In-Store & Retail Media News

All Lost in the Supermarket, Take 2: What's Green Anyway?

2009-09-08T10:02:00.001-04:00

A recurring theme in my consumer-focused story is simple equals better. The less you confuse customers, the more likely they'll single out a product or brand and retain a sense of its importance and utility in their everyday lives. For most items (not luxury or splurges, though), this is the main goal of marketing, branding, and consumer loyalty pitches. But sometimes it seems like confusion is the main goal of marketing: distract your opponent with the most noise and they'll acquiesce, pulling out their credit cards in the process.

According to Chain Leader magazine, a national survey conducted by the Shelton Group suggests that while the majority of Americans are interested in buying more green products, they are confused and lack information about how to choose among the array of possibilities. Indeed, Shelton Group's results have been presented as demonstrating that people would sooner buy natural rather than organic because they're confused about what organic means. Of course, the irony of this finding is that "organic" in the food category now carries a USDA certification and label, whereas "natural" has been so watered down by overuse in a variety of inconsistent ways, those that they surveyed tended to gravitate towards "natural."

Although Shelton Group generally has a sophisticated approach to sustainability (see their blog, for example), in this survey, they were perhaps misguidedly attempting to measure people's knowledge of green products, with organic and natural being presented as components of green. But even certified treehuggers will tell you that green is a variable and difficult concept to grasp in the first place -- and in fact, is already the focus of derision by those who can see the marketing handwriting on the wall, greenwashing their way into consumer's coffee cups, kitchens, and recyclable shopping bags. In an interesting twist, it seems that sometimes a government seal of approval is not enough -- in fact, it turns out possibly to confuse the matter more -- to make consumers step up to the cash register with certainty about what's in their cart. One thing is for sure: companies need to tread through the green fields lightly, accepting the fact that green is not as obvious as you'd think.

Twenty Five Kinds of Super Glue

2009-08-13T13:14:00.000-04:00

I kid you not.

In a recent Wall Street Journal report detailing changes on supermarket and pharmacy shelves, it announced that Walgreens would be reducing the number of superglue varieties it carries -- from 11 to 25. Doesn't 11 still seem excessive? Isn't the whole point of super glue that you can use it for a whole range of surfaces? Can you even imagine eleven different situations in which you might need a special type or even a certain brand of super strength glue? I'm pretty creative, but I stopped after about seven.

In the past, I've talked about brand extension as a mixed approach to retail, especially when it comes to food. We've about exhausted the rationale for new kinds of Oreo cookies when we hit 12, didn't we? (For goodness sake, if you're going all out for a holiday, why not just get some heart shaped cookies on Valentine's Day? If you need Oreos, get Oreos! They don't have to have red cream).

But the economy has retail manufacturers discovering what consumers have known all along: there are just too many tiny variations on the same thing to make choices. According to the WSJ report, Target Chief Executive Gregg Steinhafel says even he is baffled by Target's array of shampoo choices:

"I have found myself standing in front of the Pantene display, trying to figure out if I need the product for dry hair with frizz or dry hair with split ends," said Mr. Steinhafel, a thick-haired 54-year-old. A typical Target store has 88 kinds of Pantene shampoo, conditioner and styling products. A Target spokeswoman said the chain has "slightly reduced" its hair-care offerings this year.

Even eight or nine years ago, consumer research was showing that people are overwhelmed by the choices. As Sheena Iyengar reported:

The more-is-better approach can backfire, warns Mark Lepper, the chairman of Stanford University's psychology department, who studies how variety affects the odds that people actually buy. Mr. Lepper set up a table with 30 jars of jam and gave shoppers who stopped for a sample a discount coupon for their next jam purchase. He also had a table with six jams. He counted the coupons to see which group was more likely to buy. Of the shoppers who faced 30 choices, only 3% actually bought jam; of the shoppers who had six choices, 30% purchased jam.

The study, like many others, concludes that too much choice was not a good thing. People also feel bad when choosing from a broad selection because they second-guess their pick and worry they have made a poor selection, his follow-up studies revealed.

I'm still stuck on the eighty eight kinds of Pantene shampoo. Seriously, I normally try to curb my consumer rant voice when I'm exploring the rationale behind retail, but that's just mind-bogglingly ridiculous. There simply aren't eighty eight different kinds of hair problems that warrant their own product. Indeed, P&G has pulled back, repackaged, and cut some of the varieties in order to address less-than-desired sales.

But let's review simple science: the more you add, the more the original gets diluted. The more it's diluted, the less it resembles the original item.

Here's the social scientific conclusion: The less it resembles the original, the less people will feel any loyalty to the product as a unique and significant item in their must-have pile. And let's face it, what brands are competing for right now is a slot in the shrinking must-have pile in the grocery cart.

What's missing from the brand retraction (can we call it that?) that's going on due to economic retrenchment is a consumer-based logic. Sure, maybe there's a core group of consumers who use one or two of those varieties of Pantene on a regular basis -- and they'll be at a loss when they show up at Target looking for the usual stuff. What retailers and manufacturers are loath to do -- and in fact, have never been particularly good at -- is giving consumers the head's up about the loss of a product. At the very least, offer them something new (coupons for one of the surviving comparable types of shampoo, let's say...) that isn't yet another "special for frizzy hair, will glue plexiglass. and has a cartoon character stamped on the outside cookie" invention.

image credits: Germes and Dominic Bracco II (WSJ online).

Of Mints and Markers: Curiously Strong and Sharp

2009-08-10T13:17:00.000-04:00

Some products are things we never knew we needed. Smart marketing takes advantage of the unique ways that people value everyday items.

Before they became ubiquitous, Altoids were just a novelty product, something hipsters and old men handed out to their cronies. But then something happened and they became a must-have, commonly recognized brand. In 1995, when Kraft foods acquired the product, it had been around for, well, centuries, notable both for the concentration of peppermint oil and, starting in the 1920s, the clever tin in which they were housed. Their new campaign was rather tongue-in-cheek and campy with vague sexual references. The most famous was the turn-of-the-century carnival worker featured with the caption "Nice Altoids."

This ad ran for what felt like an eternity in contemporary marketing terms, but it also gave the mints a notoriety among a certain segment of the population. Nowadays, everyone knows the Curiously Strong Peppermint, its variations (chocolate covered ginger, so far from the original, but still so good), and of course, the tin. Altoids can now be found in many flavors as well as gum and sours and claim to be the number one mint in the USA, which has prompted the corporate owners to move manufacturing from Europe to Tennessee.

Another product that suddenly appears necessary to everyone's daily life is the Sharpie. Twenty years ago, permanent markers were the kind of thing moms used to label kid's clothes before sending them off to camp or office workers kept around to make sure their lunch leftovers in the company refrigerator didn't get eaten by someone else. Black and red were standard -- green was for unusual circumstances. Graffiti artists have always loved Sharpie (In college towns, local coffee shops even began leaving Sharpies in the restrooms, encouraging poetry on the walls and using the big fat black version to "erase" anything too raucous). Nowadays, the brand name Sharpie has replaced the less colorful "permanent marker" (like calling a tissue a Kleenex, the item and the brand have unconsciously collided.) The parent company, seeing a perfect opportunity, is coloring the world. Indeed, Sharpies have become an art necessity: here in Pittsburgh, the most local venerable shoe store staged a promotional event, where local tattoo artists would grace any newly purchased pair of Ugg boots for free.

Building on this kind of unusual usage, Sharpie has smartly linked its new website, sharpieuncapped, to a whole host of online communities, DIY enthusiasts, kids, and artists who generate endless innovative ways to use sharpies. There's even a David Beckham promotion, some amazing surf boards, and a nice YouTube video showing exactly how to transfer a design to a t-shirt. And for the really ambitious, there's always the opportunity to emulate artist Tim Bernard, whose Sharpie murals translate well into car designs.

Referencing their most recent summer campaign, Sally Grimes, global vice president of marketing for Sharpie, told Marketing Daily: " We're starting now because we think Sharpie is about much more than a school supply. It's a tool for self-expression not necessarily tied to any particular season."

It's one thing for a product to work its way into people's list of necessities and it's another for companies to capitalize on that successfully. For mints and markers, you can't do better than these.

images from Color Coded Life, Amber Turnau and Altoids.

Credible Claims and Big Savings

2009-08-03T10:01:00.001-04:00

Credibility always counts in marketing, but even more these days when consumers are questioning the trustworthiness of their banks, the safety of their food, and the value of the products they are purchasing as funds have tightened up. Interestingly, polls now show that the same people concerned about safety issues in the food system are also exhibiting greater trust in small or local banks. Retail marketing campaigns that aim to capture the frugal consumer are extremely vulnerable to skepticism in the age of internet activism, advice, and response. Setting aside their big blunder with free chicken, Oprah, and coupons, KFC got into some hot water with consumers when a recent ad challenged a family to create a meal from the grocery store for as little as it cost for one of their seven piece dinners (roughly $10). Tons of bloggers and ordinary folks took the challenge and, armed with Joy of Cooking, common sense, and price spreadsheets, "brought the colonel down."

Now, Wal-Mart is faced with a similar challenge. Their new ads are slicker, minus the smarmy happy face, but full of satisfied families getting just what they need (or don't) for low low prices. Recently, Media Post reported that the National Advertising Division (NAD) of the Better Business Bureau is after WalMart because of its claim that it can save customers $700 a year. Wal-Mart contends that its math is good and small disclaimers at the bottom of the ad make it clear that variations are possible. However, the claim is misleading:

While acknowledging that all price-matching programs have terms and limitations that may not reasonably be expected to be disclosed in a TV spot, the NAD recommended that Wal-Mart "make its disclosures substantially more clear and conspicuous in its printed and broadcast advertising and on its in-store signage." It also recommended that it ditch the "$700 annual savings" claim entirely. "The use of the phrase "on average" does not temper the overriding message that the viewer -- wherever located -- can expect to obtain these savings," the watchdog group says in its release.

According to Retailing Today, the NAD also complains that Walmart's cost comparison study (done by Global Insight) looks at a national average rather than considering the competitive landscape of grocers throughout the nation. Indeed, Global Insight's study was designed to look at the impact of WalMart's low prices on the overall economy, but it does make the claim that customers can expect such savings no matter what geographic area they live in.

More importantly, the press generated by the BBB's complaint and WalMart's defiant attitude are more likely to be what consumers hear about rather than the methodology behind Global Insight's research. Being a behemoth, it's not likely that WalMart will take a huge hit from this gaffe, but it doesn't help their larger credibility. We've reached a point, as a culture, where defensiveness is not a successful long term strategy for gaining loyalty.

Organic Adjustments: Cultivating the Consumer

2009-07-16T14:14:00.001-04:00

Everybody adjusts to economic change in different ways. Public advocates from Oprah and Mommy Bloggers to Kraft and your favorite insurance company has suggestions about what you can do to make it through tough times, whether you're just being cautious or facing serious financial cutbacks. One thing that hasn't changed with the economy is the glut of willing advice-givers who'd like to take the place of your local community sage, your grandmother, your priest or rabbi, or your best friend. The diffusions of a global marketplace bring all sorts of goodies to your doorstep (getting tired of pomegranate juice? Get ready for at least a few of the 1,000 varieties of Indian mangoes coming to the American market). At the same time, we're not sure who to trust anymore -- especially when it comes to the food system. Indeed, the growing green and organic movements have always been partly motivated by failures of government and industry safety protocols -- and that certainly hasn't changed. But how to hold onto that steady market and establish your company as a positive force?

According to the Organic Trade Association, "Organic products represent a value to consumers who have shown continued resilience in seeking out these products... This marks another milestone for the organic food market." The spread of organics to private label brands, megastores, and your neighborhood supermarket has meant that consumers can shop around -- and according to new research by JD Power and Associates, they are doing just that. So where are they getting their information? (and, the question that's hard to answer: how are they deciding what's reliable?). Some key possibilities:

Blog, blog, blog: it seems like a truism that women in particular are drawn to blogs and other social media as sources of information. There's no shortage of advice about organics on these sites and many of them incorporate a message about the true costs of non-organic foods, the budget-saving aspects of cooking with natural foods (despite, of course, the reality that organics are still priced premium), and savvy shopping and cooking techniques (which, in fact, are the best way to "work around" the pricing issue). The Big Green Purse and other mom-friendly websites do eco-friendly product evaluations in a chatty but knowledgeable style.
Corporate websites that give good basic information along with marketing promotions. Stonyfield Farms Yogurt is my favorite example of this: people go to their site for facts as much as they go for the coupons (I'm not the only one, I discovered!). Other websites are repositories of information, especially if the product is marketed entirely on its organic pedigree. Swanson vitamins sells only through a catalogue and online, but has weekly health research articles, an informational blog, and indexical information about supplements and natural ingredients.
Your friendly neighborhood university or academic publication. The internet has opened up all sorts of information to the public access. People are as likely to check out first hand sources as they are to repeat what they heard on the news. Institute websites, press releases, public lectures, and even alumni publications are hot to capture the knowledge market. And even better if your audience is women: Vassar's Alumni magazine had a recent feature on avoiding unseen toxins; Smith and Mt Holyoke have featured "food issues" of their quarterly publications.
In-store media is a successful, but often under (or badly) utilized source of information. Supermarkets are a mixed bag for consumers, often providing a glut of advertisements and enticements without critical distinction, but they do offer the most direct place where consumers make decisions. In-store media -- especially cooking demos and tailored local content -- still stands somewhat apart from endless coupons, circulars, and print media that swallow the shopper.

According to a Packaged Facts market research report from last fall, "one lesson to be learned, that is both obvious and elusive, is that innovation and integrity are both critical to this market. This report shows how successful companies have created a mirror representing the values and demands of natural/organic consumers."

image: Vassar Alumni Quarterly (click here for more info on the toxins numbered)

Learning to Live with Frugality

2009-07-01T10:03:00.001-04:00

We’re far enough along in the economic downturn for there to be a glut of ad campaigns aimed at the thrifty consumer. From Wal-Mart and Target to Virgin Mobile and Kraft, creative copy is being funneled into the contradictory practice of getting conserving consumers to, well, consume. Most approach it as a "trust me, we’ve got bargains" line of reasoning. Some, like the recent "don’t feed the pig" campaign for tourism in Finland, have a screw-the-recession ethos that may be appealing but ultimately no more or less effective (because, after all, if you haven’t got it to spend, you haven’t got it). Although very few companies follow it, the basic principle during downturns is that steady or increased advertising (no matter what kind) almost always works.

Since as early as last fall, market analysts and consumer behavior specialists have been tearing up the population segments, scrutinizing up and down to make prognostications (is "the new frugality" temporary? Widespread? A long term trend?) designed to keep companies afloat and ahead of the game. As Tessa Wegert of ClickZ put it,

According to a survey conducted by Harris Interactive and commissioned by online coupon site RetailMeNot, consumers are likely to cut their budgets during an economic recession but will continue to spend if provided with discounts. They're also just as likely to look to the Web for deals as they are to stores. In response, consumer marketers are focusing their most recent ad campaigns not just on the bargains they're able to offer but also on the economic value they can deliver at a time when the country's acutely aware of what it's spending and where. Ads that take a decidedly cash-conscious spin are cropping up on television, in print, and of course, online. While a drop in sales is certainly cause for worry for many consumer good producers, a quick glance at the history of our culture says we’re a long way away from the death of consumerism.

Journalist Lauren Weber takes a more nuanced approach in her forthcoming book, In Cheap We Trust: The Story of a Misunderstood Virtue. Looking back through American history, Weber finds a deep ambivalence about spending and saving running through our culture, from Ben Franklin to John Maynard Keynes, Booker T. Washington to freegans and eco-conscious conservationists. While advertising, object obsolescence, and status issues certainly contribute to American’s lack of frugality, Weber reminds us that there are plenty of other factors at work here (deregulated markets, stagnating wages, inequality, and financial illiteracy among them). The key point here is that thrifty impulses wax and wane and co-exist with more expansive attitudes about consumption.

