matching consumers’ new priorities.


John Gerzema says there's an upside to the recent financial crisis -- the opportunity for positive change. Speaking at TEDxKC, he identifies four major cultural shifts driving new consumer behavior and shows how businesses are evolving to connect with thoughtful spending.


From consideration to advocacy or is it the other way??

If the post on the purchase funnel and the consumer decision journey was a little too academic , then meet Dave, and follow his idealised journey from initial consideration to becoming an advocate:


The purchase funnel is no more

The purchase funnel has always been one of the main tenets of marketing theory.

purchase funnel

We’ve intuitively known for while that it no longer holds true (if it ever did), but despite many attempts, we’ve had nothing come along that’s replaced it. For example,Forrester had a go a couple of years ago with the diagram below, but crucially it failed to provide a model that was easy to visualise, and it failed to catch on (surprisingly, neither did Giles Rhys Jones’ simpler alternative).

Forrester's funnel

Now, finally, we have a viable alternative model, along with the science to back it up.McKinsey have conducted a study examining the purchase decisions of almost 20,000 consumers across five industries and three continents, and come up with what they callthe consumer decision journey:

The funnel concept fails to capture all the touch points and key buying factors resulting from the explosion of product choices and digital channels, coupled with the emergence of an increasingly discerning, well-informed consumer. A more sophisticated approach is required to help marketers navigate this environment, which is less linear and more complicated than the funnel suggests. We call this approach the consumer decision journey.

Because of the shift away from one-way communication — from marketers to consumers — toward a two-way conversation, marketers need a more systematic way to satisfy customer demands and manage word-of-mouth.

consumer decision journey

We hate the word ‘consumer’ (we are all people as far as We Are Social is concerned), but that doesn’t make their model any less valid. David Court, Director ofMcKinsey’s global Marketing & Sales practice, has an excellent presentation that explains the research and what it means for marketers. The most salient parts being:

You have a trigger of some sort, where people start across the decision journey — they are now going to move towards purchase. The first stage is initial consideration. In many industries, people actually start in their initial consideration of a brand with a relatively narrow list, we believe because of the busy lives and bombardment of media — it’s just very difficult to get through all this clutter in this consumers initial consideration set. However, once the consumer decides they are going to buy a product, they move into a stage that we call active evaluation. It is here that the number of brands they are considering increases. Which is exactly the opposite of the premise of the funnel, going from broad to narrow. This is the stage when the consumer is intent on purchasing and they are actively researching the product.

What marketers should know
The most important thing for marketers to do is to make sure that their marketing activities are aligned against how their consumers research and buy products [...] companies need to look at their messaging in light of where they have the greatest opportunity. For example, companies’ messaging is all about trying to get into the initial consideration set, and yet, when the consumer reaches out during their active evaluation stage, they’re not providing the right facts and testimonials that the consumer is looking for [...] most companies are going to have to make fundamental investment in what we would call consumer driven marketing

Consumer versus company driven touchpoints
We analytically looked at which touchpoints were most influencing the consumer’s decision. We found two types — company driven versus consumer driven. In consumer driven, the consumer is reaching out to get information — they’re talking to their friends, doing internet searches, seeing what’s said on third party sites.

In the initial consideration it was still very much still company driven — the advertising was a very critical part of the touch points that influenced the consumer. However, when we got into active evaluation, two thirds of the influence of those most powerful touchpoints were from consumer driven touchpoints — word of mouth, talking to friends and family, searching on the internet.

And that is a very big change — you need to develop ways for people to talk about your product, so that word of mouth works. Be represented on independent internet sites where people will go and research and buy products. Because, if you don’t have enough presence on those types of consumer driven approaches, when the consumer is reaching out during active evaluation, you’re not there for them to find.

A Unique Research Defining "Generation Z"

The Next Generation forum,  gave fresh insight to advertisers and marketers about the characteristics, values and media and brand consumption habits of Australian youth in the 13 and 24 year-old demographic, it's also shares a comprehensive online research on thousands of teens in Australia and around the world demonstrates there is a sub generation of youths with markedly different characteristics and value systems to that of their Gen Y predecessors.

