Thursday, May 29, 2008

The Gap is good TV-free, but Old Navy needs a rescue-at-sea

I'll tell you the moral of this story up front: sometimes not advertising is a great way to advertise.

Advertising Age recently noted that the GAP continues to eschew television advertising as part of its overall marketing plan. While this allows the company an 18% savings in advertising expenditures, it coincides nicely with GAP’s recent profitability (up 40% according to some sources). A quick look at the numbers shows that the original GAP brand and Banana Republic are moving out of a sales decline, while the lower-priced line Old Navy struggles along. Given the fact that the GAP line is mostly promoted in print magazines and billboards, much of their overall corporate TV ad budget goes towards Old Navy. You might think there’s a direct correlation here (Less TV = Better Sales) and while there’s certainly some relationship, it’s worth examining some of the other branding variables for both lines before we pinpoint the exact cause of death on a still-breathing corpse.

First, Old Navy has been struggling with its product line for some time now. According to the NY Times:

Last month, the company said its lower-cost Old Navy chain had become too fashion-oriented, with an emphasis on youthful women’s clothing that put off customers shopping for basics. Weakness at the chain prompted the departure of its president, Dawn Robertson, in February.
President for less than two years, Robertson’s strategy of aiming for a younger market and hiring designer Todd Oldham to create new products never really stood a chance. Oldham’s safari-themed prints are still bulging out of the half price rack and it’s the end of May -- an eternity in Old Navy turnaround.

Down the street at its sister store GAP, though, a considerable amount of energy and money has been spent on re-shaping the brand with social consciousness recognition. The (PRODUCT)Red campaign was mainly done through print ads, with famous do-gooders wearing the Red line, to raise awareness and money for HIV/AIDs research and health care in Africa. Despite criticisms about how many of these funds actually make it to direct aid and sluggish sales early on in the campaign, the imprint of celebrity charity literally adhered to the Red line at GAP. More recently, the company is going to sponsor a conference on international child labor campaigns, as much to raise awareness as to save face after watchdog groups targeted child labor in Gap-contracted factories in Dehli.

Finally, in a slightly safer vein, GAP’s latest venture is a line of art t-shirts designed by an array of artists connected with the Whitney Biennial. Most are well known and already well compensated (Chuck Close and Kiki Smith), so it’s not clear what “support for the arts” means in this case (“allowing more people access to fine art,” was one suggestion, although $38 a t shirt is still out of the ordinary joe’s price range).

The strategy is still a hit, though, since it hints at the charitable and social consciousness vibe and certainly stays in line with the tastes of GAP’s main customer base in the educated upper middle class. While these folks are also pulling back spending, a combination of selling the basics and selling a message may keep GAP itself afloat.

So why is Old Navy sinking? You’d think the lower cost line would be thriving in recession times, especially when merchandise gets moved through the store and discounted at such a fast pace. Summer clothes are already in the half off racks, but I see fewer people in the store every time I walk by. Yes, the teen market is definitely sluggish right now, but an even bigger problem is that Old Navy has no identifiable style, since it shifts and re-shifts its product line so quickly. There’s too much variety with no coherence. More importantly, no single product remains to be the “signature” piece drawing shoppers back inside. Variety is not always the spice of life.

The real genius who’ll throw Old Navy a life line needs to come up with a single print or television campaign that will not sell merchandise, but link the brand to something beyond its retail doors. (Currently, the closest they get is a charitable donation incentive if you fill out their online survey after shopping there. As one financially savvy teen commented as he went through the checkout, “yeah, sure, so YOU can get the tax break.”)

Until then, GAP’s management is right to save money, avoiding celebrity commercials or campy ads with kitschy references and focus on getting the merchandise connected to a loyal consumer base. Their bet on out-of-home media also seems apt, as more retailers pump ad dollars into posters, billboards and other below-the-line media every day.

But even great cause marketing and the right choice of media won't be enough to save everyone... Right now, shoppers need a pretty solid reason not to limit themselves to department stores, where they can save time and gasoline and the clothes actually last more than a single season. So until Old Navy finds their special purpose, it might be best for them to keep those advertising dollars in hand.

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Wednesday, May 28, 2008

POPAI's introduction to digital signage webinar coming up on June 12th

If you, your clients, your partners or any other interested parties are starting to explore the strange and exciting world of digital out-of-home media, POPAI's holding the first of what will be many "Digital Signage 101" or "Intro to Digital Signage" webinars on June 12th.

Specifically designed to help newcomers see past the industry hype and focus on the projects, business cases and best practices that have been successful in the real world, POPAI's Introduction to Digital Signage webinar is a great way to spend an hour of your time -- and only $50 -- to jump-start your understanding of what works and what doesn't in the digital signage world.

The topics we'll cover include:
  • An introduction to the digital signage market with some basic market history and analysis,
  • A look at some of the most common usage scenarios,
  • An explanation of the components used in typical digital signage networks,
  • A discussion of the benefits and drawbacks of using digital signage, and
  • An examination of some of the most common pitfalls and problems that occur, and ways to avoid them in the first place.
So please join us on Thursday, June 12, 2008 at 1:00pm EDT

If you're interested, you can click here to sign up now!