Many current marketing pitches have a bit of a frantic edge, hinting that the world might crumble if consumers don’t buy the new improved frugal (or anti-frugal) message. There's always some consumer disbelief when marketers are pushing virtuous spending. One of the reasons green campaigns have remained successful is the impression that there’s positive embedded in the potentially negative –the pleasure of getting something that also gives back mitigates the pain of paying. In the end, we’re still all consumers – the question for us and for marketers remains, what kind of consumers do we want to be?

pig image: Finnish ad campaign featured on NPR's Planet Money

Supporting Sustainable CPG

2009-06-24T06:37:00.001-04:00

A few weeks back, the Food Marketing Institute released findings about changes in consumer shopping patterns. While the main thrust of the study was a breakdown of the stages that shoppers go through when coping with the widening reach of the recession, it might be equally interesting to focus on what has remained consistent --and its implications for retail organization and marketing.

According to FMI's study, shoppers are still highly concerned with finding more nutrition and health information, in-store pharmacists to provide health advice, easy-to-make recipes, ideas for cooking a meal for $10 or less, and convenient placement in the store for dinner items such as pasta, sauce, bread, meat and salad. Sustainability is also still a strong consideration. According to the report: Food shoppers continue to show strong support for locally grown products, with 72% of shoppers saying they purchase locally grown products on a regular basis, driven by a desire for freshness (82%), the desire to support the local economy, (75%) and taste (58 %).

Someone must be getting it right because CPG was one of the few growth areas in the last six months. Support of core brands has been one key strategy. For example, ConAgra has increased its advertising spend to support the Healthy Choice brand, relaunched and designed to leverage consumers' increasing desire for healthier, easy-to-prepare foods. While marketing has been one key factor in this, some research is suggesting that CPG growth is also related to a shift in the way the company -- and its employees -- interacts with customers and its retail clients. One argument is that its front-of-the-house sales force has to be more diverse with skills related to customer service, strategic merchandising insights, and traditional sales approaches:

The relationship between retailers and consumer packaged goods (CPG) companies has significantly changed and CPG companies need to broaden the skills of their sales forces to meet retailer expectations, according to a new study released today by the Grocery Manufacturers Association (GMA).

Critical is finding ways to incorporate those consumer concerns directly into the basic approach of any CPG company. So how do large wholesalers with an emphasis on prepared foods take advantage of the consumer's desire for the local and the sustainable?

Large companies can no longer put all their emphasis on creating standardized brands that don't adapt to site-specific market needs. Some examples include working with more localized networks of suppliers, engaging in community programs (giving back to the Little League, for example, but more pointed demonstrating visible support of local businesses, making visible recycling programs, and advertising research and development related to food safety), and allowing the hometown producer a visible space on your retail shelf. Companies can take advantage of new country-of-origin-labeling (COOL) requirements by putting the local items up front and center in the retail display. Consider something as simple as soliciting local chefs and cooks to come in and demonstrate their recipes, first in person and then in an ongoing DOOH video display, timed to coincide with sales on the necessary ingredients (dry pasta and local fresh basil, anyone?). Blogs and newspaper columns that feature cooking like a chef -- but fast -- in local papers like the San Diego Reader go a long way towards helping consumers navigate both their needs and sustainable options.

However, despite FMI's interesting data, there's one key caveat with diversifying into more localized strategies: you need to understand the particular shoppers in your locale. Both category-focused and shopper-centric data are necessary and surveys are only the tip of the iceberg in demonstrating what's possible. As one industry insider put it, "it's hard to act locally against national research and insights." Qualitative data -- inexpensive, but underutilized -- remains the key.

Irrationality: we got it, but can you capitalize on it?

2009-05-29T12:15:00.000-04:00

William Cusick, who runs VOX, a customer experience consulting firm, has gained some notoriety for proclaiming that "All customers are irrational" (appropriately used as the title of his forthcoming book) but that marketers can still use behavioral psychology to strategize sales and profitability. Irrational, to Cusick, is mitigated by encouraging consumer loyalty at every step of the branding process.

Cusick does a great job of pointing out all the ridiculous ways that corporations organize their promotions and sales to attract new customers while ignoring the better revenue possibilities that come from more attention to your current clients. Just think of your mobile phone service contract or your internet service and you get the idea: While Cusick emphasizes findings from brain research (which feels like overcompensation -- to dress up good insights with the unassailable imprint of Science) – his real skill is at breaking down the sales experience from the consumer’s perspective and mirroring that back at retailers. I particularly like Cusick’s Twelve Steps to Improve Customer Experience, which, as he points out, are incredibly easy to implement and rely on rather inexpensive methods (such as qualitative observation, adding more trained personnel rather than technology, and mapping customer experiences).

For those who work in digital point-of-sale technology, one key take-away point is that such innovations should not be promoted as replacement for workers, but rather that employees still need to be the primary interface with customers, acting as a guide to both the services and the self-service kiosk. It’s a reminder that technology is a tool to help both sides of the retail aisle. For a great example, look at how Stop and Shop’s excursion into hand-held scanners is facilitated by employees at the entrance, throughout the store, and at the checkout. Eventually, after repeated use, customers will get used to "paying" for their items as they put them in the bag. But for now, they need a lot of hand holding -- and some of that attention never goes away. Even as shoppers more readily cue up at self service supermarket checkouts, the smarter stores continue to have enough personnel deployed near registers to help, look things up, and solve the problem even before the blinking light above can signal real distress!

Checking in on the Gap: Old Navy Riding the Waves

2009-05-27T12:44:00.000-04:00

Not surprisingly, the Gap reports drops in retail sales over this last quarter. While the company and its three stores – Old Navy, Banana Republic, and the Gap – have been struggling to return to earlier gangbuster popularity. Expansion, rapid merchandise turnover, and shifts to the brand identities were not sorted out and established strongly before the recession really started to take a bite out of everyone’s clothing budget.

In the past I’ve singled out Old Navy as an example of a concept gone awry, a good idea that went too far in the wrong direction. The last few clothing lines have not included enough interesting and basic pieces to attract the right segment of customers and, unlike more teen-upscale lines like Abercrombie or Aerie, wearing a shirt with the brand name across it isn’t signaling anything status-wise. The turn-around for styles was so fast you could buy a sweater one day and find it in the reduced aisle next week. And of course, the one you bought was already fraying. Having Old Navy be the “discount” Gap didn’t work well for Gap itself either. This year, both Gap and Banana Republic are still showing large losses. But Old Navy is pulling back: At its Gap North America division, same-store sales fell 12% for the quarter, at Banana Republic 13%, at Gap International, 4%, and at Old Navy -- the division that has been one of the worst performers of late -- the decline was just 3%. (In the same period a year ago, Old Navy's sales sank a steep 18%.)

Today if you walk into the store. there’s more actual basics being promoted – the tank tops, shorts, and flip flops that fit into a whole variety of fashion identities. One smart addition to the line are yoga -nspired exercise clothes. While fanatics of all sorts will still be decked out in brand names (LuluLemonistas we call them) , the Old Navy Athletica versions are versatile – a word I haven’t used to describe their clothes since they first opened.

This is not to suggest that the overall situation has changed – the Gap itself is losing ground, both because it’s a medium-end brand gaining a boost from celebrities wearing t-shirts to the Oscars (unless they can get Mrs. Obama to look beyond the J Crew catalogue). The consumer spending in that income bracket is getting more cagey, careful, and limited. That’s a trend that has to be considered durable, even if the recession lightens up. This is a message that’s most important for stores that depend on rapid growth, inexpensive and fast merchandise turnover, and single-category sales (clothing only versus Target, which can make up losses in one area with gains in another).

Moms After Mother's Day: Getting Beyond the Surface from Color to Culture

2009-05-24T23:10:00.002-04:00

Mother's Day is over, so that small spate of men and children shopping urgently is quietly over. Back to the basic rule of retail sales: women do the vast majority of shopping and purchasing, whether in real or web-based sites. That goes double for moms, who tend to manage the purchases for themselves, the household, and almost all the other family members. That means the mom is the gatekeeper for cleaning products, household furnishings, clothing, pet food and products, and even, surprisingly, electronics and outdoor living items. In this economy, more women may be struggling to stay employed, but interestingly they are also among the demographic groups most likely to return or start working outside the home or telecommuting. Not surprisingly, media technology and electronic resources have become even more significant in women’s lives.

“Power Moms,” as Nielsen Online calls them, are those who have young children and use electronic media for social networking, advice, shopping, consumer savings, and text messaging. Despite the wealth of information in Nielson’s report, most women – particularly women of color – feel that marketers ignore their needs. While there has been a decided uptick in the number of mainstream ads that feature African American families (for reasons so obvious, we need not mention them…), a vast majority of marketing campaigns have yet to really address the different needs and concerns of women of color. Consider how marketing campaigns target Asian or Hispanic women without consideration for the ethnic and regional differences collapsed by those categories. Or, more importantly, how these women might have something in common as consumers that goes beyond race. A simple note: the vast majority of Oprah Winfrey’s viewers are middle class white women, but her opinions and choices carry great sway among women consumers of color.

Taking account of women’s consumer habits is even more important in the current economic times. Here's one consulting firm's nine simple guidelines for marketing to women. However, despite better knowledge of segmented markets, marketing firms still seem decidedly slow to recognize that women’s retail behavior crosses similarities and differences in their outward status. For a good example, take a look at how marketers are stymied by racial differences in the social media landscape: BlogHer reported on this problem back in 2007, with a session infamously titled after one advertisers’s gaffe, “We don’t know what to do with you.” But according to Kim Moldofsky, a quick survey of women’s blog communities suggests that there is still a lack of outreach to women of color. Here’s a simple reminder: if the people in charge don’t look like their customers, chances are they’re going to have to work a bit to gain insights. This mirrors race relations in the non-digital world. Recent studies of racial attitudes and behaviors point to difficulties faced by whites who claim to want cross racial communities and friendships but find it exhausting trying to bridge cultural and social divides. While it’s clear that excuse doesn’t hold water for forging a more integrated society, it’s also a terrible limitation on marketing and sales.

One answer in the social media world is an upcoming Blogalicious Weekend in Atlanta in October, a conference designed to link blogging women of color to marketers, public relations consultants, and other advertising and brand-development executives.

Interestingly, in the M2M Neilson study, women of all races stated that they were most likely to take advice from others who had shared experiences and children in the same age bracket, two factors that were much more important than similarities in age, race, religion, or education. This suggests that marketers are really missing the boat when they presume that color determines cultural values and consumption. While it may be true in some cases, it seems clear that the complicated juggling act of motherhood and work is something many women share that can be experienced through online communities in ways that are, dare I say it, color blind? As Marketing to Moms CEO put it, “Moms share universal concern for their children, community and family…It is clear, however, that the way [women] react to the economy, rising food costs and the dreams she has for her children is impacted by her personal experiences, upbringing and ethnic background.”

Still, let’s not collapse all the differences: Although the majority of all moms have made household adjustments to cope with the family crisis, African American moms are more likely to delay major purchases to reduce shopping. Caucasian moms are using coupons and discount codes and driving less. Some of these differences are shaped by the fact that women of color are more likely to be in the workforce and are sometimes geographically concentrated in more urban areas where retail locations are scarce.

Women of all races were clear about the significance of the internet for their consumer purchases, there were some differences: When viewing advertisements, the majority of all respondents notice the product first, rather than the ad’s message. There was only a slight difference between white and black women in whether they always or frequently use a website before purchasing a product. The web is a gendered landscape, that's for certain, but marketing firms have barely begun to consider what that really means.

image of white and black barn owls from Daily Mail October 2008.

The Internet and the economy force retailers to re-think the experience

2009-05-12T10:44:00.002-04:00

I've run across a few articles in the last week or so that point to a "new" trend in bricks-and-mortar retail: focus on the experience. Now, "new" is in quotes, since obviously a lot of good retailers have been doing exactly that for a long time -- just look at FAO Schwarz, Trader Joe's, or most recently, Apple. However, for many retailers, experience was put aside when Internet upstarts suddenly made price the number-one feature of the marketplace. While it was always important in the past, the Internet's ability to conduct real-time price investigation persuaded less-savvy real-world retailers to chop off anything and everything in the name of lower costs.

It seems like some retailers are finally starting to realize that they can never win that way. Case in point:

The Brand Experience Labs notes Toys 'R' Us is pushing the retail concept further, though in a decidedly downmarket way: "Toys "R" Us is looking to give shoppers a reason to visit its stores more frequently with the rollout of the "R" Market store-within-a-store concept that provides a wide range of kid-focused products including diapers, infant formula, baby food, lunchbox items, paper goods, health and beauty items, household cleaners and more. Each "R" Market will feature roughly 1,300 items in a convenient shopping format located at the front of Toys "R" Us stores. The chain currently has "R" Markets in 260 stores with plans to roll the concept out to all of its 585 locations in the U.S. this year."

On the one hand, moving high-demand items to the front of the store may make it more likely that parents duck in for a quick purchase without having to commit to an hour of walking up and down aisles -- more if there are kids in tow. On the other, though, as BEL notes, taking the "grocery" approach might backfire for TRU, who have counted in the past on their image as the largest toy store chain to capture the imaginations of children and parents alike.

Likewise, Target just today announced that they too are trying out a new bricks-and-mortar retail approach that sounds surprisingly like Toys 'R' Us's. As Mediapost notes (via the WSJ), "Target is transforming a corner of a hundred of its discount department stores into mini-groceries stores that carry a narrow selection of products from 90% of the food categories found in a larger grocery store, Ann Zimmerman reports. It may eventually add mini-groceries to most of its 1,300 outlets as the key to its strategy to reverse declining sales." While grocery never faced the same threat online as dry goods and durables (with the brief exception the PeaPod experiment, which, a billion dollars later proved to be completely non-viable), Target and others have found it increasingly difficult to play the price game. As convenience has been something that people have consistently demonstrated their willingness to pay for, it seems like an obvious place for Target to focus on.

If companies like Target and TRU are experimenting with new ways to stand out from their competitors on- and offline (but especially on), it shouldn't be long before we start to see others do the same. After all, online-only retailers and Walmart can't wind up doing all the business, right?

Coffee, Community, and Consumers in Complicated Times

2009-04-29T14:09:00.000-04:00

M Coffee at Half Moon Bay from Half Moon Bay Review April 2009

As predicted, with the uncertain economic conditions and drooping retail sales, more and more marketing and business articles are focusing on the possible shift in consumer attitudes – the new frugality (simple is good), the suddenly cautious luxury market, and the joys of hanging out together at home. All of these “modes” are probably a reflection of some real behaviors and attitudes among Americans, but let’s take a look at one segment and consider whether these shifts really amount to something that marketing and development needs to consider today.

So, today, let’s start with coffee: before we were using the “r” word at all, there were some red flags signaling that Starbucks expected world domination was hitting its Waterloo. Dunkin Donuts and McDonalds were taking advantage of oversaturation and pricing issues to promote their own coffee, packaged in that perfect slot between “cheap” and "cool.” After all, Starbucks’ success was based on the experience of the space, the coffee, the brand, as much as it was about a really good cup of coffee. As price becomes more of an issue, customers can see the writing on the billboard (for in fact, McDonald’s has seriously steeped up its outdoor advertising to focus on the McLattes and other drinks that compete directly with Starbucks: the price wars campaign in December has moved toward showing the coffee itself in attractive photos).

If, for Starbucks, the brand focus shifts from ambiance towards value, it becomes a dangerous game of seesaw for a chain that is as much about the overall package as the item being sold. This is less so for McDs, which can make it up in other ways if this gamble fails – after all, they are a hamburger shop, despite the coffee, salad, healthy meals, you-name-it advertising. Unfortunately, for a coffee chain, it’s all about the coffee. Interestingly, the Washington Post reports that Starbucks is betting on major revenue from international sales of Via – that’s right: instant coffee (the ultimate downscale coffee beverage to most Americans).

