Saturday, February 23, 2008

Consumers pay more attention to circulars than other advertising

Two reports highlight the growing importance of in-store marketing. The first (noted by Progressive Grocer) was released by Vertis Communications two weeks ago and noted that, "47 percent of Americans cited inserts and circulars as the most effective, a 9 percent increase since 2003. Also according to the report, inserts and circulars have surpassed TV advertising as the medium most able to draw consumer attention." Further, "Forty-three percent of those surveyed said TV advertising interested them the most, but that was a 10 percent decline from five years ago. Meanwhile, 38 percent of respondents thought newspaper advertising best grabbed their attention, down from 45 percent in 2003."

Helping to confirm those results are new findings from BIGresearch that also point to the increasing importance of marketing at retail. Across all demographic groups, 27.4% of those surveyed said in-store promotions influenced their decisions, up 0.5% from last year. That compares favorably to TV/Broadcast at 27.9%, though still ranks behind traditional forms of retail promotion like newspaper inserts (30.5%) and word of moutn (42.6%). Of course, the influence of newspaper inserts have also been falling steadily the last few years, and plunged -4.5% last year lone (the influence of word of mouth promotion remained steady).

Tags: ,

Friday, February 22, 2008

Reenergizing Starbucks

You know a company is good when the mere suggestion that a tiny fraction of its stores may be closing in the next 12 months is taken as a sign of general economic malaise. After all, if it's not the force of the global economy slowing down, how else might Starbucks explain the sudden deceleration of their growth? Surely it can't have something to do with their expensive, mediocre coffee (especially compared with much cheaper fare from McDonald's), right?

Well, according to this article in Business Week, maybe it actually does. I know, I know, this would mean that throngs of Wall St analysts and FOX News personnel would be wrong, but apparently CEO Howard Schultz thinks that yes, maybe Starbucks has been doing a few things wrong the past couple of years. Business Week's Matt Vella does a great job of outlining the current problems facing the company (the biggest of which being deteriorating customer experiences at existing stores, and a playing field crowded by the likes of Dunkin' Donuts, Burger King and McDonald's), but also notes some possible solutions:
Brian Collins, chief creative officer of New York's Collins design research firm, thinks "technology seems underleveraged at Starbucks." Collins says the company could better use its digital resources to learn the tastes of regular customers. "Somebody call Facebook," he jokes, suggesting the company should create social networking tools to foster communities and facilitate social interaction at individual Starbucks stores.

Others, however, remain adamant that it's the coffee, not the technology, that will see Starbucks through. Geoff Vuleta, CEO of New York innovation consultancy Fahrenheit 212, says he has a radical solution that will solve the chain's problems even as it soothes Wall Street's jangled nerves: Open a chain of microstores devoted solely to making coffee. "No travel cups, no music, no machines, just amazing beans and a narrow range of the best-in-the-world coffee drinks," he envisions. Such microstores, he says, could hone the Starbucks experience—and result in a smaller, less costly footprint than regular stores which change at a slower pace. Jeneanne Rae, president of the Alexandria (Va.) service innovation consultancy Peer Insight, agrees, saying, "They can't move away from the essence of the brand; they have to focus on getting back to the basics."
I've spoken to folks at Starbucks a number of times about kiosk and digital signage projects, and in general their opinion has been that less is always more, especially when it comes to any form of 3rd party advertising. While I'm generally bullish on the use of in-store technology, I think the idea of microstores that focus on a few key coffee products is the best idea of the bunch. While admittedly it's going to be tough cramming lots of Starbucks style and panache into a couple hundred square feet, working with a small environment and limited product range will allow the company to identify and enhance the most core elements of the Starbucks brand in a cost effective fashion. These findings, of course, can then travel back up the chain into their regular format stores quickly and with little risk, since they essentially will have been vetted by hardcore Starbucks fans frequenting the microsites.

There's lots of speculation as to what direction the firm will take. But we're going to have to wait until March 19th to find out the truth: that's when CEO Schulz will announce his plans for rescuing the company from mediocrity.

Tags: , ,

Wednesday, February 13, 2008

Will lickable ads help take product experience home?