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P-O-P Every Bit As Important As Brand Building

Those were the words out of Kellogg's Frances Booth, Category Management & Customer Marketing Controller, when she spoke at this year's spring POPAI meeting this past April. Here's the blurb from the POPAI UK site:

[For] Kellogg, P-O-P is every bit as important as traditional brand building especially when it comes to new categories, Frances explored the role P-O-P plays versus other forms of support including above the line. She also explained what Kellogg are learning about the do’s and don’ts of P-O-P.

The presentation concluded with a summary as to how the Company are changing the way in which they work with suppliers and how they are continuing to seek an open dialogue with them in order to generate new ideas and a reciprocal understanding of the Kellogg business.

The meeting also featured a presentation by shopper research agency, Shoppercentric, who unveiled their latest findings on impulse shopping.

Danielle Pinnington, Managing Director of the Company, looked at the factors driving the growth in impulse purchasing and provided an illustration of the way in which it reaches beyond Fast Moving Consumer Goods (FMCG). The presentation demonstrated a clear understanding of the role of impulse among shoppers, the channels that make it happen and the triggers which, in 2007, led to 31% of shoppers claiming 70% of items purchased were selected on impulse.

There's been a lot of discussion lately over the relative merits of different advertising media, since TV viewership is on the decline, and other sectors -- notably, out-of-home, Internet and even mobile -- are growing at substantially faster rates. We've also heard folks like P&G, Unilever and Wal-Mart talk about how important all forms of POP and shopper marketing is to their success. Thus, hearing it from Kellogg isn't too surprising (though it is certainly reassuring).

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Monday, May 26, 2008

Another thing that keeps me up at night...

So I've been a little remiss on posting lately, but I promise I have a really good reason. I'm not normally inclined to post personal stuff on these blogs, but a lot of you folks already knew that my wife and I were expecting our first baby sometime around now. Last week, he decided to show himself to the world. Say hello to baby Liam:

The surprised look on his face is because I was telling him about the digital signage industry at the time -- the number of overlapping vendors, the lack of standards or formal metrics, the continual volume of hype fed into the channel. But fear not, a solution is at hand: he promises to start working on the problem as soon as he learns what his fingers are for.

Thanks for your patience, folks. Things on the blogs should get back to normal in a few weeks :)

- Bill

Mythical authenticity: retromarketing anew

When my kids were younger, we used to get tons of toy catalogs in the mail. One was called “Back to Basics,” and it was obviously aimed at Baby Boomer parents, with re-issued toys from the 50s and 60s, like Flexible Flyer wagons, wooden blocks and Tinker Toys. The slogan, “they do make them like they used to!” appealed to that generation of parents, who may or may not have actually hauled a red wagon around their yard, but yearned to make that kind of idealized childhood possible for their own kids.

When done successfully, especially with an already sentimental demographic, nostalgia sells. Retrobranding is not new – notice all those VW Beetles on the road? – but some companies are counting on a deeper affinity for brands from a not-too-distant past. Nostalgia is too simple a term to describe what’s going on here.

According to last week’s New York Times, one company, River West Brands is entirely devoted to acquiring and re-establishing certain brands, packaged in a reinvention of their original design. Some of the products -- notably Brim coffee, Underalls, and Salon Selective Shampoo – are not necessarily things that people still want or need (Brim is an instant decaf, for example, in an age where real coffee has morphed into a whole host of status symbols) Rather, Paul Earle, company founder, claims that the past experience invoked by these brands can be put to use generating interest and loyalty to newer incarnations of similar products.

Think of “brand memory,” as something more than firsthand knowledge: the taste, the appearance, or even just the advertising slogans are familiar even to people who may not have ever used the product on a regular basis. Anthropologist Arjun Appadurai famously reminds us that things (as well as people) have a history and a biography. Interestingly, this memory doesn’t have to be 100% accurate, it just has to tap into something that seems collective -- something lots of people can easily relate to. My daughters love the Tootsie Pop commercial with Mr Owl who counts to three before he can’t stand it and bites to the tootsie roll center. Is the commercial from the 1970s that good? Or timeless? Or is it the grainy edge to the animation? Or the fact that their parents stop dead in their tracks and say out loud, “One, Ta-whoo, Threee,” along with the owl? Embarassingly, it’s probably a bit of each.

Advertising campaigns have certainly played on nostalgic content before, but an existing narrative storyline of a product is a rich vein to tap. It’s the same reason why fairy tales, myths, and legends engage people who never lived in Bavaria or ancient Greece. They create a sense of belonging, of being part of a larger story beyond our individual lives. Marketers work hard at creating “backstories” for products – the revival of a retro-brand, carrying history in its DNA saves the marketer a whole host of time and energy. The Times cites recent research in The Journal of Customer Behavior:
Retromarketing is not merely a matter of reviving dormant brands and foisting them on softhearted, dewy-eyed, nostalgia-stricken consumers,” they asserted. “It involves working with consumers to co-create an oasis of authenticity for tired and thirsty travelers through the desert of mass-produced marketing dreck.
Now, I’m cynical enough to know when we’re being sold a tall tale, especially one rooted in the 1950s. But I’m also aware that authenticity is as much an invention as is nostalgia. Creating authenticity is what culture’s all about – and in consumer culture, companies invent rich worlds for their products. If they do it well, the story becomes real (it's almost like the marketing version of The Velveteen Rabbit).

Here’s my big question, though: how do we know which brands are worth reviving? Take Postum, which, despite being loved by my 80-year-old mother and a whole lot of Mormons, is an acquired taste at best, and is easily replaced by a good brewed decaf latte or even chai-in-a-box!