But let's compare: many areas report that local coffee shop sales are not down -- from State College PA to Pueblo NM, to Seattle (that’s right: Starbucks’ old home location!) local coffee shops seem to be doing okay (with the caveat that there are more stores closing or not doing well in areas that are generally hardest hit by unemployment and the housing slump). Part of the reason is that these shops do more than sell coffee – food accounts for a large percentage of their sales (something Starbucks is recently considering expanding) as well as ground or whole bean coffee to take home. Finally, the significance of social and communal interaction in a local place. Interestingly, the Seattle Times reports that people who’ve been downsized in corporate jobs are opening small businesses like coffee shops. Despite worries about regular sales (and that two year startup time where profits are nonexistent), the equipment and leasing costs are low right now, making it possible for some who might not have attempted this at another time to give it a go. Despite the ways in which Starbucks has become a McDonald’s-like symbol of the homogenization of culture, one thing that’s been well documented is the ways in which the coffee chain has actually spurred on the development of competing local businesses. Capitalism occasionally works the way it was intended.

What’s important to note here is that people’s spending habits are driven as much by social as economic needs. Consider how a coffee shop – whether it’s the Panera in the strip mall at the center of town, the Dunkin Donuts near campus, or the funky locally run place – actually does become Oldenburg’s “third place,” where those who have lost their jobs, are searching for new ones, or need a cheap place for a meeting for the price of a cup of coffee. These sites provide community, something that isn’t driven by budgetary considerations.

Consider this: one of the Starbucks slated for closure is in the Oak Park neighborhood in Sacramento. Locals (including a cinema owner whose site depends on the coffee shop traffic and celebrity mayor Kevin Johnson) are campaigning to keep the store open. Mayor Johnson said he personally called Starbucks CEO Howard Schultz and asked that the coffee chain keep its investment in the neighborhood's revitalization.

Ironically, in March, CEO Schultz announced that, rather than pulling back, they are expanding in Eastern Europe and China, along with 140 new stores in the US. This week, despite a community petition and phone calls from Oak Park activists, the corporate offices announced that it was closing the store (along with 400 others in the US) to “help its bottom line.”

Some would argue that it’s not good priorities to fight for a high-priced coffee shop in an area of town that boasts high rates of homelessness, unemployment, and few jobs: indeed, perhaps it’s not what the community and politicians should be doing with their time. But if Shultz is serious about making Starbucks an investment in local environments, the great good place rather than the only alternative, they might consider it a form of brand-building: a bit more consistency and goodwill in the overall policies would put the foam back in the latte.

Niche Marketing: Tailoring the Goods as Well as the Pitch

2009-04-07T23:36:00.001-04:00

Many of the posts on this blog have talked about segmented markets, core customers from specific demographics, and good marketing design that speaks to the right audience. Smart companies develop or streamline their products for the needs of that key group, often with good PR that travels over and beyond the dream demographic. But sometimes companies have to be pushed to recognize that they’re missing out on potential sales. Ten years ago the Wall Street Journal noted that some companies were beginning to notice that people with disabilities were an important market with some disposable income. According to Suzanne Robitaille, approximately 54 million adults-- one in five Americans -- have a physical or mental disability. She argues that “People with disabilities have a combined income of more than a trillion dollars -- and are willing to spend it on products and technologies that make their lives more productive…Brands that ignore the needs of this group relinquish an opportunity to reach this growing demographic.”

Indeed, American Airlines just announced that it will run a contest for advertisements featuring people with disabilities, promoting both its own efforts to create services that are accessible while highlighting other companies too. The winners receive free advertising on the airline's in-flight network.

As new technologies make access to a wider world possible for everyone, creating devices that are user-friendly for people with physical challenges has not been as much of a high priority as it could be. And that represents a loss of core customers. Recently, the state of Massachusetts and the National Federation for the Blind, (which successfully sued Target) went after Apple for the inaccessibility of iTunes products. In response, Apple will rework iTunes U, the college and university online course content section of the iTunes music store and make it "fully accessible to the blind" by the end of the year. At the same time, as Robitaille points out in her ablebody blog, Apple has produced some assisted technologies, such as an iPhone app that provides a talking email keyboard and another that uploads glucose readings from connected blood glucose to the iPhone, which allows diabetes patients to track blood sugar levels over the course of the day. While creating specialty products for a niche market is a tried and true formula, technology companies also need to face the fact that their main products may be used by different groups in profoundly different ways. The product itself -- as well as the pitch -- needs to take that into account. For example, many of the applications designed for people with disabilities are also more user-friendly for older consumers who might find regular interfaces difficult to navigate.

For a positive example, note the marketing news about Panasonic's Toughbook laptops which have "carved out a niche among people who use computers under the most trying circumstances -- think utility linemen, the military, construction workers -- but in this age of belt-tightening, marketing executives with the brand are thinking the brand's durability message may play to a wider audience." The success of designing and then selling to that specific market has encouraged Panasonic to create a multi-platform campaign of television, web-based, print, and out-of-home ads that considers how other users might also want a more resiliant laptop. The new campaign, which carries the theme "Toughbooks for a tough world,” is being promoted in airports and on shows like "CNN in the Morning" to capture the business traveler who might not realize the advantages of a more resilient product. In the same way that sportswear and hiking gear morphs into business and street wear, the "tested under extreme circumstances" approach entices users from a slightly different occupational group. Indeed, I suspect Panasonic has not yet exploited the full extent of its crossover from successful niche sales to larger markets. One of its Toughbooks is geared towards doctors -- another group that can appear authoritative or innovative to "regular" consumers. Toughbook provides the "first fully-rugged mobile clinical assistant (MCA), will be one of its many mobile healthcare solutions innovative engineering, resulting from its own proprietary global healthcare industry research and Intel’s mobile clinical assistant (MCA) reference design. The device improves workflow and eases clinical loads for doctors and nurses, helping healthcare organizations maximize efficiency and reduce errors... [It] is a secure and intuitive platform for barcode medication administration (BCMA), vitals capture and electronic medical records (EMR) capture and review." Given the popularity of hospital-based on television, philanthropic work in the field by Doctors without Borders, and concerns about emergency medical response in disasters, Panasonic might also consider how to promote its product even more.

Change is not always good

2009-04-02T07:15:00.000-04:00

Orange juice giant Tropicana has recently been taking some flack for redesigning the packaging on what was, essentially, already a successfully functioning brand and look. Pepsico, its parent company, recently announced that after less than two months of the new design, it will return to its original packaging due to customer complaints. Consumers said that the new look (which replaces the now iconic orange with a straw for a more abstracted glass of juice) made Tropicana blend in with generic brands on the shelf and presented problems when hurried shoppers tried to distinguish between the varieties such as “no pulp,” and “extra calcium.” At a time when private label brands are surging and an item already has a strong brand image and core customer base, this definitely wasn’t a great move (especially when the volume of complaints was not that huge, but they were from people who labeled themselves as long time brand users).

Interestingly, the actual packaging differences are not enormous: the color scheme, the single color item emphasis, and the logo offer some carry-over from the original design.

But perhaps the marketing folks at Pepsico misunderstood the power of its original design in relation to the place Tropicana holds in its customers’ brand memory. You would think they’d have learned their lesson with the recent trouncing of its parent company for re-vamping the Pepsi logo to be more in sync with the Obama “O” and piggybacked off of its message of hope and, well, change. While the change brought media attention to the brand, it wasn’t the kind that marketers had in mind.

Another recent change that’s also been universally disliked by users is the new Facebook interface. While logo changes are mostly for cosmetic and visual appeal, the complaints about the new Facebook, while not reducing its phenomenal growth in any way, means that users will have to adapt in more interactive ways. Interestingly enough, the petition against the new Facebook, signed by almost two million people, is of course, hosted on the Facebook site itself. The COO of the company talked about the interface as an evolving platform, always in the works and that they are interested in taking users’ concerns into consideration with each new iteration. While not a perfect incorporation of consumer feedback, it’s probably the right tack to the take for this kind of product.

Some manufacturers have gone one step further and gotten customers more deeply involved in the actual package design process. Stoneyfield Farms redesigned its yogurt packaging and logo--- although they’ve already finished getting input and made a choice based on it, still asking its online community to rate the various choices. Their online poll is a bit stilted, but it has the nice feature of allowing survey respondents to invent their own answers and then have those answers integrated into future version of the survey. Not only does this give the brand more of a transparent image with its core customers, it fits with the overall presentation of the company as engaging a larger community of consumers who buy Stoneyfield as part of a commitment to a particular lifestyle and set of values. Perhaps if Pepsico had paid more attention to those kinds of sociometrics, the desire for change would not have hit them quite so hard.

Candy is Dandy

2009-03-30T07:06:00.001-04:00

What sells? That is the bottom line in retail, but it’s also a huge question in turbulent times. While President Obama’s economic advisors work hard to convince the public, investors, and the world that we will return to productivity and consumption, even they can’t completely answer the question of what products, services, or goods will be the key items in the new, post-fiscal-traumatic-stress market. But here’s a pretty interesting answer:
Candy.

Well, yeah, probably not the first item that came to mind (imagine the headlines: “Hersheys Saves American Economy”).

But despite the hype about drastic and dramatic change, some aspects of recovery are necessarily conservative. And what’s more conservative than comfort foods? The recent surge in candy sales (The Times reports an 80% increase since last year in one major Chicago candy store) can be seen as a sign that folks are anxious, eating what makes them feel better in anxious times. Candy is always a good bet -- especially on what seems like a bad day that keeps repeating -- notwithstanding the things I'm sure my nutrition-savvy friends will say about sugary sweets adding to hyperactivity rather than calmness, but hey, that’s background noise.

The cultural history of sugar is as both luxury and necessity. The great anthropologist and author of Sweetness and Power, Sidney Mintz, points out that by the 1500s, sugar production was already pre-industrial in the New World, which generated a whole host of other industries, including the tools and gears, molds, and iron casts used to refine the substance and food production (think: canning). Within the next 200 years, Europeans colonized the Caribbean, imported slave labor from Africa (after wiping out much of the indigenous population), and produced sugar in large quantities that could be shipped back to be consumed by the working populations who were fueling the industrial revolution on that side of the Atlantic. As Mintz points out, what was once a luxury item soon became a necessity for survival (most workers subsisting on sweetened hot tea or jam and bread, foods that provided energy for long days of factory labor). But sugar retains its connection to luxury, with its use in desserts and confections. Nobility were no longer the only ones to have their cake and eat it too.

In terms of today’s sweet tooth, candy may be a quick pick-me-up for difficult times, an indulgence and a necessity that most people feel they can still afford.

And finally, there’s that whole pantheon of choices. American consumers have been deeply indoctrinated in the value of choice. When asked what makes someone or some thing American, my students almost invariably answer, “we can choose what we want to do, how we live, and what we eat.” Food marketers in particular have had to hone the message of variety – a type of Oreo cookie for every mood, every personality, and every season – in order to keep selling when it’s possible to have fed the world three times over with the excesses that generally flood our marketplace. Having wholeheartedly taken that message in, the shift in attitude can be a little rough for some consumers: yes, people are suddenly saving more, making frugality sexy, and adapting to the green “less is more” mantra. But does it mean they have to give up variety everywhere? The endless pleasures of a fertile marketplace? An inexpensive and satisfying treat? Not in the candy aisle! The last ten years have seen an explosion of types of new candy and re-introductions of old favorites. The candy section in many supermarkets is the last refuge of those 70s co-op bulk bins, no longer filled with dry lentils and granola, but colorfully bursting to the brim with Smarties, Mary Janes, Starbursts, and Jelly Beans.

But as for Hershey’s saving the economy, don’t bet the last of your nest egg just yet. Questions about its stock value, mergers, and steady sales after the last of the big candy holidays (Easter) suggest that you might be better off buying a few bars to sooth the soul and waiting to see if demand is more than just a recessionary sweet tooth.

Marketing milk and detecting demographic differences

2009-03-12T21:28:00.000-04:00

By now, almost everyone is feeling the reverberations of the economic crisis, whether immediately in their wallets or less directly through stress – and smart marketers have been attending to these shifts, designing campaigns that demonstrate what a good value one can get by shopping at WalMart or eating at McDonald’s. Most of these campaigns are spun in a positive fashion rather than blaring red sale signs (except of course, Circuit City, where it is already too late to resuscitate).

But not everyone is worried about the economic crisis in the same way nor shops in the same way. Even before there was an official crisis, we suggested that retail markets were not attending to the differences between consumer segments. As the low income category grows in all directions, IRI (which has been exploring this demographic group since 2007) helps track, categorize, and explain segments. While their catchy names for population segments seem a bit arbitrary to my skeptical eyes, the study does show some general trends and highlights the need to see differences even when they resist categorization. For example, many of the people they surveyed are more interested in good values than in sale items. However, price is only one factor in how they choose stores. Issues like health and well being, family and media use vary across the age cohorts, regional pockets, and cultural differences based on race or ethnicity.

Although we can critique the idea that baby boomers (a group that spans a huge age range) have anything consistent in common, we do know that those who are closer to retirement age are obviously more concerned with investment, savings, and health. Other huge aggregate segments like Latinos and African Americans seem consistently worried about managing and keeping full time work. For most of these groups, family is extremely important, but younger low income shoppers worry about more debt than savings and are more focused on friends.

In marketing to these groups, IRI suggests that less is more – less variety and category assortments, but also having stores that are open more hours to accommodate different work schedules, accept many forms of payment, and offer guarantees for store brand products (the last one comes up frequently in qualitative interviews: people buy brands only if they trust them. Being on a budget means that any risk with a new brand is a huge budgetary consideration. Guarantees take out some of that risk.). There is a strong interest in healthy foods and dollar store bargains all in the same mix. Today almost anyone can fall into the lower income shopper category (hence its lack of usefulness as a broad rubric), but it’s clear that there’s room for thoughtful promotions, product innovation, and strategic marketing within that framework.

Take this example from the food industry: according to Natural Specialty Foods Memo, Dean foods, the largest dairy food processor in the US, is predicting sales growth despite the economy because milk prices are down (good for them, not good for the dairy farmers, not good for everyone in the long run). Its line of organic products – including organic milk and soy milk – has successfully expanded into non-traditional venues like convenience stores and pharmacies. As NSFM points out, people have a strong brand association with Dean products like Silk and Horizon, so sales remain steady. However, even as the price of milk drops, the cost to consumers of organic milk will not be dropping at the same rate. At the same time, the research shows that middle to lower income consumers are equally interested in organic and natural foods, even as they are forced to cut back on some organic consumption. Fresh products rank consistently high even as consumers cut back in other areas, such as packaged organics.

So, the challenge would be to generate and market a line of lower cost organic milk. Right now, a gallon of organic milk is still 50% higher than its regular counterpart. According to NSFM,

“That's a stiff premium, which is why many consumers just can't afford to buy organic fluid milk in this economy (and often in a good economy) even though they want to. The core organic milk consumer still seems to be sticking …but there is significant overall sales erosion in the category as evidenced by recent data. A slightly lower organic milk retail price is a good goal."

Keeping the price in line and selling in venues that are accessible to everyone is one way that companies can corral that elusive but necessary low income dollar, segments or not.

Corporate Social Responsibility Revisited

2009-03-03T07:29:00.000-05:00

Previously in this blog, I’ve talked about the continued importance of corporate social responsibility even in the midst of retail downturns. Indeed, a fair amount of research has shown that consumers like companies that combine charitable donations with purchases; green practices that demonstrate conservation and renewable resource use; and product development that highlights an awareness of the community of users.

In some respects, it doesn’t matter if CSR is done out of selfishness (brand image) or altruism (a clear guiding philosophy embodied in corporate practices), but in other ways companies that appear to engage in corporate social responsibility for purely selfish gain are less enticing. Still, as companies like Proctor and Gamble have shown, it should definitely be highlighted so that consumers know what they’re getting.

A recent study reported in the Washington Post goes one step further and examines whether CSR helps or hurts companies. The Post reports on a study from July 2007, by Goldman Sachs which found that sustainable companies outperformed the market, often by significant margins. The WP tested that argument by creating a ranked list of 498 companies that represented -- according to IW Financial -- a broad view of socially responsible behavior… What they found: “In the worst economic turmoil in decades, when investors had every reason to shed pretensions of political correctness, companies that put time and energy into behaving responsibly seem, thus far anyway, to have performed no worse than those that didn't.”