Generation Z research


Habbo's Global brands survey

Arabia woman:::consumer demographic

“Muslim women and their money are protected by the dogmas of Islam, wherein they have the right to spend their finances in whatever way they wanted to.”

Recent studies and work by scholars has uncovered surprising similarities between American women and Arabia women when one looks at their influence over household spending and consumption,"shopping"

“Contrary to stereotyped beliefs, Arabia women have control of their own money,” opens the article by two professors from Zayed University in Abu Dhabi titled “Financial empowerment of Women in the United Arab Emirates,” published in 2008 in the Journal of Middle East Women’s Studies.

The article continues: “[Women] have the right to spend their money in any way they see fit, even to contribute to the running of the household if they desire to do so. They may own property in their own name and invest or spend their own money as they choose.”


The article also summarizes the results of a series of focus groups with women in the UAE, a study that showed 79% of women managed their own money. The study also showed that 95%agree that religion influences how they spend their money, 66 percent think money brings them happiness and just over half, 53%, believe husbands and wives should share their money.
Additionally, it notes that men are the ones who pay household bills, but that they do not have control over what’s considered “conjugal” money.


It’s easy to see how not understanding this reality could lead many brands astray in messaging. Consider a hypothetical: A campaign aimed directly at men that subtly implies a woman must get permission from her husband to buy product X or Y? Disastrous. This is the one indisputable area of autonomy for many Middle Eastern women. A brand that fails to talk directly to women would not win any points or make any gains in building brand equity for failing to recognize and affirm this authoring.
Granted, this autonomy as consumers still doesn’t equate to parity with Western women in other economic endeavors. For instance, according to a recent study by the Arab Council of Businesswomen, a gender gap in business ownership persists in the region, with only 14 percent of business establishments in the region owned by women, compared to the US and Europe, where women own 30 percent of businesses.
Even so, Middle Eastern women wield enormous influence over spending, and marketers who don’t recognize this and integrate that truth into messaging, branding initiatives and campaigns do so at their own peril.
Female consumers in the region can also play powerful roles in boycotts of Western brands, according to Aseel Sawalha, a professor of anthropology at Pace University and an expert on the Middle East.
Sawalha shared her observation of street protests and women’s groups that organized boycotts against Danish products and brands in Jordan after the 2005 publication in a Danish newspaper of images of the Prophet Muhammad.
“It’s the women who were organizing, the women who were protesting against Danish products,” she recalled.
She noticed that in many retail stores, proprietors took great pains to make sure to address women shoppers, noting they were meeting consumer demands for the boycott. “Signs would say, lady, or madam, we boycott the Danish,” she said. “It was pretty clear women were in charge from a consumption standpoint.”
So what does that mean for Western brands eager to tap into this market?
“It’s the women who make the decisions about how to spend household money,” she said. “It’s the woman who decides what they are going to cook tomorrow. Even if they are not working, they are the ones who make the shopping lists and do the shopping.”
For marketers, it naturally follows that all brand communications must recognize this power.

After all, considering women in the region lack empowerment in other economic endeavors, undermining women’s power as consumers is misguided, to say the least.
Granted, women in the Middle East are far from monolithic. Data from the World Economic Forum on the global gender gap puts Egypt at the bottom of the list among Middle Eastern countries. Even so, women in the Middle East are making gains, albeit incremental ones, and many economic development studies have cited the continued suppression of women in the workforce and education as a deterrent to economic growth for the entire region.
In a different world, women in the region would already enjoy parity with their male counterparts in employment, education, pay and social freedoms. And empowering women as consumers surely isn’t the path to full-fledged independence. But failing to recognize and affirm this power is a surefire recipe for backlash. This is a consumer demographic that demands respect and the recognition of its autonomy and power.

Singer sewing machines:: Mania in Arabia

Used items market places in Saudi saw a surge in people looking to buy Singer sewing machines.








“Singermania” broakout early april 2009 caused by story about the existence of a mythical substance called “red mercury” that — either helps you find gold, wards off evil jinni, or is a key and highly prized ingredient in making nuclear bombs.