Is Postum interesting or cool enough to be Americana? My vintage Mr. Bubble and Spam t-shirts evoke a whole world of comments. There’s even a new line of Oscar Mayer wear for teens. The difference is that these brands are not yet defunct – and everybody’s got a story to go with these products (remember, when it comes to brand memory, it doesn’t matter if it’s real, overheard, or even made up, as long as everyone agrees on the "memory").

It’s the ability to invent or tap into a story behind the brand that makes the brand valuable even long after the products have been removed from the shelves. I for one believe foods are the best bet because they resonate in collective memory both visually and physically. Taste and memory defy science and yet we are learning more and more about the way they’re tied.

We may have to wait a few years to see if Underalls and Eagle snacks return as part of the consumer vernacular. Until then, I’ll be on eBay, looking for a Tootsie pop t-shirt for my daughter and Postum for my mom.

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Saturday, May 24, 2008

Just a date or serial monogamy?: Loyalty programs in an economic downturn

Here's a follow-up to ongoing stories about consumer behavior during economic slowdowns (as a stress-reducer, I’ll still avoid using the R-word): The key question for retail sales right now is, of course, how to keep spending steady? Or, in other words, how do we know you love us if you don’t come back for more? Right now spending is unquestionably heading down and as those tax rebate checks begin rolling out, the necessities (food, gas, and love?) will come first. Surveys say we should expect to see people using that small boost to fulfill daily needs and bring down personal debt.

Some reports suggest that technology sales are still good: people continue to see televisions and cell phones in the category of "needs" rather than "luxuries" (and in a perfect world, my economic stimulus package would prove my love for Apple in the form of an iPhone). But aside from that, most analysts suggest that even adjusting for housing and car sales, personal consumption is shaky. As Mike Mandel of Business Week points out, it's also a bit hard to define:

What the government calls "personal consumption" is actually a grab bag of items, some of which don't really fit the usual notion of consumer spending. For example, the nation's current annual personal consumption of $10 trillion includes about $1.8 trillion in outlays by Medicare, Medicaid, and private health insurance providers... In fact, once medical outlays... are set aside, it turns out that the rest of personal spending has actually fallen since November, adjusted for inflation. The decline is pretty much across the board: inflation-adjusted purchases of food, clothing, furniture, and motor vehicles are all down. The part of health-care spending that individuals control most directly—prescription drugs—is down as well.
Although spending on clothing and household goods looks tight, Kohl's and Aeropostale posted some gains. But what are they doing that might make a difference? Kohl’s has a two-way romance going: one is a longstanding relationship with its credit card and frequent customers. The second is a flirtation with the regular crowd. The retail giant counts on a strong loyalty marketing program, with a pre-existing direct mail coupon and deeper discounts for credit card holders. At the same time, fliers offer regular deals for "walk-ins." Even teens are spending less, and their loyalty is like a high school crush: the retail love story with Aeropostale will probably be short lived. The clothing company didn't rate a mention in a recent list of "Top 15 Brands for Gen Y Trendsetters."

Where does that leave everyone else in the retail dating game? There’s no question that tempting consumers to spend will depend on incentives such as in-store deals, bargains, and coupons. It also doesn’t hurt if it’s a relationship with perks. Consider the success of grocery store loyalty programs that give regular customers money off at the gas pump for every dollar spent.

In general, loyalty programs might want to increase their flexibility at a time when customer relations are no longer like serial monogamy. Programs where consumers stop getting coupons if they don’t purchase on a regular basis will quickly lose viability. The concept of "unprofitable loyalty" may be worth revisiting so that regulars get more incentives but infrequent customers still feel as though there might be a better bargain in returning rather than seeking out a competitor.

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Tuesday, May 20, 2008

The refrigerator can read your mind

...Or at least your barcodes, which more marketing experts are hoping will be an extension of your thoughts and needs. In this case, the point-of-sale moves even further into your home and automatically into your pantry.

Warren Belasco’s new book, Meals to Come looks at the future of food and cooking, noting how scholars have consider the meal-in-a pill, the thinking kitchen, and automated grocery shopping since before the 1939 World’s Fair. My favorite image is from around the 1950s, showing a gleaming metal and plastic kitchen with no actual food, mess, or cooking smells, but a space age mom pulling fully prepared trays from the automatic fridge-oven combo.

In some ways, we’re certainly closer to that image today than ever before. Prepared foods for both in-store and take out consumption have become a growth industry for supermarkets. Delivery grocery services like PeaPod and NetGrocer will even bring your fresh and prepared foods right to your door. And now, appliance manufacturers are edging up to the futurama kitchen with a refrigerator that allows you to swipe a product’s barcode directly into the appliance, creating a grocery list that can be transmitted to the store immediately. Incorporating microprocessors, touch screens, and internet communications into your kitchen means no more running out for milk at 10 pm. Imagine downloading a recipe, comparing the ingredient list against what’s in your refrigerator, and sending out a shopping order for what’s not. It is the DreamWorld of the 50s come to fruition.

Wait, wait, wait. I hate to be the Luddite in the Temple of Future Goodness, but is this really necessary? Or better? (I’m not even going to mention the international food crisis as one reason why this technology might appear a bit excessive. Okay, well, I am. But Belasco ties these things together, too: if we want the kitchen of the future, we have to create a future where access to good food remains constant for the global population and doesn’t deplete resources unevenly).