One interesting point that the Washington Post research reveals is that companies that appear at the bottom of the SR list were companies that are a bit more insulated from consumer demand – and yet they were also trying to engage in CSR, whether as part of their core business model or as a way of maintaining profitability (i.e. energy conservation) during tough times. The ambiguity of what “counts” as CSR makes it a bit hard to put an enormous amount of generalizability on any list, but the point is that more companies are engaged in CSR than not. As the Washington Post puts it,

“Since their products are in demand whatever the state of the economy, these companies are largely shielded from the vicissitudes of consumer taste; whatever these companies actually think about the norms entailed in CSR, they've decided they have no choice but to play along, recession or no recession.”

As Intel chairman Craig Barrett told Fortune. "We look at our CSR activities in pretty much the same way: you can't just do them in good times and then just forget about them in bad times and hope to get any results."

As one analyst put it, "leadership on corporate responsibility is not like a spigot that can be turned on when things are going well." CSR for long range planning is key.

CSR, whether or not it’s highly visible to the consumer up front, will be increasingly important as the less-savory business practices of the financial industry come to light and as companies are forced to make decisions about how to survive the recession.

Sticky Situation Suggests Selling Safety Up Front

2009-02-10T17:43:00.000-05:00

The recent peanut butter fiasco – in which salmonella was found at the point of production and hundreds of products were recalled – brings up some sticky issues in retail marketing and consumer behavior (yes, the pun was intended. Sorry). Even with contemporary concerns about peanut allergies, sales of peanut butter remain consistent and high in America. Like macaroni and cheese, pasta, tuna, and other pantry staples, peanut butter seemed recession-proof. But concerns about food safety are another matter altogether. Given that Americans consume an enormous amount of peanut butter and that this is one of the largest food recalls in recent history, the food industry has a bit of a problem on its hands. The New York Times reports that companies are taking some defensive measures.

“The drop-off is so striking that brands like Jif are taking the unusual step of buying ads to tell shoppers that their products are not affected, and giving them a coupon to make sure they do not learn to live without a staple that almost every child loves — and more than a few of their parents, too.

While food companies are working to stop the drop, it might be worth considering this as a good object lesson in marketing: consider what’s going to be most important to consumers in the near and not-so-distant future, when their dollars are stretched and confidence in corporate entities wavers with each step in the process. First, health is what we could call a “super value” in American society – it supercedes many others and intersects with our sense of rights and entitlements as citizens and consumers. Health concerns are partly why many people shift to organic and green products, maintaining those practices even when budgets are tight. When we’re dealing with food and safety concerns, people exhibit a combination of desires: individual control and energy spent on well-being combined with a sense that government and other institutions should protect them from the most egregious risks. According to policy and industry experts, we're going to see more of the latter in the future, especially with new concerns about "bioterror."

While there’s a whole host of complicated reasons why the salmonella outbreak happened – and we will, in all likelihood, see renewed vigilance from federal agencies who supervise the food industry as well as new mechanisms to trace the sources of problems more quickly - it behooves marketers to consider pro-active marketing that touts their compliance and engagement in national food safety standards. In some cases, it makes sense for industry to construct and enact its own protocol -- but in the case of food, it will be more and more important for companies to also align themselves with national directives.

Bringing People Back In: Advertising, Technology, and the Personal Story

2009-02-05T11:28:00.001-05:00

Everyone loves a good personal story, especially if it has elements that ring true and speak to common interests, human pathos, and the usual triumph over adversity. Advertisers know this, but they often consider their own imaginations as the prime source for good stories. That’s like a novelist who locks herself in a room, endlessly mining her own biography well past the first few novels. Enough already, we think.

Rather than chase their own tails in search of a storyline fit for an ad campaign, advertisers are beginning to put two and two together: the first part is knowing how to find human drama in real life experience and the second is giving consumers and citizens a sense of control over how they present themselves, how they interact with products and technology. The best of these are integrated marketing campaigns that include posting to websites, print and media ads, and social media.

Here are some examples of what I mean: the old version is the “personal testimony” –you know these ads ("how I lost 145 pounds eating turkey subs…") But more significant are the ones where the ad – or the site where the ad is generating attention – is not as intensely focused on the product alone.

The now-classic version of this is Dove’s Campaign for Real Beauty, which began in 2004 as a straight media format, but showed ordinary women celebrating the diversity of body types. Women posted stories and sent in photos; Dove’s site included space for commentary and has morphed into an activist campaign to help women of different ages develop self esteem and respond to unrealistic portrayals of women’s bodies in the media.

A less successful version was Microsoft’s Life Without Walls campaign (“I’m a PC… and I’ve been turned into a stereotype” featuring a John Hodgeman-like spokesperson who then gives over to vignettes of many different people using their pc…) which had potential but felt scripted too closely to its competition and also gave in to rumors that many of the spots on the commercial were created on Macs… The site itself has great stories, but it functions too defensively in favor of the product and less positively in favor of the terrific stories.

For an upcoming example: athletic gear maker Adidas is giving women a chance to star in a new campaign with WNBA basketball player Candace Parker. According to recent news,

The company is hosting an enter-to-win promotion, starting today, in which women can share stories about training struggles and successes. Three entrants whose stories are chosen will star in the ads. Throughout February, consumers are invited to become the new face of the "Me, Myself" campaign by uploading their photos and stories to www.adidas.com/women. They can invite friends and family to vote for them via an online widget that can be attached to one's Facebook or other social networking sites.

Another interesting version is Nationwide insurance, which has a version of that’s focused on Black History Month. The centerpiece of the campaign is a site, www.nationwide.com/mylegacy, where people can post their significant moments of personal achievement within their African-American heritage. The site allows people to share stories, family history, and photos. The company's presence on the site is subtle, which also adds to the imprint of sincerity.

photo credit: "Dad and Four of Five Sons, August 2008" by Jame C.E., Tignall Georgia on the Nationwide "My Legacy" site.

Back to Natural: Focusing on Functional and Generating Generational Sales

2009-01-30T07:42:00.000-05:00

Yogurt’s a mainstay in our household – a regularly purchased product – and we’ve had a fair amount of brand loyalty over the years. Originally a local brand in New England, Stonyfield Organic went over well when there were small kids in my house, since it could be sweet, smooth, and without artificial ingredients. It wasn’t my kind of yogurt – not tart enough and a bit too gelatinous – but it’s better than a lot of what is available in your average grocery store. Recently, yogurt brands have been expanding out again (beyond the unfortunate direction of looking too much like a bad version of dessert, from the turn-your-tongue-green and sell me a cartoon character to the what-is-that-crunchy-chocolate-crap anyway) now there’s a renewed interest in yogurt as an actual health food --- priobiotics are one of the best selling functional foods out there. And greek yogurt –the “real” stuff with a richer texture --- has gone mainstream, too. I’m still buying the Stonyfield and a greek active culture yogurt for our regular use, but I’ve stood over the “probiotic” ones for a while, contemplating a taste. So far I’d resisted because they only come in the tiny packs and I'm suspicious that the benefits have been inflated. But the ad campaigns are definitely wearing me down, as I see Jaime Lee Curtis hawking the stuff with a big smile. The clincher was when I was offered some at a hotel breakfast bar this weekend, which I happily ate, especially when it had the words “ALL NATURAL” written across the top.

In the retail food and beverage market, natural and functional seem to be steady sales and growth areas. Although “natural” has a vague and watered down meaning, it’s clearly become more meaningful to consumers than “fortified,” “low-calorie,” and “low-fat.” According to the Mintel Global New Products Database, "Food and drink manufacturers today realize that natural and pure have become healthy eating ideals, as people look for holistic, genuine nutrition they can trust." Functional foods also have that edge – they have the tinge of science and nature all in one (Kraft has a LiveActive Chewy Granola Bar that smacks of healthy snacking while providing the consumer with all the fiber and probiotic culture you simply can’t find in potato chips). Ethical (eco) foods are also still a growing concern among consumers, so add that in to the mix.

I’m not Gen Y by a long shot – my kids and students are, though – and their food preferences match up with the trends described above. The Center for Culinary Development and Packaged Facts did some qualitative studies and found “their penchant for customizing foods through adds-ons or mix-ins (the reason they love fajitas and other "build-it-yourself" foods); their dedication to local, organic, fair trade and vegetarian/vegan foods (reflecting their belief that food choices can make a positive difference in the world at large); and their firm belief in the value of health/wellness and functional (including anti-aging) foods and beverages."

Sure enough, I looked around the classroom the other day and saw three women eating the same yogurt I’d had at the hotel – and the ones I bought for myself are mysteriously disappearing from the fridge awfully fast…. Honestly, the one I actually tasted was good, but until the science catches up with the marketing (or I magically become Gen Y), I think I'll probably go back to my regular brand.

image and an excellent analysis of the yogurt health claims from the great science magazine Inkling's Inky Circus Blog.

Do You Think “What You See” Influences “What You Get”?

2009-01-29T12:32:00.000-05:00

If not, you might be wrong, as Evan at Storefront Backtalk points out in an excellent blog post.

We know the statistics: Wal-Mart's in-store TV network is now the 5th largest broadcast network in the US, after NBC, ABC, CBS and Fox. We know that YouTube and social video sites are at the top of the pack in terms of traffic, loyalty and "stickyness." And we know that "kids these days", say anyone under 35, are tuning in to video sources on their cellphones and PDAs while on the bus or train, in class, and at work. While all of this distraction might have kept people busy, and thus not spending money, interestingly, “among the benefits of videos touted by web retailers are a lower
number of abandoned shopping carts, reduced return rates and higher
sales,” said Jeffrey Grau, eMarketer senior analyst. Further:

[I]t’s clear retailers are just beginning to understand
the sales power of in-store videos, which is nice, because consumers
are just starting to understand the informational power—and, yes, the
convenience—that well-done videos can offer. Will these two trains
meet? And I do not mean in a Gomez Addams model train set kind of way.
The economy may also play a role. I’m hesitant to say that, because columnists, marketers and politicians (how’s that
for a trustworthy group?) today seem to find in the weak economy the
magic answers that will explain everything. (”Traditionally, Brussels
sprouts are not big sellers in school lunch programs, but with the way
the economy is headed, that’s going to change.”)

The question I have is whether there's a causal relationship between video viewing habits and purchase intent (or brand perception, or any other goal/measurement of success). Are video watchers naturally inclined to be more accepting, hence their attitude toward watching the video in the first place? Or are we simply seeing the self-selecting dynamic play out (as Evan notes himself)? Or maybe it's novelty. I guess I'm wondering how much selling the video itself is doing, and how much is coincidence.

Any thoughts?

The Web as The Source: Consumers, Information, and Trust

2009-01-29T11:11:00.000-05:00

As we’re poised to watch a whole slew of expensive Super Bowl ads, undoubtedly focused on entertaining and emotionally enticing viewers, it’s worth stepping back a moment and considering that as fun as these ads might be, lately most people are making purchasing decisions using their brains and not their feelings.

Whether you consider this a new insight or a basic tenet of human consumption in the market era, consumers are becoming more focused on gathering information about products and brands. To me, it’s no surprise, but the accessibility of knowledge via the internet and social networks makes this a whole new ballgame for marketers and retail sales. Certainly there’s a glut of information out there -- and people struggle to decide what counts as an authoritative voice to guide them through purchases. (You can even see the Madoff debacle as an extreme example of how easy it is for the unbelievable to appear ordinary). One result of the current economic situation is that discernment is rising to the top of desirable skills for consumers. No one wants to make mistakes when they’re on a tight budget.

In a recent survey of consumer micro-trends, Penn, Schoen, and Berland Associates find that consumers no longer trust television ads or news as a means of gauging a product – and they’re more likely to trust online sources than store clerks for information. Again, no surprise when most retail outlets don’t work to create the sense that their sales force is there for the consumer rather than the company line. As I’ve pointed out in prior posts, those that do (Apple, for instance) are more apt to generate consumer loyalty. Blogs that provide retail insights (like this one, we hope!) are also a growing influence. Not that we have a buyer’s revolution on our hands, but it’s about time advertisers jettisoned their outdated notion of what consumers are really like.

Just to keep things in perspective, keep in mind that the micro-trends survey finds that most people are spending less than half an hour in product research online. That’s not a huge amount, but it also probably depends on the item in question. It also appears that it actually works when companies don’t presume that consumers are ignorant of technical information. Penn et al explain:

“Information-seeking is not just an activity, it's a way of looking at the world. New info shoppers are proud of the progress they have made in putting facts over pablum. More companies should treat their customers as Dyson did and let them in on the secrets of their unique success. And they should invest more than ever in helping form their consumers into citizen corps, arming them with PCs, cameras and even asking them to use the phone's new video cameras to document their product usage and put them online.”

The biggest obstacle in advancing a new approach seems to be the antiquated notion that an informed consumer is an unwilling consumer. Trust, it seems, is a two-way street.

Image source: Smart Shoppers in the 1940s, The National Archives.

Marketing Up the Scale: Foodies as Economic Indicator

2009-01-14T13:31:00.000-05:00

As a writer and a market analyst, I am working hard to avoid using the word “recession” or even the less ominous phrase “current economic climate” when describing what’s happening in the retail world. Perhaps until things change, we can just reach a mutual understanding that this is the context in which we’re all working?

Sounds good.

That said, there are some interesting marketing trends reaching for two segments of the market – those who are somewhat insulated from current conditions and those who are affected more directly by a “fear of falling.” In this case, I’ll focus on the upscale side.

Food purchases are some of the best indicators of people’s attitudes about spending. Certainly restaurant-going is way down and there’s a fair amount of concern in the hospitality industry about who – or what – will survive the...well, you know the phrase. The new President’s economic stimulus plan (here it is in full detail) has retail and hospitality high on the list of industries that ideally will receive some help. But general food expenditures, outside of restaurants, remain robust in some sections of the market.

Despite a very recent spike in Baby Boomer savings, Packaged Facts reports that spending is still high among “foodies” (a term that I hate almost as much as I bet the foodies do). Natural Specialty Foods Memo also points to good sales at UK premium grocer Waitrose and other natural upscale food stores over the holidays.

Even though they end up promoting a rather frivolous-sounding label, Packaged Facts actually does a good job unpacking the segment to find that there are subgroups: Foreign/Spicy Foodies, Restaurant Foodies, Foodie Cooks, Foodie Gourmets, and Organic/Natural Foodies. Interesting though these segmentations are, they don’t translate outside the American marketplace to countries where regional cultures have a stronger influence on cuisine.

Among the many intriguing insights in their study, one point seems worth highlighting when thinking about retail marketing: even though foodies are willing to pay more for higher quality foods, they are also bargain hunters. (This goes along with our earlier blog about upscale shoppers being more effective coupon-users.) For example, Bon Apetit just featured 20 excellent wines for $10 or less. NPR reports that while some folks are still shopping based on taste regardless of price, wine sales are up especially among the less expensive vintages. (Remember the slumping restaurant industry? People perceive dining well at home as a less expensive option.)

Chocolate, on the other hand, seems to be benefiting from its association with good things in many of those foodie categories. Again, Packaged Facts finds that sales of premium chocolates remain high: from spicy (high end chocolates infused with chilis) to gourmet (premium microbatch bars) to natural (fair trade organic) to healthy (dark chocolate’s purported antioxidant properties).

The point for retail marketers to take home: Well, we can’t all survive on wine and chocolate, but many people, despite a desire to save and scrimp a bit, would prefer not to do without it. Marketing consumables as both a savings and a luxury is where it’s at.

Department Store Dreams: Fantasizing the Future from the Past

2009-01-13T10:04:00.000-05:00

Le Bon Marche and the interior of the old Samaritaine in Paris

In their heyday, department stores were “palaces of consumption,” originally modeled on the great World Exposition of 1900 in Paris. Huge, turn-of-the-century fairs and expos helped usher in the consumer revolution, beginning an era of merchandising centered on fulfilling people’s fantasies through purchases made in a dream-like atmosphere. The rise of the department store from the mid 1850s to the end of 19th century was nothing short of a major revolution, not only for business but also for all of society. In Au Bonheur des Dames, writer Emile Zola skillfully describes these exotic and new places, bursting with fabrics, furs, and frills, with Oriental carpets and curtains recreating a harem-like setting where people were drawn in by awe and amazement. To many, the department store was the home of the democratization of luxury and the fantasy of wealth.