This is one of those stories that's a little too bizarre not to mention. According to this Wall Street Journal article, Welch's is taking out full page ads in People magazine this month that feature a lickable patch that supposedly tastes like its grape juice. Innovative, gross, or both? You decide:

Marketers are excited about the prospects for lickable ads, but also have to deal with the "ick" factor. Since magazines are often passed from reader to reader (think doctors' offices) there is a good chance that saliva could be left on the ad. Readers are supposed to peel off the entire sticker on the Welch's ad before licking, says First Flavor, the company that developed the technology used in the ad. If someone doesn't rip off the whole sticker, First Flavor says, the flap can't reseal, giving people an easy way to know whether the ad has already been licked....
Well, that addresses at least one concern. And kudos to the WSJ for pulling out perhaps the worst example -- sharing lickable ads at a doctor's office -- to make sure readers think twice about whether the idea of a magazine ad that goes in your mouth is really a good idea. However, Welch's seems to be excited by the prospect of offering prospective customers a taste of their products without having to get them into a store first. At least, they certainly seem to have put a lot of effort into the campaign:
[Welch's], which is owned by a cooperative of grape growers, says it went to great lengths to make sure the ad tasted good and that the ingredients used in the lickable strip met safety guidelines laid out by the Food and Drug Administration. It says it spent weeks conducting consumer taste tests and enlisted more than 50 company employees to try the lickable ad. The ad was created by WPP Group's JWT.

Print ads present a unique challenge for marketers because they don't typically have "sound or motion," the two things that tend to make ads stand out, says Paul Caine, president of Time Inc.'s Entertainment Group, which includes People magazine. Adding taste is one way to create a new way to grab reader attention, he says. People has experimented with adding sound chips to some print ads.

Welch's says the ad costs a couple hundred thousand dollars more to create than a normal national print ad because it had to pay to make the sticker plus an additional fee to People for the added production costs. The ad will appear in the Feb. 18 issue of the magazine, which has a circulation of about 3.6 million.

Getting people to use multiple senses to process ads is a good way to build a stronger connection with consumers, ad experts say. "It's hard to forget whose brand you are licking," says Lisa Haverty, a cognitive scientist who works in the marketing field.
Of course as we've all talked about before, being able to really interact with products is one of the big draws of brick-and-mortar retailers today, and that will likely remain the case for some time (even if lickable ads do become all the rage). But it's pretty cool to see a company recognize that their print advertisements were only so effective, and trying out some out-of-the-box solutions to see if they could bring benefits traditionally associated with the in-store environment into a consumer's home.

As for me... well, I think I'm going to avoid any ads that have a "your tongue goes here" sticker on them. At least for now :)

Tags: , ,

Monday, February 11, 2008

Guessing the impact of mobile media at retail

I've been watching a conversation at RetailWire about mobile device integration develop for a few days. It seems like the data is finally in and most opinions are settled, and I wanted to draw some attention to what the folks in the discussion -- arguably some of the better-informed, savvy retail analysts and consultants out there -- are saying about the future of mobile phones and devices for the typical retailer. To begin with, Amanda Ferrante, Assistant Editor for the website Retail TouchPoints, asked what seemed like a simple enough question: Within the next five years, what percentage of Americans will have used mobile devices as part of their shopping experience?

Surprisingly, as you can see from the chart, 40% of those who responded think that within five years, at least 60% of shoppers will be using mobile phones to aid and improve their experiences. Almost another 30% of respondents think that it 40-60% of shoppers will do so. No matter how you slice it, these people think that mobile integration is going to be big, soon.

I'm not quite so sure. Yes, I've had a WAP-capable phone since 1999, and I clearly remember trying to do some comparison shopping while at a Barnes & Noble store. Most clearly, I remember the bewildered look of the clerk as I tried to explain that was selling the same book for less, and I wanted the lower price. Needless to say, the five or six lines of text on the tiny black-and-white screen wasn't the best visual aid to help make a compelling argument.

Anyway, the point is that I've been hoping for better use of mobile devices by retailers for a while. And despite nearly a decade of technological advances, trying to use mobile in a store today isn't much different than it was in 1999. Sure, the mobile Internet is now faster, prettier, and generally more like the regular Internet than ever before (heck, on an iPhone it is the real Internet). But very few are using their devices to try and connect the virtual and real worlds, which I think is a major component of all of these retail-oriented programs I've been reading about and waiting for.

Will mobile devices become a big part of the shopping experience? Sure. We all have them. They keep getting more useful (we can use them as phones, computers, GPS tracking systems, and even payment devices right now). And for the most part, they work pretty well. But in 5 years I expect things to look much the same as they do now: people carrying around gadgets, stores talking about using said gadgets to get better access to the customer and provide better service, and deployments of useful and usable in-store mobile integration systems still very few and far between.

Tags: , ,