Even if we don’t end global hunger today, how far we can go with smart appliances and customized, immediate food sales? At least let’s consider whether it’s worth the effort:

1. Are new techno-smart kitchen appliances a growth market? GE, one of the oldest and the second largest appliance manufacturers in the US, just announced that it likely going to sell off its century-old but slow growth appliance line. This doesn’t mean people won’t buy stoves, refrigerators, and washing machines in the near future – but creating a whole new product line means you’d better be sure there’s enough income and desire out there for such big purchases. Right now replacing old televisions and laptops seem to be a more pressing consumer concern. Consider also that the market for new appliances is going to be energy-efficient, green and with greater recycle-ability. When manufacturers add in new circuitry, screens, and other technology, they might want to make sure they’re LEED compliant first.

2. Isn’t this a bit redundant? The goal is to move people away from doing online shopping on their computers and having it dispersed throughout the household. But what if my cell phone can do all that work for me? It’s small, I can take it everywhere I want in the house (scan the barcode on my laundry detergent, my shampoo, and my milk, all in one handy device!) Why incorporate it into a refrigerator? As one shopper told me, “the more gadgetry they stick on the microwave, the more expensive it is when it breaks. You’re usually stuck just going out and getting a new one.”

3. Fast, free delivery is often neither. Aside from the fun technology, one factor hidden in these point-of-sale-to-your-doorstep services is the difficulties and costs of delivering that milk. First, there’s the cost of gasoline. Just ask my local milkman, whose prices just went up (and yes, speaking of the 1950s, when we're in Massachusetts, we have a milk delivery service complete with the cute insulated milk box on the doorstep -- and if you want it, glass milk bottles. It’s local, organic, and we never run out). Whole Foods, which has just started its own home-delivery option, is only selling dried and canned goods at this point. While Amazon has proven the cost saving measures of virtual stores, it’s much more difficult to get people to standardize their weekly grocery purchases than their occasional book buying (think about how much you believe in the accuracy of Amazon’s “personal” recommendations based on your past purchases.)

4. Who needs this the most? Consider the people who would most likely benefit from this technology: people who are less mobile, like senior citizens and new parents, people in urban food deserts, where there are no nearby grocery stores, and others in rural or geographically less accessible sites. But these are not the consumer groups most likely to pay the premium price for these techno-savvy appliances.

So, until they get all the kinks worked out, I think we’ll put off that kitchen remodeling job a bit longer.

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Monday, May 19, 2008

Wii Fit for charity in New York City today!!

If you missed your last local Wiimbleton contest, this might be a chance to redeem yourself -- at least if you live in NYC, as Marketing Daily notes:
Nintendo, whose U.S. headquarters is based in Redmond, Wash., will host an all-day event at the park's Merchant's Gate near Fifth Avenue intended to coincide with National Fitness and Sports Month. The event to promote the home video game system will center on live demos of the Wii Fit and Wii Balance Board.

The game maker will offer up some 40 different Wii Fit activities for consumers to try out; for every demo, the company will donate $5 up to $25,000 to the American Heart Association. On hand will be company brass and various luminaries from the American Heart Association.
The piece also reports that Nintendo is working out a deal with Westin Hotels to offer the balance board as an exercise option for its customers. Although I got my yoga mat for Mother's Day, given the new luggage restrictions on airlines, I think I'll leave it home next trip and give the Wii Fit a try instead of waiting on line for the treadmill in the fitness center!

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Wednesday, May 14, 2008

Visual vignettes and virtual shopping

When I began teaching about food, I pointed out to my students that market researchers had much better information than social scientists, including studies that looked at how people moved through a store, what eye level was the most compelling for purchases, and whether it mattered if items were up front or back on the shelves. But the virtual shopping experience described by Valla Roth and Matt Draper of MarketTools reminds me that old fashioned social science research techniques can often provide better data than in-store surveys and tests. The system allows potential customers to walk through a supermarket on their home computers. The pictures of the aisles and the movement through the store are facilitated by 3D graphics, allowing the researcher to assess how and when a shopper might pick up a 3 for 1 deal or ignore the end-of-aisle displays.

Long before we had the computer graphics to make it virtual or sexy, I learned a similar technique demonstrated by the late Dr. Peter S. Rossi, head of the Social and Demographic Research Institute at the University of Massachusetts Amherst. Rossi pioneered a new method of research called the vignette technique (or in its less glamorous name, factorial survey), in which different descriptions of a situation are given to respondents, who are then asked a series of questions to elicit individual responses to each description. The vignette technique is great because it allows the researcher to measure and analyze fairly complex scenarios in a way that surveys and linear question-and-answer formats do not. Rossi and his wife Alice (an equally famous sociologist) used it to measure how people perceived their relationships and obligations to family, but vignettes have also been used in studies of AIDs/HIV, religious beliefs, and the delivery of social services to different populations. For all this, consumer market research has shown surprisingly little use of the technique, opting more for focus groups, surveys, and in-store tests.

In a way, MarketTools’ new approach is an “upgraded” vignette method. Giving the vignettes a 3D interface and having the consumer act out inside of a virtual environment combines the vignettes with a much-needed visual element. Since people are better at relating and responding to stories with a images,  we hope the collected responses will be better too. And imagine the next step: perhaps a Wii-like interface where you actually “walk” through the store and interact with objects.  It would be like The Sims for market research (but of course, in The Sims pizza never goes bad and groceries can be delivered at any hour of the day...)