But more than a hundred years later, things have changed and some are wondering about the possibility that department stores are at the end of their lifespan. Both the experience of shopping as a form of entertainment and the availability of affordable beauty have diffused to different sites. Even prior to the current economic downturn, hints that the department store was not fulfilling people’s fantasies abounded. Specialty stores in cities and suburbs have increased their size and scope, whether it’s books, electronics, or high-end fashion. Malls, on the other hand, which are the traditional mooring station for the department store, are working hard to stay afloat. The malls that survive are often smaller, more focused on being entertainment and recreation centers, and provide more leisure rather than shopping activities (restaurants, cinemas, fitness centers, play areas, and day spas all do well, whereas specialty fashion stores and the big anchor box stores do not).

While many critics will point to Wal-Mart as a key factor in department store decline, it seems more likely that the experience of shopping as a leisure and pleasure activity has changed. When the original department stores opened, there was nothing else on the landscape that offered the same kind of variety, exoticism, and glitz in one potentially affordable site. People went to see the window displays and merchandise much in the same way one might go to a museum or show. La Samaritaine in Paris, one of the original department stores full of the latest fashions, was unable to stay out of the red and now awaits transformation into luxury condos. Today malls must add musical fountains, interactive game centers, and IMAX theaters to draw in traffic, none of which is enough to encourage wary shoppers to come out and spend money. What remains of the dream world of consumer fantasy?: Retail shopping in urban centers; Online inspiration provides almost instant gratification (and the collective experience via social media; Speciality stores really do specialize (not a bad thing). Frankly, the world is more densely populated with opportunities for consumption.

The department store, like the mall, may be at a particularly difficult point in its life cycle, occurring at an unfortunate moment in economic and social history. It will take some innovative thinking – and some real awareness of the long-term needs of people and their communities – to resuscitate these retail icons. Whether the new palaces of consumption are real, virtual, or some exciting combination, the story is far from over.

Are you a cart puller?

2009-01-08T14:48:00.001-05:00

No, not in the pack mule sense of the phrase, but rather in the "move down the checkout aisle pulling your shopping cart behind you" sense. If so, you may be missing a big chunk of marketing messages trying to get you to make a few last impulse purchases before you pay.

That's what boutique market research firm Relevation Research concluded (and AdAge reports) after studying shoppers moving down the checkout aisle. While "pullers" as they're called (and you can count me among them) account for about 74% of shoppers, remarkably most marketing materials and POP around the checkout aisle are designed for pushers -- those folks who push their cart down the checkout aisle (why they do that I'll never know. But then, I'm a puller). The critical takeaway ias that, "The front of the store is a department, accounting for 1% of sales or more." That's according to Nan Martin, a co-founder of Relevation, who continued, "It's designed for consumers to make impulse purchases as they push through. If you're pulling, your back is to the merchandise most of that time."

I can see this kind of information putting retailers in a bind. It's definitely not intuitive or "pretty" to have POP and other promotional materials face backward. And while many displays are designed to be shopped from 360 degrees, few visual aides are designed to be seen from 360 degrees. And if you decide to simply double up the number of ads in hopes of attracting the attention of both pushers and pullers, it's going to start looking very noisy, very quickly.

On the other hand, one must imagine that retailers are happier knowing what's going on than not, right?

Right?

Tags: shopping, retail marketing

If the shoe fits: spending less, selling more, and doing good

2009-01-02T08:35:00.000-05:00

Surprisingly, as I look back over what I’ve written about for In-Store and Retail Media News, I’ve missed one topic very near and dear to my heart: shoes. That’s one that perhaps stereotypes me as a woman shopper (although not of the Carrie “Sex in the City” Jimmy Choo type – I’m more of a Columbia sportswear/Dansko kind of gal). But shoes are a great gauge of retail market sales, so I’m happy to find something to say about them as the year winds to a close.

Brandweek just profiled Zappos.com as an online shoe company that’s done exceedingly well with little to no advertising budget. Indeed, the biggest print ad I’ve ever seen for Zappos was no more than a three-inch sidebar in the New Yorker. Word-of-mouth and excellent customer service are the key factors that make Zappos successful. Indeed, my own retail happiness comes from knowing that I will be treated honestly and decently by whomever I talk to if I call to ask about an order or email a question. I’ve not had the pleasure of a bar sitdown with CEO Tony Hsieh, like some other customers have, but it’s not outside the realm of possibility, whereas the ten things I’d really like to convey to the executives at the Gap, Target, Starbucks, and Apple will probably only ever make it as far as this blog. There’s a lot of hype about social networks and retail sales, but Zappos is one of the few companies where it seems to actually work. Partly it’s the item in question: shoes are deeply personal but highly coveted fashion items that are necessary and ultimately functional (okay, well, for those who have learned the secret to walking in those Manolos, that’s not true). Partly it's good sales strategy that's accessible to even the small scale retail business. If you want to know more about how Zappos manages to do what it does, for a mere $39.99 a month you can subscribe to their new video question and answer service that’s a lot cheaper than a marketing consultant firm.

For another shoe company of more modest means and goals, take a look at Tom’s Shoes. I have been a fan of Tom’s for a long time. They make a single product in a million varieties and have a single important mission: to help shoe the world. Tom’s makes a stylish sustainable shoe (not Jimmy Choo or Dansko stylish – more “I’m a yoga goddess” or “I’m Brad Pitt and I can wear whatever I want” stylish”). Even if you personally don’t love these (and I do), you probably know someone who does and you’ll love the reason why Tom’s wants to shoe the world. For each pair of shoes sold by Tom’s Shoes, the company donates another pair to a child in a less developed country where podocondoitis is common. This disease, transmitted through high levels of silicate in the soil, which travels through the bloodstream to create lymphatic problems, is completely avoidable if people wear shoes. Tom’s has brought thousands of shoes to South Africa and Latin America. If you still haven’t finished your holiday gift giving or if charitable acts are part of your New Year’s resolutions, you can help Tom’s reach its goal of 33,000 shoes sold before the holidays end. Like its big corporate counterpart, Zappos, Tom’s Shoes makes great use of Facebook and MySpace, where fandom helps spread the word and provides excellent social network buzz about these cool shoes. There's a lot of marketing noise about the power of cause-based sales, but Tom's Shoes really walks the walk, as they say, in that the company's existence is centered on the cause as much as on the sales. Starbucks will still go on selling coffee long after their Red marketing foray into ending AIDS in Africa. But Tom's will always have a purpose AND good shoes!

All in all, here’s hoping you stay well heeled and inexpensively marketed for the new year.

Happy Holidays Without the Hype

2008-12-31T13:46:00.000-05:00

There’s Chanukah and there's Santa at my house, so we have a lot of gifting going on – Santa usually ends up with one serious present to the girls (believers, still, so let’s hope they’re not among my loyal readers), while Chanukah is a lot of smaller things, alternating between fun and necessity. I’ve been out and about observing the shopping situation here in western Pennsylvania since prior to Thanksgiving and it’s been slow, no surprise. But just as a recent NRF survey indicated, there seemed to be a late surge with a lot of last minute purchasing going on, if my experiences were at all typical.

Many shoppers heading out the last weekend before Christmas indeed found the stores and malls fuller than they had all week prior. The deals certainly got sweeter too, with online coupons and direct mail flyers pushing more and more discounts as shoppers got down to the wire.Interestingly, my observations and personal experience follow right down the line with NRF’s survey information about what people are buying. Here are some notes to mull over while sipping on the last of your holiday eggnog or eating latkes or whatever edible pleasures your holidays bring:

Clothing seems to be doing okay (about 48% of shoppers told NRF they’d already bought some), especially as the big retailers like Macy’s, Kohl’s, Target, and Old Navy barrage households with even deeper discounts as we get down to the wire. Advertising pays off here, as do loyalty discounts. Most purchases seem to be happening in the discount aisles, away from the frivolous and the "five-minute fashionables."
Books, cds, dvds, and video games are second at around 40%. Again, preferred customer discounts and email offers seem to be luring people into the big chain bookstores, as both Barnes and Noble and Borders had customers lined up with printed out coupons all this week. People mentioned these items as reasonably priced, perhaps more thoughtful than clothing, and definitely something that didn’t fall into the “necessity,” category, but also didn’t feel frivolous.
Electronics: sales are down (24%) but there’s a lot of online research going on behind those purchases. Santa’s bringing some small electronic gadgets to our house, since the price of video and digital cameras have gone way down and there are good comparative deals to be had, even if you weren’t willing to risk it all at Circuit City. The electronics clerk at Target mentioned that his customers seemed to be doing less in-store decision-making, ponying up to the counter with the information in hand.
Gift card sales are way down. Not surprising, given the vast number of store closings that make people nervous about sticking their loved ones with a useless piece of plastic (example: Sharper Image). Even American Express seems shaky to some people nowadays. In our household, a few iTunes cards seemed a safe bet for music teachers and college-age cousins.
Online Shopping Rules! Everyone I know has bought something from Amazon or eBay this season because of the bargains, lack of crowds, better variety, and good ideas. That’s a first. It’s also more of a topic of discussion, with people trading tips in person and, of course, on social network sites. “When heading online to shop, consumers are increasingly web-savvy in the way they look for bargains: 85 percent of online shoppers use tools or websites to find good deals online… they use price-comparison websites, online-coupon websites, online advertisements, bargain-tracking websites and shopping-themed social networks,” according to the Marketing VOX Web site. Art Technology Group, Inc. claims that close to half of the people they surveyed would shop online for gifts this year, while 44 percent said they still expect to frequent stores.
Chocolate, chocolate, chocolate. Watching people's carts, even with all the careful shopping, it's clear that indulgences are still important. I venture to guess that they’ve gotten smaller and more meaningful. Everyone – and I mean everyone except my dad, who likes everything except chocolate – is getting some form of the good stuff this year. From wine-infused bars to hazelnut dark chocolate logs to simple bonbons to, my favorite, the Vosges Bacon Bar – there’s chocolate for everyone. That kind of gelt still, as they say, holds currency.

Happy Holidays, and Happy New Year!

Chocolate gelt: available everywhere. Chocolate Christmas Trees c/o The Chocolate Tailor.

Not All Shoppers are Equally Frugal, Not All Coupons are Equally Creative

2008-12-19T14:15:00.000-05:00

For as long as I’ve known her, my one sister-in-law has been an amazing coupon user. I just never really noticed it. To me, coupons evoke images of my mother in the 1970s, with her little file box full of tabs for certain items (“household,” “dairy,” “paper products,” they read). She managed the shopping for a medium-sized family on a tight budget until the '80s, when coupon use was just her routine and not a necessity. But my mom’s bargain hunting was really focused on groceries and everyday items. My sister-in-law, on the other hand, had perfected the gift buying bargain well before the current economic climate put a damper on everyone’s holiday shopping.

Back before I knew it was possible, she was using online savings, bookstore coupons, and, most creatively, Amazon.com discounts. We once got a holiday package from Amazon with the sales slip accidentally left in: she had so many discounts and qualified for free shipping that the entire 3 foot box had cost her a total of $5.00. And the most interesting thing is that of all my relatives, she’s in the most comfortable financial situation, in the high upper income brackets. As another family member put it, “well, that’s probably why she’s got money and we don’t!”

Anecdotal evidence aside, it’s quite obvious that coupon use is going to go way up in the coming year. What’s less obvious are two things: one, who’s going to be the main users and two, what kinds of coupons and special offers will work to entice very reluctant consumers to spend. The answer to the latter is complex, since the markets are multi-faceted and the full extent of the economic downturn is still up in the air. It seems likely that people will be more drawn to bargains in stores where they already shop. It’s also likely that younger consumers, who have been a steady market but are now slowing down, will have to learn some thrifty shopping skills. Here’s some other useful information: Packaged Facts has a recent study that gives some depth to my sister-in-law story.

When it comes to money-saving coupons, the highest-earning segments are most active. Coupon penetration is at 69% of all households through the early part of this year, but 46% in households earning less than $25,000--and it jumps to 71% in families earning more than $75,000. Usage is highest among those working in such white-collar functions as management, finance and administration. Also intriguing: Smaller households use coupons more than larger ones.

On-shelf point-of-sale coupon dispensers in the supermarket have been one of the most successful programs, making my mother’s file box obsolete. Here’s a lesson to be learned from this, though: Rather than barrage consumers with endless paper deals for items they don’t need, retailer should use their data to target coupons to people based on their purchasing history and demonstrated needs.

Fear of Falling? Organics, Slow Growth, and Making Too Much of Market Data

2008-12-16T10:42:00.000-05:00

This week Mintel’s research on organic foods is all over the press, especially with the catchy headline “organics are not recession proof.” This strikes me as another one of those no-thinking-involved stories: let’s start at the beginning. First, is ANYTHING recession proof? Because if it is, you should let us all in on the secret now.

Second, we run into the same problems with definitions that we had prior to the economic fear factor. “Organics” means a whole lot of things – and often, not enough to define entire segments of the consumer population. People may be hesitating about buying organic shampoo, but they’re not ready to give up on organic meat or eggs. Or, more likely, they’re cutting back on meat (organic or not!) until the prices are more in line with their current budgets. Still, it looks like they’re still buying their essential pantry items from the organic side of the fence (not much downturn in sales of Annie’s Mac and Cheese, for example…).

It’s absolutely true that, despite its current legal battle and identity switch from "Whole Paycheck" to "Whole Deal," Whole Foods is not going to show the same profits and growth it has in its pre-recession history. CEO Mackey claims it’s not as bad as we think:

“We have worked hard to increase the value choices within our grocery and Whole Body departments without sacrificing our standards," he said. "We believe our efforts have been successful since these departments are continuing to produce positive comps. While we saw a decline in average transactions in grocery, our average basket size was up, which we believe is a reflection that customers are making fewer trips but stocking up with more on each trip."

Here's three things to consider when evaluating the organic market:

One, it’s still expensive, especially in the produce aisle (here’s a hint to all you green consumers: shop local produce markets and shop sustainable rather than organic).
Second, a good chunk of WF’s big sales have been in regions that have experienced big population and economic growth, but are now at the forefront of the real estate crash (Arizona, Florida, and California, for example). These areas are hard hit by the recession and all businesses will be struggling a bit here.
And third, it depends on what you look at that people are buying. What's green is more often mixed in at mainstream stores now (ironic that WF is being accused of having a monopoly when some of their biggest competitors are now supermarket organic brands and the real candidate for global market control, Wal-Mart).

Although the Organic Trade Association has charted a greater price convergence between organics and conventional food (especially with the development of in-house organic brands), it’s important to note that certain items are going to remain high. Organic produce that’s not in season and difficult to transport is still selling at premium prices in supermarkets. Comparatively, organic vegetables and fruits that are locally sourced and sold in local markets generally sell for the same if not less than their supermarket counterparts. Certainly, consumers have gotten used to buying strawberries even when there’s snow on the ground, so the shift away from those products may be a general trend, not limited to oganics. On the other hand, some of these items may return to their original status as luxury goods, which would mean producing less, but selling for more.

Non-perishable organics like cosmetics and household cleaners are a more complicated question. If the price differences remain high, expect sales of the organics to drop, except in the very high end. But OTA editor Barbara Haumann points out that big companies like P&G are striving to keep their green goods in the same ballpark as their regular line. To me, the Natural Specialty Foods Organization sums up the whole situation:

Organic category sales - not including store brands or bulk sales - were forecast to grow by 14 percent in 2008, compared with increases of 16 percent in 2007, 22 percent in 2006 and 21 percent in 2005, according to market research firm Mintel International. We think the 2008 forecast is probably off by about 4-5%, meaning overall organic category growth is more likely in the 10% range for 2008.

Mintel’s study is more subtle than the headlines would have you believe. Senior analyst Marcia Mogelonsky claims, "Economic struggles will undoubtedly change the way organic food and drink is sold. But we don't expect people to completely stop buying organics… We anticipate more subtle changes, such as the formerly all-organic shopper who returns to traditional cookie brands while sticking with organic produce. These small changes will slow market growth."