The Singer machines have been fetching outrageous prices since rumors spread that they contain red mercury, according to rumors going around on , a sewing machine can be proved to contain red mercury if a phone signal cuts off when held close by.






As the rumors started sweeping , the prices of Singer sewing machines rocketed from SR200 to hundreds of thousands, with one reported case of a machine being sold for half a million riyals.

Drink poster slammed by ASA ruling

08-Apr-09, 06:00
LONDON - A poster claiming that POM Wonderful pomegranate juice could help consumers "cheat death" has been axed by the Advertising Standards Authority.





The poster, which showed a bottle of the juice with a severed noose around its neck, attracted 23 complaints from people who felt the ad communicated false and misleading health benefits.POM Wonderful argued that consumers were unlikely to take seriously the obvious untruth in saying that the antioxidant power of the juice could help cheat death.

The company claimed that it was a typical technique in poster advertising to use a powerful, yet brief statement to sum up the brand.However, some of the complainants had interpreted the ad to mean that the antioxidant power of pomegranate juice contributed somehow to a longer life.
The ASA noted that the claim "cheat death" was an exaggeration, however, it was felt the overall ad text was ambiguous and if read as a health claim, was likely to mislead.
The ad must not appear in its current form again.

Advertising Standards Authority scraps Tesco poster ad


08-Apr-09, 06:00
LONDON - A poster featuring a 50 per cent off promotion in Tesco stores has been banned by the ASA for including items not in the sale.
The poster showed an iPod nano plugged into a docking station next to a price tag of £74.98, with £149.97 and £99.97 crossed through. Additional small print stated "Ipod [sic] not included".
Three people complained that the ad was misleading as it implied that the iPod was included in the price.
Tesco Stores argued that the iPod was shown installed in the docking station for illustrative purposes only and the small print at the foot of the ad supported this.
Tesco believed that customers would not expect that the iPod was included in the offer as it generally retails at about £100.
The ASA felt that the main body of the ad, which featured just the illustration and price, did not explain properly what was for sale.
The small print was not felt to be sufficiently prominent to ensure it was not overlooked by customers.
Therefore, the watchdog concluded that the poster was likely to mislead and must not be shown again in its current form.
Tesco assured the ASA that it would give clearer item descriptions in future advertising.

Hyundai ::: Behavioral Segmentation

How Hyundai Uses Behavioral Segmentation to Take the Bull by the Horns and Send the Bear Packing
"The Faith We Have In You"
Published on March 10, 2009

Hyundai took the bull by the horns in this bear market and scored big. It used behavioral segmentation to identify what was keeping prospects from buying and then developed a strategy that made it easier for customers to part with their hard-earned dollars.

What can you learn from its example? In every market change, even a downturn, there is an opportunity to use the power of behavioral segmentation to make your product or service stand out.

Talk to Your Target Prospects

Each news cycle brings a tsunami of information that influences your customers' purchasing decisions. The smart marketer understands that every change in the marketplace is an opportunity to capture new customers.

How do you seize that opportunity and grow your business? Relying on secondary data or past segmentations isn't a realistic option. Even in these tough times, resist the urge to repeat a smaller version of last year's marketing strategy and tactics.
Instead, use voice-of-the customer research to talk to prospects you are currently winning over as well as those whose business you would like to win. You can't overestimate the value of talking to your customers. Ask new, open-ended questions. Focus on learning:

  • What their reason is for buying—how is it changing?
  • What their needs are—how have they been affected by recent events?
  • What's keeping them from buying?
  • What do they think of your product versus the competition's product?
  • What would change their perception of your product versus the competition's?
  • How do they rate your product against alternative solutions?
Sort Findings
Take a hard look at your data and sort groups with similar characteristics to determine which segments to target.
Hyundai discovered that as the market changed so did their segmentation. Significant numbers of prospects were no longer focusing on gas mileage performance, and they weren't necessarily looking for more discounts.

Armed with such customer insight, Hyundai identified a business opportunity.