Here are some limits and suggestions, though: No matter how sophisticated our graphics get, they are still a mere representation of reality. People’s main complaint about shopping on line is that the product image on the website does not match up to what arrives in their home. And while the grocery store layout is ubiquitous to most people, there is a certain fudge factor to getting it as realistic as possible, and comparable to what people are used to in the real world. In the end, real interactive video might prove more useful than graphic representations. Also, t one thing this method alone won't mimic the different types of shopping trip that people take -- the data won’t tell you if people on a milk run or a weekly shopping trip are most likely to make point-of-sale purchases. Tying the tech back to storylines and vignettes would help: give people a scenario before setting them lose in the virtual shopping world (“It’s Wednesday, only your teenage daughter will be home for dinner, and you have to be home in half an hour.”).

It’s almost impossible to follow customers around and see how they react to deals without being invasive. As much as I like talking to my informal research group in the supermarket, I don’t learn much about their point-of-sale behavior. But I am much more attuned to their overall patterns and cycles, their brand preferences, and the frequencies at which they buy certain products. I'd love to see how they make decisions in real time, even in an imperfect imaginary realm, so if that's the current state-of-the-art, I'll still take it.

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Tuesday, May 13, 2008

Counterfeit irony: Four credits for deception in social networking

It used to be that colleges were a feared breeding ground for anti-corporate militants. Now, it seems, college students are turning activism into a form of socially-networked brand protection. This week there’s a case where a sponsoring corporation wanted to advocate socially responsible behavior among consumers – and, in a great twist of irony, ended up using ethically questionable tactics including guerilla marketing and college credit for a sponsored course mostly created by a corporate trade organization to do so.

The story emerged at Hunter College in NYC, where last week the Faculty Senate recently met to Monday to denounce a course taught last spring. The course was funded by a $10,000 grant from Coach (whose CEO Lew Frankfort is a Hunter alum, who claims his concurrent 1 million dollar donation was completely unrelated). But suspicious course content and a well-timed donation are not enough to warrant faculty censure, of course. What brought charges of violation of academic freedom was the course content, its purpose, and the methods students were asked to use – not to mention that the professor claimed to have been coerced and was unqualified. Add in the fact that the Hunter College faculty includes well-known critic Stuart Ewen, whose most recent book is titled PR! A Social History of Spin, and you've got a full-blown recipe for disaster.

What exactly happened to be of interest beyond the ivory walls?

It starts with Coach and other companies, who are always worried about counterfeit products, even having gone so far as to develop their own nonprofit trade group, the International Anti-Counterfeiting Coalition (IACC). They decided that rather than do all of the legwork themselves, it would be much better to compel student (who make up a fair number of those inclined to purchase counterfeit items) do it form them via social network sites. Using Facebook and MySpace, the Hunter class invented a blogging student named Heidi Cee, who posted an ongoing story about the loss of her Coach bag, a gift from a boyfriend, her subsequent search for it through posting a reward (more than the bag’s original worth!!!), its return, and her discovery that the returned bag was not her original but a counterfeit. Her personal lesson, which she shares with her network friends, is to check out the IACC’s website and start a campus activist organization to end counterfeiting. Only after an on-campus event pitching the IACC message did the class revealed that Heidi was fake.

I’ve spent about twenty years teaching 18-24 year olds, and my limited wisdom tells me the students couldn’t have “known better” without some adult guidance. After all, isn’t it the college’s job to teach and model ethical behavior to the future generation of business and political leaders? Of course the students behind the charade thought it was great fun: they were handed power tools without the instruction manual. The professor in charge claimed that with a pre-set curriculum and hand-holding by the IACC, he could not present the counter arguments, the limits, or even the ethical dilemmas raised by the class project (the IACC has supposedly adjusted its curriculum packet and puts the blame back on Hunter for assigning an inexperienced professor to the course). The Faculty Senate Report points to the fact that the IACC approved the students’ plan to create Heidi Cee and use a deceptive Facebook account. One student’s justification – “People do crazy shit on Facebook every day” – highlights the fact that the ethics of corporate-sponsored “crazy shit” were not something they were taught. The real question is: would I write a recommendation for (and would you hire) someone with no ethics training on their resume?

Of course, even if the students and faculty are found to be at fault, it's clear that the IACC must have had at least some involvement with these highly questionable tactics. Marketers walk a self-imposed line every day, trying to sing the praises of their products without lying outright to potential customers. Sometimes they go over the line, and when that happens, it's the job of consumer advocacy groups and perhaps even a few key government bodies to step in and get them to stop (though the latter group is pretty inept, so I'd count on the former). But questionable marketing practices will continue, and they may even get more outlandish as brands struggle to find new ways to connect with consumers.

Still, maybe it would have been better for the IACC to wait until the students graduated and just start using that MRI on their brains

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Saturday, May 10, 2008

Safeway takes its private label public

Private label brands have become a staple at grocery stores, big-box retailers, discount warehouse clubs, office supply stores and pretty much everywhere else you can think. While private label items were once sold as the low-cost alternative to higher price, higher-quality items, today the items typically carry a small but still appreciable discount over their name-brand cousins, but at a price that is similar to and sometimes even exceeds that of the higher-priced goods.