Pantry staples remain solid sellers. We still load up the cart with Annie’s Mac and Cheese, some Arrowhead Mills mixes (Hains Celestial is the parent company), and Stonyfield Yogurt, all of which are slightly more expensive but brands with loyal followings, as their steady sales indicate. Stonyfield’s CEO Gary Hirshberg says it all: things may be slowing down, but "Anybody else would be envying our growth" given current economic conditions.”

Maybe not recession-proof, but certainly still kicking.

In Defense of Good Data

2008-12-15T09:47:00.000-05:00

Last week in Marketing Daily, Adrian Chedore, CEO of Synovate, made an argument for the more robust use of big data sets along with smaller, in-depth studies of consumer behavior. One of the challenges, he suggested, is being able to make use of the massive amounts of data that we are now able to collect. Putting aside my objection to reducing the full measurable reality of people’s lives via their consumption habits, it’s important to recognize that information is useless without two things: reliability and interpretation.

Reliability means we know the information is good. I know this is a standard social research rant, but every day there’s new reports touting data that proves what people want, who they are, what they buy, based on sample sizes and questionably designed survey techniques. In a frantic attempt to name and claim segmented markets, research firms will prematurely christen fragments of the population with ridiculous nomiclatures. I spend a fair amount of my research and reading time figuring out the design and sampling procedures of studies. Even the good ones tend to generalize too far out from their data. Intepretation means what ideas are being used to make sense of the data. I'm also constantly digging to make sure that the studies cited really do measure what they purport to measure. In the desire to say something new and useful, the data often gets left behind. For a good explanation of how to decide what statistics are good or bad, here's a recent broadcast from noted sociologist Joel Best on Kojo Nnamdi's radio show.

Given that, I’m in agreement with Mr Chedore, but I want to put a plug in for the most important source of data we have: one that is not generated by commercial entities, but by the government. It’s the Census. Recently the New York Times included an editorial supporting the new administration’s concerns about the 2010 census, specifically about finding a director with proven experience. The last eight years have seen reduced funding and administrative upheavals at what was once a very reliable agency.

Indeed, Chedore insists that market research's strength lies in its foundation in academic discipline and commitment to sound, reliable data. He pushes for more coordinated use of data and international comparisons – something that might be more effectively handled with government-generated data rather than across different companies. Case in point, Chedore laments the highly fragmented nature of current market research efforts. Using the Census might be an important corrective.

The census is extremely important to all of us who are interested in the demographic makeup of this country. It’s also necessary as an unbiased benchmark against which we can compare other kinds of data. In January, John Tizzi reminded the business world that the census is the best free market data around, another smart tip in lean times. The public accessibility of the data is one of the most remarkable things about it. (Tizzi’s other suggestions for “marketing on the cheap” are actually some very sound, basic research principles that companies seem to be forgetting in their constant search for something new).

So it may be smart for companies to put in a good word for the new administration's efforts to revitalize the US Census. After all, there's nothing like good data.

Map above is from Google Earth's census mapping program: it is a map of the counties in the United States colorized by median age. Lighter colors are older.

Nielsen's 2009 Outlook: When times get tough, the tough go back-to-basics

2008-12-11T10:01:00.001-05:00

Nielsen's Consumer Insight Magazine put out a set of predictions for the retail and advertising landscape next year, and as one might expect they're not too optimistic about experiencing a quick economic turnaround. In summary, they expect:

"a no-frills philosophy to kick into high gear in 2009, reflecting not just a consumer mindset, but one that is paramount to retailers and manufacturers alike, who are looking for growth in a downturn economy. From sustainable manufacturing techniques to innovative national brand offerings, the products and services likely to succeed in 2009 will be those that appeal to the sensible consumer looking for a rational benefit."

They go on to highlight twenty trends across the consumer spending board, a few of which gave me pause. Consider:

Marketers will think "renovation" as much as "innovation"

Nielsen has seen steady growth in testing of established brand restages and re-launches over time, and we expect this trend to continue into commercialization as marketing budgets are tighter. Reinventing established brands can be managed as a lower risk innovation strategy.
However, making this strategy a success requires a delicate balance of providing continuity to current buyers while offering sufficient novelty to attract new triers.

Ad spending will be tight.

Nielsen reported significant ad spending declines in the first half of 2008 by eight of the top 10 advertisers—down roughly 6% during the same period in 2007. As companies continue to downsize and scrutinize spending, expect these declines to continue, especially within the automotive category and with Financial Services companies. However, product categories such Direct Response Product, which increased spending 20.48%, and Credit Card Services (+18.95%), should continue to spend on advertising.

Coupon redemptions will rise.

As consumers look for more deals, expect coupon redemptions to increase. While coupon activity is actually flat versus year ago, this is positive news as it is the first time in many years that redemptions didn’t fall. As more manufacturers and retailers make it easier for consumers to gain access to coupons via email, mobile phones and in-store methods, consumers will take advantage of this cost-cutting strategy.

and

Brand prestige will be driven less by premium price.

Expect to see fewer premium-priced new products introduced into the market in 2009. However, focusing on low price may under-deliver on expectations. Marketers should look to emphasize a brand’s value proposition in new and unique ways by linking the value message to the consumer benefit.

These three, if true, will present some unique challenges and opportunities for in-store marketing experts. Price differentiation, typically considered a form of trade promotion, will probably be king for the time being, especially if the shift from brand-name to lower-priced private label or off-brand continues. But the opportunity to deliver customized marketing and promotions via interactive loyalty terminals or digital signage systems that can beam offers to a shopper's mobile phone could make them more valuable during the recession than previously expected.

Text Me Those Bargains

2008-12-10T07:44:00.000-05:00

Like some bad stereotype come to life, I find I have a teenage daughter who can text faster than lightening. She can hold three conversations at once: one with me about something she left at home on her way to school, another with her local friends about what everyone is doing today, and a third with her Massachusetts buddies about what movie they saw last week. She even has mittens with flip top thumbs, so she can text comfortably even when it’s cold outdoors.

While I’m not as fast as she is, I use texting a lot more frequently as a means of communication for shopping. We email grocery lists as text messages, send photo messages to friends to see if the color or style of an item is what they want (before they buy it), and most importantly, check in with other folks to see if a bargain item is still there, on sale, or at another store. Even without barcode scanning capacity (which some phones actually do have), the cell phone is an ideal way of instantly finding out if one store is less expensive than another.

Scarborough Research has done a recent survey of “Texters” and generalizes that most texters are young, active, spend a lot on their cell phone bills and technology in general, and do a fair amount of shopping on line.The study indicates that in cities like El Paso, Salt Lake City, Dallas, and Memphis young consumers use the greatest amount of text messaging. Further, the study suggests that there’s racial diversity among this demographic, which also shapes their consumer tastes. Market researchers are already salivating over the possibilities in “tween” and teen markets (a new study by the University of North Carolina even suggests that the cell phone text message can be used as a motivational device to help monitor teen behavior and increase weight loss!), so the minority-tech savvy market seems almost too good to be true. But Scarborough's findings about the group's interests lack depth. Michael Hastings Black makes a great point about this: if viewed properly, social media can actually illustrate a greater complexity to consumption and identity among people of color, particularly since the content is being created by the individuals rather than for them!

While there is definitely a segment of the consumer market that fits the profile, I’m not convinced market researchers should be encapsulating text message users as a consumer category “texters.” The research identifies a subgroup, one that may prove profitable to manufacturers of certain types of goods (sports events and gear, music and concerts, media-based and technology-driven items, for example). At the same time, my ethnographic observations and other cell phone use surveys suggest that texting is becoming a general part of consumer behavior, more broadly distributed across the population than this study suggests. The Nielson group reported in September that most mobile customers are receiving more text messages than actual phone calls. Indeed, they cite a 450% increase in text messaging since the same time period two years ago!) One group I almost never see texting is people 65 and older (the only exception I noted was in relation to President-Elect Obama’s campaign use of text messaging to let supporters know about such things as his choice of Vice President. One older woman said to me, “I’d never gotten one of those before!”) More than other new technologies, the current platforms for texting favor those with experience using small keys. It’s taken so long for computer screens and keyboards to be adapted for use by older readers who need bigger text, it’s not surprising that the current cell phone designs favor users with small fingers and good eyesight.

While technology marketing tends to fawn over the users described in Scarborough’s study, it would be a mistake to aim ad campaigns more pointedly towards this group rather than expanding the possibilities by paying closer attention to social media. And, lest there be a post without mentioning our current economic state, keep in mind that young consumers are not necessarily the ones who’ll be controlling the household spending as we ride through the recession.

Will convenience stores thrive or fail in the recession?

2008-12-05T10:10:00.001-05:00

Recessions can be funny sometimes, rewarding companies that are usually associated with low-touch, high-margin products that are readily available from numerous competing outlets. Case in point? Convenience stores. C-Store News noted that 2008 was not a particularly great year for c-stores, thanks in large part to very high gas prices that encouraged consumers to spend less time in their cars, and consequently, less time getting the gas that so often leads to a c-store visit. So, while the total number of stores decreased by about 700 this year, and people have been spending less on impulse items like candy and cigarettes, as Inside the Aisle notes, "two facts offer some
encouragement: consumers are driving fewer miles and stopping luxury
spending, focusing on necessary items, and c-stores sell necessities."

Because consumers are traveling less distance, going out fewer times for dedicated shopping trips, and generally finding ways to consolidate their spending, C-stores might actually see profits rise next year thanks to the lousy economic climate. That, in spite of the fact that they often charge higher prices for staple items like bread and milk than dedicated supermarkets or megastores like Super Walmart or Super Target do. Interestingly, Inside's blog post also suggests that this might be a time for C-stores to innovate, finding new ways to encourage shoppers to make unexpected, impulse purchases while filling up their tanks and grabbing a gallon of milk. Indeed, stores are experimenting with self-checkout systems (despite some research that these devices can actually decrease impulse purchases, ironically), and other time-saving conveniences to get customers to spend more.

I'm not convinced that the recession is going to be good for anybody just yet, but considering that people will always be willing to pay something for convenience, c-stores may well indeed be poised to profit from these hard times.

Meet the Wary Savvy Shopper

2008-11-26T07:34:00.000-05:00

"It's a little depressing, but if you're smart now, you'll be better off in the long run."

That’s a comment from Leonard Stiff, a chef-caterer quoted in Business Week in yet another article trying to gauge how consumers are reacting to the ongoing recession. Mr. Stiff sums up what, to me, seems like the best philosophy for both the average citizen and the average retail company. The question, of course, is how to be smart -- and indeed, the best way to do so: let customers know you think they're savvy.

Business Week’s summary points to the obvious: people are still buying enough items to keep Wal-Mart and the various incarnations of the Dollar Store afloat. At the same time, they are certainly searching for bargains and coupons, passing information along to their friends via email. And finally, the news that retailers keep staring at, like the deer in the proverbial headlights: people are making immediate cutbacks and trade offs, while postponing certain kinds of purchases indefinitely. As we've already pointed out, generics and in-house premium lines are also making a dent in brand loyalty.

Speaking with Kai Ryssdal on Marketplace, Buyology author Martin Lindstrom summed up the crisis:

“We will see that this Christmas is probably going to be the worst in 24 years. And I think the main reason why is because the first time ever we are realizing this is serious stuff. This time it's almost like we got a slap on the chin. And with that slap on the chin….. people wake up and they start to say, "Hey, I have to buy stuff differently." And what happens is people literally change stores, people literally change the path down the supermarket aisle. And they have never done that before, but that is the change we are facing right now, and retailers are realizing that."

The Center for Media Research offers some nice recent data about what people are doing these days when they go to the mall: they’re still going, as I’ve pointed out, but they’re not frequenting department stores as much and they’re not venturing too far off the beaten path. The most common comment I’ve heard, both in person and in the news, has been “no more retail therapy for me.”

So how can retailers react to the slap on the chin? From watching shoppers since mid-September, I have some tentative but I think fairly obvious conclusions:

One, people will limit their purchases to items that "matter more," both for everyday needs and for long term use.
Two, people will be deciding more carefully exactly what "matters more" and using new criteria to decide what’s worth the money. (My prediction: "green" and "healthy" will hold steady).
Three, there will be even more market segmentation: some people will be frugal because they have to be and it will be a new experience and a struggle; some people will be frugal because it’s tacky to spend when others are suffering and, well, let’s be clear: no one knows how long this will last. Others will continue to spend, but in patterns that will, at first, be unrecognizable according to current market logic.
Four, while consumers may be enticed by bargains, expect them to bring a whole new wealth of knowledge (from word-of-mouth, social media, and general on-line sources) to their in-store decision making.

Spurious Spam Savings

2008-11-24T15:20:00.001-05:00

Coming soon to a lunchbox or pantry near you... SPAM!

I mean the original Spam, of course: the canned, spiced ham produced by Hormel that was the origin of the name for unwanted email. Sure enough, stories about how frugal people want economical products, ones that smack of comfort, home, and tradition, are starting to pop up. While I expected a whole new emphasis on “comfort foods,” I have to admit, Spam was not what I was imagining.

Andrew Martin of the New York Times reports that Spam sales are up because, as he suggests, it is “the emblematic hard times food in the American pantry.” Indeed, the cultural resonance is probably strong for a whole swath of consumers, regardless of whether or not they have ever been through an economic downturn. Spam is the ultimate brand, one with history, kitsch, family lore, and practical use. Martin suggests:

Even as consumers are cutting back on all sorts of goods, Spam is among a select group of thrifty grocery items that are selling steadily.

Pancake mixes and instant potatoes are booming. So are vitamins, fruit and vegetable preservatives and beer, according to data from October compiled by Information Resources, a market research firm.

“We’ve seen a double-digit increase in the sale of rice and beans,” said Teena Massingill, spokeswoman for the Safeway grocery chain, in an e-mail message. “They’re real belly fillers.”

Kraft Foods said recently that some of its value-oriented products like macaroni and cheese, Jell-O and Kool-Aid were experiencing robust growth. And sales are still growing, if not booming, for Velveeta, a Kraft product that bears the same passing resemblance to cheese as Spam bears to ham.

There’s a bit of mixed logic going on here, though. Despite their appearance as discount foods, products like instant potatoes and Spam are not cheaper than the “real thing.” Food researchers doing recent price comparisons note that Spam averaged $3.20 a pound, whereas boneless chuck roast and spiral cut ham were selling at $1.99 in the average Texas grocery store (as of last week). As dieticians routinely like to point out, a bag of potatoes lasts longer and is cheaper than the kind in the box. On the other hand, rice and beans make the most economical, nutritious, and inexpensive meal around (and they're tasty, too).

Spam in particular is not a simple "hard times" food. In Hawaii, it is a staple item, cooked in a variety of ways (including something that looks like sushi). Based on her research there, culinary historian Rachel Lauden provides a great Defense of Spam. For the truly upscale, there's even this great example of spam sushi in a bento box (the japanese version of lunchbox that is catching on in American upper middle class households) Jell-O is also an iconic American food, morphing from molded salads into a jiggly kids' dessert. Spam, Jell-O, Kool-Aid, and Velveeta all have a kitsch factor, a reference to the 1950s, when processed foods (and the marketing behind them) reigned. As historian Laura Shapiro has pointed out, some of these foods become iconic to America (like the frozen green bean casserole topped with canned mushroom soup and french fried onions that will appear on many Thanksgiving tables this year, regardless of people's everyday commitment to the new, the regional, and the fresh). While other "food logics" may have taken hold in households across the US, these "cultural needs" will emerge more when the populace feels unsettled.

The retail marketing and sales lesson here is that people may be aiming for the economical, but they’re reaching it through a set of cultural beliefs that might not be the most direct route to savings. Certain brands that have a cultural history, associations of comfort and familiarity, and the sense that they are economical (regardless of reality) – still have a toehold in the current marketplace.

Fully Functional and Loaded... With Goodness?

2008-11-18T07:51:00.000-05:00

"functional foods” poised to expand, despite general economic food trends.