Define Segment
Hyundai determined that the fear of losing one's job was a high barrier preventing prospective buyers from purchasing a car.

After defining the segment, the company developed and aligned sales and marketing strategies to reach this new segment. By targeting prospects concerned about job security, Hyundai broadened its audience and increased the number of customers who considered its cars.

David Zuchowski, vice-president of national sales for Hyundai noted in a New York Times article, "It doesn't matter how many zillion dollars you put in rebates, or what APR you give them. If people are worried about their job, they don't really care and they're just not going to get off the fence."

So how did Hyundai motivate customers to move off the fence?

Develop Strategy to Target Segment

Next, Hyundai developed a strategy to ease the fears of this segment: The company's Assurance Program releases customers from car payments without harming their credit score.

As Advertising Age editor Jonah Bloom wrote, "right there, is an honest-to-goodness big marketing idea.... Hyundai confronts the recession head-on and does something tangible to tackle its effects."

With consumers demanding more for their money, more companies are cutting prices to offer the “best deal,” which can come at the expense of the bottom line and brand perception. And now, more than ever, it’s important to stand out. Maybe marketers would be better off fighting the recession with incentives that add value and provide distinct business advantages instead. Creating tangible and rational value allows consumers to spend more wisely especially in this climate of frugality.

Create Messages
Craft messages to address the specific concerns of your customers.

Hyundai advertising used straight talk that resonated with customers: "We're introducing Hyundai Assurance to show you the faith we have in you. Right now, finance or lease any new Hyundai, and if in the next year you lose your income we'll let you return it. That's the Hyundai Assurance."

Hyundai’s Assurance program — which promises to let you return a newly bought car if you get laid off.
As of early March, no Hyundai buyer had yet returned a vehicle bought under the Assurance umbrella. This raises the intriguing point about what sort of consumer is being reassured. Probably anybody who is really afraid of losing a job simply isn’t going to buy a car right now. But somebody whose insecurity is more abstract, who perhaps simply needs a rationale for a big-ticket purchase at a moment when the headlines are full of doom — that’s different



* * *


Hyundai's Assurance Program had hit a home run. The company was one of only a few automakers to post an increase in sales.
So here's the question of the hour: Are you using behavioral segmentation to differentiate your product, reach new customers, and drive additional sales?

Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fears with an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fearswith an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its market share as industry-wide, new-vehicle sales fell 37% last month.
The US recession.::: marketers Vs. consumers
"a great mismatch exists between the way consumers experience and think about their world and the methods marketers use to collect this information."
During these 'bad' days marketers have to be "attentive to the emotional dynamics of peoples' lives in these times… The goal of advertising should be to engage people with a message that has an emotional impact. And that requires actually grappling with the means by which they have experiences and react with emotion, sentiment, and feeling….
By tapping into an "emot-econ" marketing mindset, Hyundai's Assurance "provides a little heart in a world that has gotten so cruel."
The Transformation (basic changes that alter life's circumstances) frame is a powerful driver: People who are worried about losing their jobs may be reluctant to buy a car. "Hynudai has taken a relevant point of communications that may not have been true a year ago, but is true today,"
And, similarly, ReMax's "Best Time to Buy/Sell" invokes a) a Journey ("The meeting of the past, present, and future") and b) Transformation: Basic changes - some desired, some involuntary - that alter life's circumstances and c) Force (events that have a powerful impact on the lives of consumers) frames by suggesting that "people will be administering strong, self-inflicted kicks down the road if they fail to take advantage of home-buying or selling opportunities now."



In the current economic conditions, "People want to know they're being respected. Their feelings have to be acknowledged."
As a point of caution, however, that brands that are insensitive to the feelings and emotions disclosed by the visual metaphors may "suffer a backlash".
The possible downside of the ReMax advertising ("it may remind people of poor decisions they made in the past coming back to kick them") as an instance where some consumers "may perceive the company to be insensitive and out of touch…. Well meaning attempts to tap into these emotions could be seen as opportunistic or patronizing that could backfire."

Categories

Followers