Grocers in particular have jumped on the private label bandwagon, as goods stamped with their own name can often bring in 200-300% more gross margin than similar name-brand products which can be pretty significant when margins hover in the low- to mid-single digits.

Interestingly, some private label goods are doing so well, and have such a positive reputation in the marketplace, that they're starting to become full-fledged brands of themselves. That's precisely what has happened to Safeway's O Organic and Eating Right brands, as Supermarket News notes. Both brands have seen sales surges recently thanks to renewed interest in healthy eating and of course the gigantic sales monster that is organic. Just last week Safeway's CEO noted that O Organics recorded 2007 sales of $310M, and is expected to do $400 million "with ease" this year, with sales in the first quarter alone up 50%.

Wanting to capitalize on that trend, the company is going to be selling some of the products in this line to other grocers and retailers, who will basically treat it like any other name brand. To do this they're forming the Better Living Brands Alliance, which includes, "manufacturing, marketing and distribution companies as brand licensees; co-pack and distribution partners to provide a supply chain network; and support from EMAK Worldwide, a group of marketing agencies based in Los Angeles, for communications with consumers, and Crossmark, a professional services company for consumer goods based in Plano, Texas, for communications with retailers."

Safeway is taking a bit of a risk here by stepping outside of its typical role as a retailer and entering the murky world of product distribution and sales, however given the margins they're probably making on the O Organics and Eating Right goods, it may be a great hedge against store traffic slowdown or average ticket size decrease due to economic uncertainty and slowdown. If nothing else, it's a savvy play to try and take advantage of our current craze over organic and (perceived) higher-end foods.

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Friday, May 09, 2008

Wii Fit: Better than chocolate for Mother's Day?

I’m a cynic: there’s no question about it, so it’s no surprise that I tend to think of Mother’s Day as greeting card and florist marketing gimmick. The original Mother’s Day was more to my liking: It was initiated after the American Civil War , as a day where women stood up for peace and justice world wide.

Cynicism aside, I’m still sending my mom a card and I sure hope there’s chocolate and breakfast in bed for me on Sunday. And in case anyone I know is reading this, I could really use a new yoga mat…

But wait! Maybe my family should get me the new Wii Fit attachment (which won’t really be available until May 19th, but when pre-ordered from Wal-Mart, comes with a $10 gift card). That way I can do yoga and exercises from the privacy of my own living room, using the patented Balance Board to check my stance and chart my progress in weight and body mass index over time.

Wii Fit is Nintendo’s latest expansion of its product line. The wildly successful Wii has appealed mainly to a certain demographic (you know who they are and they’re probably not reading this blog). Targeting mothers is an interesting strategy and a smart one, since women are major consumers, especially for fitness products. The Wal-Mart promo is designed to tap into the shrinking pool of spending money, literally banking on the fact that people might be more willing to make discretionary purchases on technology for special occasions and gifts. The Wii Fit seems like a bargain coming in at $89.00 (with that $10 gift card) at Wal-Mart, which is less than the average $138.00 people spend on their moms, wives, and grandmothers. Consequently, the retail giant has set up an entire Mother's Day strategy behind the new device, hoping that customers in the store for a Fit might pick up a few other items while they're there.

Compare that to my Mother’s Day list: a new yoga mat runs about $20, plus maybe a new membership card ($55), and a fancy new metal water bottle ($20) and you’ve spent about the same amount. The WiiFit should last a bit longer than my ten punch yoga class card, so it’s probably better in that regard. But let’s remember something: it’s an attachment. You’ve already got to have a Wii: that’s an additional $200 if you forgot to buy one for your kids over the winter holidays.

On the other hand, if you really wanted to get me some useful technology, I’m still pining for an iPhone…

Here’s the big question, though: will the Wii Fit be worth the price and get used? Nintendo is banking on the footprint to be a big seller based on the fact that it’s fun. They are careful not to claim that it’s a weight loss device or that it should in any way replace going outside for a bike ride or walk. Claiming it "helps you get to know your body better," they’re smart enough not to tie it in too closely to fears about the "obesity epidemic." That’s good because there are countless similar gadgets that end up in garage sales across the US. In 2005, Jackie Chan had a similar product called the J-Mat Fitness that allowed users to work out with the movie star and martial arts master and track their progress. Of course, the Wii itself is what makes the Wii Fit so appealing, piggybacking off an already successful and well-designed product.

Interestingly, the Wii Fit has already been for sale in Japan for a while. The creator, Shigeru Miyamoto, in pitching the Wii Fit in Japan, talked about his vision for its use – for family fun! This is interesting, because those sorts of activities are more in line with Japanese cultural values regarding family time. Americans may think they’re all about family values, but culturally, we are the people known for bowling alone. I do yoga with my kids and more often with my friends at the yoga studio, but keeping track of my exercise patterns and weight loss are solitary pursuits. At the same time, both men and women say they exercise more consistently when it’s a social activity – hence the worldwide success of low impact chains like Curves (also not exactly designed to make you into Lance Armstrong).

Here’s where the Wii Fit differs from DDR (Dance, Dance Revolution) the phenomenal dance game that has become an exercise tool for countless after school programs, phys ed classes, malls, and recreation centers. DDR is inherently social – most of the time, you do it with someone. Indeed, it’s a competition. I have the unfortunate feeling that for many moms who are the recipients of Wal-Mart’s special offer, the Wii rrFit is destined for that drawer in the entertainment center that’s a repository for extra remotes, old aerobics tapes, and broken joysticks. At least until they release a new snowboarding interface and the kids pull it back out.