A few years ago, I had the opportunity to attend the Arnold Classic in Columbus Ohio. No, not a golf tournament, but an annual event in honor of the now-Govenator of California, featuring an entire convention center’s worth of sporting events (from the obvious body building to cheerleading, gymnastics, sumo wrestling, fencing, and my favorite, table tennis) over the course of a weekend. The weight lifting and body building contests take place in a big expo center and on break from the gymnastics competition (the reason I was there….), we wandered around, half watching the oiled and bulging men and women on stage, but more focused on the less-oiled but still bulging men and women on the floor hawking supplements, energy drinks, protein bars, candies spiked with hormones, you name it. So when someone says “functional foods” to me, this is the image that comes to mind.

In the last few years, though, functional foods have burst out of the body building arenas and GNC storefronts and plopped themselves down full force in the supermarket. Vitamin enhanced water, probiotic yogurts, and breakfast cereals with Omega-3 content take up a good percentage of the aisles next to organic and natural foods. After all, if you're already hawking one (typically premium-priced) product with a vague-but-promising-health-claim, why not put it next to all the others?

Seriously, though "functional foods" suffer from some of the same definitional problems as "organic" and "natural," it does appear from recent survey data that consumers have a growing interest and awareness of foods and beverages that provide benefits beyond basic nutrition. Whether those foods are enhanced by science or come by their "functionality" through nature is an entirely different can of worms, but for marketers, the important issue is that people’s interest in healthy products remain strong enough to vie with cost concerns. This week Marketing Daily reports on a recent study by F&G, highlighting some of the more promising trends for marketers. (probiotic yogurts and dairy drinks, enhanced bottled waters, and satiety-producing bakery products, which, so far, sound awful even when spun with weight loss marketing magic):

According to the report, consumers are shifting their attitudes towards healthier food options and are increasingly looking for products with “positive nutrition," meaning those with added ingredients perceived to offer health benefits versus the usual low fat, low sugar, low sodium options. “Functional properties, which enhance the benefits of a product, are proving to be the key to growth. This is especially true in emerging markets where consumers justify paying more money for products with added ingredients, rather than products that have had them removed,” says Euromonitor Industry Manager, John Madden.

Indeed, when I go back to the Arnold Classic this year, industry observers suggest that we'll be seeing a lot more functional foods and a lot less of the usual bad-tasting supplements. More importantly – and perhaps more deeply to the issue of a well-defined concept -- in January, science and technology publisher Elsevier is launching a new Journal of Functional Foods that will highlight recent scientific research and some retail trends. While most consumers – and many marketers – will not be slogging through the technical jargon to decide if antioxidants really do matter, the important point is for there to be a continued and respected outlet for research to support these claims. As functional foods move out of body building magazines, vitamin catalogs and infomercials, it becomes more and more important for consumers to know they have some verification of claims to health.

Sustainable Advice For Retailers and Consumers:

2008-11-11T10:14:00.000-05:00

Despite the Downturn, Green is Still Gold

As the retail markets constrict and people consider their wallets above all other factors, the question for marketers is: what do people value?

“Green,” sustainable, and organic products saw a big upswing in sales prior to the economic meltdown that started in September. But given the fact that many of these items – especially organic goods – are often more expensive than their ordinary counterparts, can we expect that the demand for organic, green and other eco-conscious labels to remain strong? After all, even retail giant Whole Foods has, pardon the pun, beefed up its economizing marketing campaigns, with a new “Whole Deal” website that provides corporate and customer tips on how to eat well on a budget (“More of the Good Stuff for Less,” is the byline).

Industry watchers like the Organic Consumers Association claim that organics have not yet felt much of a decrease in demand. In fact, many argue that green is a great way to ride out the recession: greater concerns about the dollar mean that people are more likely to spend carefully, with every eye on making things matter. In June, Environmental News Network suggested that organics remained a strong concern, particularly among buyers who had deeply integrated green or sustainable products into their lifestyles. This isn’t the largest share of the market (they estimated 20%), but it might be enough to keep it afloat. Also look for luxury green items to stay in demand, particularly in Europe, where the taste for organic and local is more deeply integrated into everyday life and even government policy. Guides for the wealthy environmentalist (like the Green Connoisseur) are banking on the continued power of both kinds of green.

Another big tie-in for the sustainable market is cause-related marketing, which remains a very strong consumer concern. Companies like Annie's Mac and Cheese, Stoneyfield Yogurt, and Vita Soy promote causes on their boxes and container lids to raise funds for school gardens and breast cancer research. Stoneyfield even allows the buyer to shape donations by choosing the environmental charity they like best. The bottom line is that consumers have high standards for the philanthropic activities of their favorite companies and are well aware of the need for collaboration between business, governments, and non-profits in an effort to solve pressing social and environmental issues. Interestingly more than 90% of the Americans surveyed believe companies should tell them how they are supporting causes, but do not feel they are getting sufficient information.

Finally, some analysts are arguing that green is economical: Marketing Daily reports on banks and financial service companies that switch to environmentally friendly practices save themselves money, while also earning some much-needed good will from appreciative consumers. Deutsche Bank goes so far as to argue that banks should invest in sustainability practices because “increased spending on green infrastructure can provide enough economic stimulus to avoid a severe recession.” Another reason for companies to invest in green now? The sector continues to grow despite the slowing global economy. According to new figures from bank HSBC, companies in the climate-mitigation business now generate $300 billion in revenues each year. But while you’re at it, do your part to save paper and read the report online!

Luxury Blues: Singing "Stormy Weather"

2008-11-10T15:35:00.000-05:00

Sometimes luxury markets have the easiest time weathering the ups and downs of the economy. After all, the people who can afford these items are often a bit more insulated from all the turbulence. This time around, however, the recession seems to be coming down hard on the whole retail parade, from the discount marts to the upscale boutiques. Even more distressing, of course, is the fact that the financial storm isn’t concentrated in one geographic area, but has hit international markets hard, too. According to the Financial Post,

Almost every stop on the retail spectrum is beginning to get hit, with reports of luxury spas starting to offer deep discounts and retailers such as Bergdorf Goodman offering free shipping as the holiday sales season ramps up early.

A quick survey of the luxury landscape suggests that people with a big stash of cash under their mattress are hording their pennies a bit, partly as a way of keeping above the potential flood waters and partly to keep a low profile. Surprisingly, in a culture that has encouraged a lot of profligate spending and visual "bling," many wealthy buyers are suggesting that it’s gauche to indulge while others struggle to keep their homes and pay the bills.

For example, a few weeks ago, Polo Ralph Lauren opened an enormous new store in Paris. At the same time, Executive Vice President Charles Fagan was quoted in the Wall Street Journal with this caution: "We're being prudent. We're very aware of our inventory and expenses."

Note though, that most of the luxury expansion is occurring in so-called “new markets,” like China, Russia, and India, where the base of wealthy customers has been rapidly expanding. Not so in the so-called "mature markets" like Japan and the US. Here in the States, things have changed since a May survey suggested that Middle Class Millionaires would continue to spend despite feeling an imminent recession. About half of those surveyed by The Affluentialist said that in 2008, they were planning on taking a vacation whose cost exceeded $10,000; More than half expected to be spending on home improvements, luxury cars, and second homes.

But here we are in November, and the news from a survey by consulting company Bain & Co. was not good. They predicted that the worldwide luxury goods market will likely enter a recession in 2009. According to the recent report,

"The impact of the financial crisis will bring some sectors into a recession," said Claudia D'Arpizio, a Bain partner based in Milan and lead author of the study. "How much and how long depends on part on how companies react. The most resilient will be those with strong international and diversified brands."

The two key points for retailers are in the last statement. First, it's still possible to reach key global markets – sectors where spending is still happening and luxury goods are still freshly affordable in developing economies. Second, it's really important to have a diverse but relevant set of products that resonate with wealthy consumers. Despite difficulties with brand loyalty in the regular retail market, the luxury sector relies heavily on the continued presence of aspirational brands and the power of the name. Expect to see more ad campaigns and design elements focused on tradition and longstanding value. After all, is it any surprise that Ralph Lauren, whose original inspiration was a reassertion of preppy WASP cache, is most likely able to weather the storm?

Monogrammed Wellies and a bejeweled trenchcoat anyone? If that's too much, maybe just some bright yellow to ward off the rainy day blues.

So What's Left in the Supermarket Basket?

2008-11-06T09:11:00.000-05:00

In my usual market-defying fashion, I have spent the last few weeks shopping – yes, that’s right, shopping. In these economic times and everything. After all, what better way is there to avoid the mordant news, panicky marketing reports, and palpable fear of falling that emanates from every newspaper and web screen I open?

I admit I had an excuse: a big upcoming event involving visitors from out of town, relatives staying over, and me cooking for the likes of 100 people. Nothing too out of the ordinary, but it is a bit odd to be celebrating in the midst of economic chaos. At the same time, it’s helpful for those in the business of watching the market to remember that weddings, bat mitzvahs, and births all keep happening and people keep eating.

Over the next few weeks I’m going to comment a bit about the kind of spending I observed in my own less-than-systematic retail excursions and compare that to the news that coming out of business and marketing research and media outlets.

One of my main forays in the last few weeks has been to grocery stores. I did the usual cart watching as I debated the kind of food I intended to cook for the horde of guests. In general, I still see the same amount of people in the supermarket aisles on the same days as I did prior to the big Wall Street meltdown. Eating well is still important, even if it's being re-defined.

Indeed, there are a lot less carts packed to the brim. Are people buying less? I think so. In my retail excursions I made some of my first-ever buying trips to one of those big discount clubs (you know the like: Sam’s Club and Costco being the most familiar) – and yes, the section of computer printers, pots and pans, dishwares, and other gadgetry were empty enough to drive a truck down the aisles. A few yards over in the laundry detergent and soda sections, though, and people were stocking up as usual. I asked one woman about her choice of a six jar package of tomato sauce and she said, “Well, I don’t use this kind normally, but it’s here, it’s cheap, it tastes pretty good, and there’s a lot of it.”

Ketchum’s Global Food and Nutrition Practice did a recent study of food attitudes across the globe (see this link for more information about the study’s methodology), which demonstrated that price was way up there as a concern for US consumers when it came to food choices. That’s no surprise, as it’s common knowledge that people in the US are accustomed to paying less for groceries than their European counterparts. Cheap food is one of those unstated American values. To be fair, Ketchum’s study did show that Americans put taste and quality right up there as key factors in their food choices. But my informant at Costco captured one other trend that has marketers – and especially those brand spanking gurus – worried about how things will shake down in the ongoing crunch for consumer dollars: “brand names are increasingly considered inadequate as a ‘proxy or shorthand’ for this growing list of factors that matter to consumers.” Linda Eatherton, Ketchum’s director of Global Food and Nutrition argues that marketers will have to rely a lot more on social media and an appeal to successful consumer research in order to sell their products.

Indeed, high-quality private label brands from Safeway, Kroger and Publix to name a few have seen very strong growth during the first few months of this recession, clearly indicating that when taste and quality are about even, the cost difference between private- and brand-labels has tended to shift consumers towards the lower-priced goods. Expect to see more private label brands boost their presence in the coming months. As the line in Field of Dreams suggests, “if you build it, they will come.”

The economy's new threat: Pantry deloading?

2008-10-15T11:39:00.001-04:00

I don't normally listen to earnings calls by public companies, but I found myself tuning in to Pepsi's call last night for some reason. Their sales are tanking, and their stock was rewarded with a healthy beating this morning as a result. But for all the depressing news, I learned something interesting - it's a phenomenon called "pantry deloading," and Pepsi execs blamed it in part for their slowing sales.

Simply put, in good times, we tend to over-shop. If something's on sale, we buy lots of it and store what we can (assuming it's not perishable, of course). Fill-up trips are bigger than they need to be, as each of us basically builds up a small inventory of frequently-used or sale-priced items.

Fast forward to today, where more people are trying to stretch out every last dollar. Instead of filling up (or over-filling), we're emptying out those stores of sale-priced items. So instead of sticking another 12-pack of Mt. Dew in our cabinets, we're dusting off the old 12-packs that we so cleverly purchased and stored some time last year. And when it comes time to replenish the dwindling stocks, some consumers will go back to the name-brand stuff, but others might be tempted to try cheaper private-label variants from their local supermarket or discount stores. Still others will simply decide to do without altogether.

So there you have it: pantry deloading. Any interesting phenomenon with real-world economic effects and a funny-sounding name :)

Tags: pantry deloading, shopping, retail, business

America at Home

2008-10-06T13:10:00.001-04:00

Ordinary People Provide the Best Glimpse into Everyday Life

If you’ve ever seen the book series, A Day in the Life or America 24/7 (photos from a single, day across America) you get an amazingly broad and deep sense of how people spend their days. Now, editor and photographer Rick Smolen has published a book of photographs of Americans in their homes – exploring everyday life, domesticity, and how people set up and enjoy their private spaces. Smolen believes readers get a glimpse into someone’s life or reminders of someone they know.

America at Home is a beautiful book, and, to my mind, the kind of social documentary that will eventually be a great historical record. At the same time, it’s an amazing document full of data about how people live, their relationship to the material world, the variety of ways in which we consume, construct domesticity, leisure, and community. Ikea, one of the book’s sponsors, is both sincere and savvy about what the book provides for the company and Americans in general. As they describe it,

IKEA is dedicated to HOME. We reached out and asked questions. And what we learned is 94% of polled Americans said that Home is the Most Important Place in the World. This finding is at the heart of the IKEA ‘HOME IS THE MOST IMPORTANT PLACE IN THE WORLD’ campaign that includes a compelling documentary film, a landmark study, and the America at Home photo-journalist book of everyday Americans taken by the world’s top photographers.

The interesting thing about this campaign is that everyone from market researchers to ordinary folks can get engaged in questions about how others live. Besides providing a glimpse beyond the living room window, the book situates the information in an easily accessible context about our world. Each set of images is tied to relevant statistics. The juxtaposition of fact and home image gives the exact type of context that marketers are always looking to find (did you know the average house costs ten times more than it did in 1970? Sure you did. But look what a variety of homes it buys!) This general information is then deepened with the inclusion of essays by Amy Tan and David Pope and an introduction by Matt Groening of The Simpson’s fame.

Finally, while I don’t want to reduce the book to fodder for the retail machine, it’s worth considering how Ikea and others might use it to see what people want and how they use products and spaces in ways other than they were intended for. It embodies the “active listening” that the Advertising Research Foundation has been pushing in its recent workshops, but does so in a way that is interesting, informing and entertaining all at once.

For more than you ever wanted to know about America At Home, there’s a terrific podcast interview with editor Rick Smolen on the IT conversations website.

Natural -- As Nature or Marketers Intended It?

2008-10-05T00:37:00.000-04:00

Anyone who buys from the organic end of the food aisle knows that labels are designed to be confusing, misleading, and downright annoying. In my local supermarket there are now four or five different kinds of eggs in the "natural" refrigerator case. I can get cage free, which means the chickens live well. I can get organic, which means they ate okay and now I will, too. There are also High Omega 3 and Certified Humane options. Or I can get cage free and organic eggs, which means I'm now paying 40 cents more per dozen than I would be if I just bought the ones that say "natural," which, apparently, means nothing except a 40 cent savings and a few worries about just how safe and/or ethically farmed these eggs might really be. My supermarket, like many, also has its own product line that prominently features the word "nature" -- but I'm still sticking to the Newman's Own Oreo-like cookies rather than their brand because I can tell what "organic" actually means.

Unfortunately, "natural" stopped meaning "safely made in nature" a long time before the USDA got in on the act and started certifying all sorts of things as "organic." Indeed, recent lawsuits in California concerning "natural" cosmetics that were found to contain known carcinogenic chemicals have prompted the FDA to take interest. Perhaps it's too late to rescue the word from its confusing mass of associations -- although a small bakery in Colorado, Rudi's Organic, has made some good noise with its clever commercials parodying the supermarket "all natural" breads that contact such healthy-sounding ingredients as "azodicarbonamide."