And since I know the iPhone is a bit too pricey, I’m hoping that when I get home from the Mother’s Day Peace Vigil, there will be a new yoga mat and some chocolate waiting for me.

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Monday, May 05, 2008

I feel it in my gut, but you're zapping it in my brain

The Lovesong of Neuroscience and Marketing

Imagine being able to measure the brain’s response to a cereal commercial, a vacation ad, or an in-your-face sports drink promotion. Neuroscientific research claims to have a handle on not only what people’s brains are doing during these ads, but what each little twitch of the face and tingle of the brain tells us about whether we prefer Coke or Pepsi or whether we’re just drinking that Sprite because the ad made our frontal cortex happy. There's even been some recent election year controversy over neuroscientific analysis of political preferences.

Market research companies like NeuroFocus, Neurosense, and SalesBrain purport to be able to map the human mind, its reactions, and fine tune ad campaigns to deep reactions. Mind Hack author and blogger Tom Stafford quotes Jonathan Harries, the creative director at advertising agency FCB:
It is very hard for our clients to buy gut feel because every time they approach [a campaign], their jobs are on the line. Neuroscience promises to measure the gut feel, and that is exciting for us. It makes it easier for us to sell what we believe is right.
Some of the techniques include brain imaging, eye tracking, and electrograms to test reactions to different versions of the same product, and have been used by shopper marketing programs for years now. Eye tracking allows researchers to note the particular features that capture attention. Functional magnetic resonance imaging (FMRI) maps changes in the blood flow to the brain, pinpointing the areas that are activated. Quantified electroencephalography (QEEG) measures tiny electrical impulses in the brain via sensors set placed directly on the scalp. Other techniques quantify facial expressions and aural responses.

Neurofocus, a research company overpopulated with PhDs and MDs that claims to be the next wave in neuromarketing, sums it up well:
The findings are clear and indisputable, because they are based upon measuring consumers' actual brainwave responses and eye motion during testing."The human brain is the most amazing processor of information that exists, and the most challenging to understand in terms of how it treats information streaming into the visual cortex," said Dr. A. K. Pradeep, NeuroFocus's founder and chief executive officer. "But now, thanks to the advances that have been made in neuroscience, we have gained new insights into how people perceive and process images. That new knowledge enables us to spell out, in detail, exactly what are the most efficient and effective ways to communicate on a screen. Conversely, now we also know specifically what doesn't work well, or is even counterproductive.
Now, I’m no neuroscientist, but any scientific method that claims to have indisputable findings should probably be submitting for the Nobel Prize. Even physics and genetics require some interpretation of results. Consider what Jonah Lehrer, author of Proust was a Neuroscientist, says about fMRIs:
I'm always struck by how even neuroscientists who work with fMRI everyday, and are acutely aware of the limitations of the technology (the 3-5 second time lag, the messy data, the difficulty of imaging certain areas, the fidgety subjects, etc.) still use the same metaphor of transparency. They talk about "looking at the inside of the brain," or how the brain scanner is like a "window," or how they can "see what's happening in real time". Of course, fMRI is an incredibly powerful and potent tool which allows us an unprecedented understanding of the mind at work, but I get a little tired of all these visual analogies. Before we can "see" anything with fMRI, someone has to perform a tremendous amount of statistical analysis.
Now, statistical analysis is something I actually understand – or at least, it can be transparent. But statistics require interpretation, which means they're not necessarily irrefutable or clear. One of the first things you learn about research when you’re a social scientist is that everything depends upon interpretation. And if everything depends upon interpretation, then the scientific part of what we do is only in the application of a method. Once you’ve got your data, what you do with it is as much art as science. Still, market research has always had a love affair with “real” science – mostly in the form of psychology, so they tend to play up that angle.

When we look more closely at what neuroscientific market research is doing, there’s a bit of the good, the bad, and the ugly at play. Let’s start with the ugly, which I’ve already laid out for you – it’s not pretty when people must use research science as means of justifying what they do.

The bad is (potentially) how the ethical implications of advanced neuromarketing will be handled. What if, for example, a marketer finds signs of mental or physical illness, indications of criminal intent (shades of Minority Report), or downright maliciousness? What are their responsibilities for reporting it to the research subject? To legal authorities? And is giving a marketer access to your deep-seated emotions tantamount to giving them permission to market to you subconsciously?

The good is that these methods, each in an interesting way, can tell us things about human reactions. Put together, studies of brains and bodily reactions are useful. The most interesting work coming out of neuroscience today is related to repairing memory loss, fixing degeneration from age and correcting genetic abnormalities. Used carefully, neuroscientific research might also tell us what kinds of environments and products are best for people with cognitive disorders, chronic illnesses, or other impairments that make everyday life difficult.

But there's still a wide gap between neuroscience for science's sake and neuroscience for marketing's, and when it comes to the latter there are serious issues that will have to be addressed if it's ever to take off on a very large scale.

So far, I think I’d rather not share that feeling in my gut.

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Saturday, May 03, 2008

Report says digitized retailing is becoming more prevalent

According to The Centre for Retail Research's latest offering entitled 'The Store of the Future 2012-2015', over a quarter of high street retailers (to use the British turn of phrase) expect they'll need to close down some of their bricks-and-mortar locations within the next five years in order to cope with changing demand and increased use of the Internet by customers. Further highlighting that trend is that 70% of retailers plan to introduce new formats and more information services in the same period, for the same reason, as noted in this article from Retail Bulletin:
According to Dr. Steve Perry, Executive Vice president, Visa Europe: "The critical role that converging technologies are going to play in shaping the retail space of the future is clear for all to see. The study shows that while changes may occur over a relatively short time period, the Store of the Future is likely to be shaped by a range of technologies in the digital era, but all will have a common goal - to create greater convenience for the customer and in turn achieve stronger differentiation and business success for the retailer."
Clearly mobile marketing is becoming the bridge between traditional online and offline assets, and it may be the catalyst that finally drives more retailers to implement fully-integrated inventories, service offerings and corporate policies that would allow the consumer to, for example, universally do their shopping online and pick up their orders in-store. Far too many retailers continue to have problems implementing even the most basic cross-channel marketing programs and policies. For the longest time you couldn't shop on pick up at Barnes and Noble, or even get store personnel to order you an out-of-stock item via their own website. Many of today's retailers continue to have problems integrating loyalty programs and gift cards into their e-commerce platforms, despite the fact that all of these things have existed for well more than a decade.

The in-store experience is still important to a lot of shoppers. Product interaction, in-person customer service and social interaction are still powerful forces that drive people to bricks-and-mortar stores. But the convenience of online shopping is hard to beat, and many retailers aren't doing themselves any favors by continuing to treat online shoppers and real-world shoppers differently.

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What's in a shopping cart? Only a slice of the pie

Thursday I made a stop at the supermarket during the middle of the day, middle of the week – no market research on senior citizens this time, just a quick trip for things we needed to make it until Saturday. At the checkout I ended up with: navel oranges, apples, cilantro, lettuce, cukes, tofu, eggs, cheese, two kinds of bread, organic peanut butter, specialty crackers, macaroni and cheese, yogurt, and six different kinds of chocolate bars. Only about four things were on my grocery list. Some were impulse buys – but not perhaps what you'd think. All that chocolate was on the list. Some of the produce was not.

But what can you tell about my consuming and shopping future from just this one cart? (Here’s one hint: almost everything, including the crackers, are brands I buy all the time. The only variation was the chocolate – I buy it every week, but always try new kinds . Today they actually had new varieties on sale!). How would you characterize my purchases? What can they tell you about brand loyalty (some), consistency (a lot), and general purchasing trends (produce as impulse buy!!) ? Looking at shopping carts is a tried and true research method, and is always a staple of larger shopper marketing programs. It’s certainly better than consumer surveys. CPG News recently reported (as noted in this RetailWire BrainTrust post) that:
Catalina Marketing has spent two years examining 250 million shopping baskets weekly from 130 million separate shopper identifications. The goal is to probe the gap between what shoppers say they buy in surveys and what they actually purchase.
I probably wouldn’t mention those chocolate bars in a survey. But the shopping cart in isolation – one day, one cart – is as problematic as the shopping survey. One of the things I’ve been studying for years is everyday meals – how frequently people eat at home, what they cook, what they get as take out or prepared meals, who they eat with. The most important thing I’ve learned is that people live their lives according to patterns, but one slice won’t give you even the slightest idea what any given day might look like. For example, the Sunday dinner is different from but dependent on its contrast with the weekday supper, the holiday meal captures the extremes, and there are other punctuation marks all along the way.

Shopping carts are going to reflect patterning, too. Mine was a Wednesday cart on a week when someone had done the week’s shopping on the previous weekend. But we eat a lot of produce and always run out midweek. I’d also exhausted my chocolate supply, which sometimes (but not always) happens too. But if you looked at our cart over a month, you would get a very different picture – where do we run to for a loaf of bread or eggs? How much do we shop at little local markets or at big supersavers like Costco? What happens on a week when we do get down to the Saturday morning farm and specialty markets (the Strip District, for those who know Pittsburgh). How much did we eat out this week? Who is doing the cooking and who is being fed (the mac and cheese was for my daughter’s friend, who never eats anything else I make)?

Certainly many market researchers worry about whether people will tell “truth,” but truth is not in a snapshot. Rather it's in multiple images, over time and place (the whole pie!). More importantly, shopping carts are the repositories for later use. If we don’t find out how people are making use of the products, we don’t understand their purchases. Shopping cart data may be rich, but it's ultimately less useful if we don't map patterns of food use along with food purchases.

Still, watching shopping carts is particularly important right now as two consumer trends are butting up right against each other: one, the growing concern with organic, natural, and “green” products (which still tend to be a bit more expensive in most markets) and two, the rising cost of food in general, which tends to push people more towards bargains, coupons, and other sale items.

Mapping patterns seems like a lot of work, but without it, you’ve got tons of data and no anchoring scheme. The distinction between shopper and consumer is too simplistic to capture what’s going on (on Wed I was both and neither!!!). It also needs to be matched against what’s on sale, what’s out of stock, and what’s new in the store (seasonally, for example).

Shopping cart data needs to be put into a meaningful framework in order to make sense. If the data comes without questions and information about how the products are about to be used, all we know is what people have bought. There’s no insight into why.

But they've probably figured out that I buy a lot of chocolate...

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