In his wonderful book, Appetite for Change, Warren Belasco charts the whole foods movement of the 1960s and 70s (and this was before that term -- whole foods -- was co-opted by a giant supermarket chain in fancy green clothing), when the move back to nature was a collective response to the industrial food system. Brands we now take for granted, like Celestial Seasonings Tea, were once small, alternatives to the big corporate food-in-a-box. But then home made granola morphed into chocolate coated breakfast bars and...well, you know the rest of that story. Belasco documents what feels like an inevitable hegemony of big business and money making over creating alternatives. What's unfortunate, of course, is that more and more people want natural and organic products -- and big companies often do have the potential to generate and support these items.

Burt's Bees is a brand that still feels like something out of the whole foods movement of the 60s. There's the great story behind the company -- Roxanne Quimby "finds" her way to Maine, befriends Burt Shavitz, an older man who's a beekeeper, starts a small business that they promise to keep to ethical natural standards -- and then sells out to a big conglomerate for millions while Burt got a small settlement and is rumored to be living back in his original turkey coop. Let's remember that she sold not just any conglomerate either, but Clorox, which sounds like the home planet of bad household chemicals.

That could have been the end of the story, but Clorox is actually working hard to prove that it's products can be as natural as any small-time competitor's. They're also working to ensure the integrity of many of Burt's original products like lip balm, sunscreen, and baby lotion (a recent profile shows the CEO John Replogle eating avocado butter face cream to prove it has nothing "unnatural" in it), but as the line expands into new territory, one wonders how soon it will be like other niche product lines that lose their uniqueness as they widen their appeal.

One way that "green" companies try to prevent this dilution is by developing industry-wide certification standards. Organic florists are a good example with Organic Bouquets, at the forefront creating and enforcing standards, developing certifications and selling and listing a variety of types of flower certifications. Similarly, this spring the nonprofit Natural Products Association launched a certification program which will certify products as natural if they contain at least 95 percent ingredients from renewable resources found in nature, with no petroleum compounds. According to the president of Dr. Bronner's Magic Soaps, "Organic products aren't necessarily inherently safer than non-organics. But if they're certified and not making bogus claims, it does guarantee they can't use a lot of problematic petrochemicals."

While letting companies certify in this way (and thus get to put the spiffy little logo on their packages) is a terrific idea, the real challenge will be for marketers to either pull back and try to make "natural" a meaningful word again (unlikely) or find a new way to attach integrity and certainty to the type of products consumers want. So, until I have a better idea of what "natural" means in industry-speak, I'm probably going to keep shelling out (pun intended) the extra forty cents for the organic eggs.

I'm just not ready for a hen house behind the basketball hoop

Marketing takes the blame -- or helps initiate change?

2008-09-30T23:43:00.000-04:00

Advertising Age recently profiled a study by Sonya Grier, a research scientist who found that the types of food and beverages marketed to African Americans may contribute to rising rates of obesity and other health-related issues. I hate to point this out, but doesn't this seem like the wrong kind of niche marketing? Grier's conclusions sound right on target: higher calorie products are placed at the point-of-sale displays, convenience stores are ubiquitous while grocery stores are not, and promotions emphasize fast food restaurants. Advertising does play a role in what happens. At the same time, let's not overstate the causal relationship between marketing and behavior.

Still, in this case, advertisers really should tread much more carefully, There's a long history of problematic advertising in particular communities. While African Americans span the socioeconomic spectrum, the percentage that live in poor or working class neighborhoods is higher than for many other racial groups. These neighborhoods have long been the terrain of tobacco and alcohol billboard advertisements, trying to capitalize on an already vulnerable population. In the 1970s, when African Americans made up 10% of the population, sometimes up to 20% of a tobacco company's advertising budget was spent on black neighborhoods. Current studies on the effect of alcohol advertising find that alcohol advertisers spent nearly $4.8 million in 2004 to place ads on all 15 of the programs most popular with African-American youth. Studies in Chicago show that all communities --African American, white, or Latino -- with "imbalanced food environments" -- meaning no real supermarkets within an easy travel distance -- greatly increased people's chances of getting diabetes or having a diet-related life threatening health issue. It's not the obesity that matters, per se (although the grant that Grier is working on is specifically funded to target obesity), but the health issues that come from lack of access and choice. Also keep in mind that there's currently no data on whether we're looking at a cause-and-effect scenario, or whether it's just coincidence (which the study will surely look into as well).

Perhaps its seems odd, though, that advertisers would feel it necessary to pour marketing dollars into areas where people already don't have a choice in what they purchase. So why do it? Partly because advertisers may not believe they have a captive audience -- or they want to keep it.

For a more nuanced understanding of the issue, all aspects of social environment need to be considered. In Grier's studies, she found that other health risk factors included: having a social community that valued or enjoyed fast food and living in areas that lacked opportunities for outdoor activities, sports, and school-sponsored play. Consider how difficult shopping must be: Markets in African-American and low-income neighborhoods have fewer healthy foods, and residents may have limited space in which to store fresh and frozen produce , making it more difficult to follow a healthful eating pattern even when desired. According to a recent research summary in Nature, a key variable is the way African Americans perceive their buying power (or lack thereof) in areas with limited local food availability. While there are numerous campaigns to fight diet-related illnesses, eliminate tobacco and alcohol advertising in low income areas, and bring supermarkets and local food to African American communities, Grier does hit on something missing. The advertising and marketing to people in these communities needs to change. Currently, most niche marketing campaigns to blacks focus on the upwardly mobile and wealthier African American professional class (remember my blog comments about gaming and people of color? They're one of the few markets that is starting to recognize that not all black consumers come from the very wealthy or the very poor segments of society). But for the most part, advertisers want to sell black consumers the "Real Desperate Housewives of Atlanta" version of reality: For example, Glam Media has created a new web and blog network devoted to African American women, but its sponsors include Lexus and its focus is on high end beauty and fashion.

While it's nice to see multi- media campaigns being targeted to a new audience, it'd also be a great opportunity for advertisers to tap in to a collective identity and create spots that help shift cultural values towards healthy living for everyone. Honestly, how often do you get to feel like you've done something virtuous and profitable all in the same afternoon?

The death of the survey?

2008-09-30T11:03:00.001-04:00

I recently got a survey in the mail and I actually did something I haven't done in years: I filled it out. It was the first "traditional" marketing survey I'd gotten in what felt like a long time, and there was a crisp, flat dollar bill attached to the letter. So, whether I threw the survey away or sent it back (I honestly don't remember), I had a dollar. Or at least, I did until one of my daughters needed money while we were at an ice cream stand.

Surveys and polls used to be the mainstay of social science and consumer research. We know more about ourselves as a society than perhaps we should at this point. And honestly, there are a lot of really ridiculous and ultimately meaningless uses of survey data out there. And then, of course, it's piggybacked onto data that isn't meant to be used in the way it's being used.

Of course, maybe I'm the only one who finds the whole "freakonomics" approach to social knowledge is snake oil -- I mean, I must be, since it's spreading like crazy. Amazon recently used their sales data to create a "blue and red readers" map of the United States, suggesting that the purchase of certain political books over others would peg the individual (and eventually the state) as a Republican or Democratic. But based on my recent book recommendations, Amazon also thinks I'm a serious dieter, a heavy wine drinker, an evangelical Christian who's also interested in Jewish mysticism, a science fiction freak who also wants to learn how to draw birds, and possibly going through puberty. It might be possible to draw some inferences about why people in Texas bought more "red" books and people in Massachusetts bought more "blue," and yes that does coincide with their voting patterns -- but only by a five percent margin of difference within each state.

Moving back to marketing data from surveys, even the retail industry is becoming less certain about their usefulness. Proctor and Gamble and Unilever are working with the Advertising Research Foundation to focus more on different ways of gathering consumer information, such as blogs, social networks, and consumer feedback on websites. The emphasis is on "mining consumer insights online." That may be an interesting new source of information, but again, it's still data that can't really tell enough about how or why people use products. And while surveys get tossed in the trash, recycled, or filled out incorrectly for a lark (yes, we've all done this), there is at least a small chance that the researcher can exercise a bit of control over the sample. The Advertising Research Foundation is pitching its approach as "learning how to listen," an insight that research methods in sociology and anthropology have insisted upon for many, many years. Despite the ascendency of survey research, for its "feel" of scientific certainty and the immediacy of results, even quantitative social scientists know that good research design is both inductive and deductive.

We're not at the end of survey data, by far, despite predictions based on the ARF's push for new insights into consumer behavior. Even so, the deathknoll might push more companies towards good solid ethnographic research, where researchers can see the difference between what folks are willing to say on social media and what they actually do. And then maybe someone can create a red and blue map that actually tells us something useful!

Dollar Days and Ninety Nine Cent Nights

2008-09-22T10:00:00.001-04:00

...But Not in Texas

Dollar Stores are a hot news item these days, as the discount market grows its share of spending from budget-conscious consumer. So while Walmart and its ilk are doing reasonably well given the overall trend towards buying less, the Dollar and 99 Cent Stores are expected to increase sales thanks to shoppers who want to stretch their paychecks a bit more. Despite the sense that people who shop at discount dollar stores are struggling financially, the numbers indicate that these stores (along with big-box stores like Walmart) are gaining popularity with more affluent shoppers too. To wit, 99 Cent Store CEO Eric Schiffer claims their most profitable store is on Wilshire Boulevard in Los Angeles. Even so, for the dollar stores the current economic climate is a mixed bag (not unlike those surprise goodie bags they have at the end of the toy aisle). Some are doing well – both Dollar Tree and Family Dollar report increases in sales and profits in August:

Higher household costs have sent shoppers into the nation's largest everything's-a-dollar chain looking for better prices on food, cleaning supplies and health and beauty products, said Bob Sasser, Dollar Tree's chief executive…While in stores to buy those needed items, customers also bought more party and summer-decor goods and graduation gifts, Sasser said.

But others like the 99 Cent Store are having trouble deciding whether they can really maintain their promise to keep everything in the store at 99 cents. One of the only “true” dollar stores left, the company blamed inflation and rising food and energy prices for its new prices. It will also have more variable pricing under the 99 cent range (previously, all items were either 99 cents or two for 99 cents). The increase means the maximum price in the stores will still fall below a dollar while helping the company offset some of the higher costs of doing business. And lest you think these discounts are being purchased through cheap overseas labor, CEO Shiffer explains,

“The vast majority of everything we buy is made in the U.S.A. That surprises a lot of people. We sell mostly food, cleaning products, which are water-based and very heavy to ship. Health and beauty care products — again, water-based, so the shampoos and everything come from here. Our imports are probably about 15 percent. I would say the United States is by far the lion’s share.”

Some chains can’t quite hold on to the promise of the name: Canadian store, Dollarama will introduce three new price levels - $1.25, $1.50 and $2 - though it says the majority of items will still sell for $1.

"After 16 years at a dollar, we've found in the last few years sourcing dollar products has become a little more difficult," Dollarama chief executive officer Larry Rossy said in a rare interview. "Meanwhile, during our recent buying trips [to Asia] we were consistently offered 'wow' items at the $1.50 to $2 price point."

Although jokes and skepticism abound about the quality and freshness of food at these deep discounters (there are websites, programs, and cookbooks on cooking from the dollar store), the chains are actually adding more refrigerator cases, stocking more brand names, and selling food more than any other item.

People buy more than “dollar” items at these stores – witness the increase in dollar bargain bins at supermarkets. Target strategically places a rotating selection of one and two dollar items right near the entrance (because you didn’t know you needed a pair of knee socks with dancing monkeys! And a set of four ornate chopsticks in a silk holder!) These items are sometimes $2 or $3, as is the case in other discount “dollar” stores. But if you want to stick to the real thing, the 99 Cent Store gives you the pleasure of spending a dollar (not less, since there’s no change for those 99 cent items) unless you live in Texas, where all 40 stores are being closed for lack of profitability. This just means you have to hope in the car and head over to California, Arizona, and Nevada, where there are 230 stores that contribute approximately 90% of the company's sales. Be sure to pick me up some of those monkey socks and antibacterial soap along the way!

The 21st century superstore: mini or mega?

2008-09-21T10:31:00.000-04:00

Up until recently, “bigger is better” seemed to be the best retail mantra around. Walmart redefined our notions of shopping, and despite all the critiques of “big box” stores, they seem to be here to stay. But the Clash’s song “Lost in the Supermarket” rings truer as the aisles get longer and full of even more varieties of the same product. Recently I stood, like Robin Williams’ Soviet immigrant character in the old movie, Moscow on the Hudson, apoplectic at the variety of granola bars that take up one slice of the breakfast foods aisle. My new grocery store, Giant Eagle, certainly captures the first part of its name well.

So, imagine my surprise when a new little store (with gasoline pumps) opened just off the main highway, called Get Go – at first I thought it was Giant Eagle masquerading as a convenience store and refused to go in. But then my less cynical partner-in-crime stopped there on our way out of town, hoping we could stock up on decent travel food before we were trapped in rest stop fast food hell. Sure enough, there was a produce section, fresh fruit, a small but very lively deli, baked goods, and about four or five very short aisles full of an abbreviated version of what appears in my regular Giant Eagle (because, trust me, paper towels and zinc lozenges are also indispensable on a long drive…) The coffee section had a few tables and wireless connection, just enough space to sit for a bit if you need to check your email before heading out. Lo and behold, just last week the New York Times profiled that very same Get Go in a piece examining the trend towards mini stores.

Apparently, my Get Go is just one of many new minis planned across the US: Safeway, Tesco, Whole Foods, and yes, even Walmart are all testing the mini store concept. Tesco’s version, Fresh and Easy, is open in Southern California, while Walmart is getting ready to launch its Marketside store in Arizona and San Diego. Recognizing consumer needs (buying groceries quickly instead of gaping at thousands of brands) is not the only reason for this move: San Diego has been engaged in a long fight over supercenters within the city limits.

Lest you think it’s all about food, note that groceries are not the only shrinking retail outlet. Macy’s, which has been struggling to keep itself in the black, has done well with a “mini” Bloomingdales in New York’s SoHo neighborhood, and plans to expand the idea to California and Washington DC. Not that they’re the first: there’s Barney’s Co-op, which began as a concept-store-within-a-big-store and now has some freestanding outlets around the US; and Neiman Marcus’s Cusp stores which have been open in Georgetown, Tysons Corner, and Century City since 2006. In this case, the stores are marketing to a particular demographic (young hip women shoppers) rather than a general “shrink it down” spirit.

While I like the mini trend for a variety of reasons (accessibility, good products, less taxing on the environment, less emphasis on endless variety and more on a few good things), I also recognize that what makes the mini work is the mega parent behind it. Who can afford to take the risk and open a small retail business with such a mixed inventory? Only someone who's already safe in the land of large scale sales, and already knows what the most popular products are.

Of course, the real irony is that Walmart, Whole Foods, Giant Eagle and the like are essentially re-inventing the corner store that was originally displaced by the mega-super-centers that these companies started out with in the first place.

Heinz: From red to black with ABC Soy Sauce in Indonesia

2008-09-20T15:07:00.001-04:00

Just a small follow-up to a story I wrote about here in June, Heinz Food Corporation is indeed capitalizing on the trends I mentioned, particularly by targeting food products to consumers in different countries. Sure enough, moving from the red to the black has meant that, while the brand is still deeply associated with its Ketchup, its ABC Soy Sauce is steadily catching up as a leading item – and a brand they can extend. ABC is emerging as one of the best selling brands internationally of soy sauce. The Wall Street Journal profiled Heinz’s Southeast Asian success and explained,

There are essentially two types of soy sauce: kecap manis, a molasses-thick sauce often sweetened with palm sugar; and kecap asin, a thin, salty sauce. When ABC's kecap asin was introduced in the mid-1970s, it was sold in a glass bottle at a premium price. Eventually, ABC expanded into kecap manis, as well as lower-price smaller plastic bottles and single-use packets that now cost about 200 rupiah (two U.S. cents), helping it develop a loyal following among working-class rural Indonesians.

Part of the success comes from “tweaking” the product: Heinz has worked on the taste (not as salty as it was when the company acquired the brand) and the packaging, coming up with a better pouring spout and other new design elements. According to Business Week,

Chris Warmoth, who heads up Heinz's Asia-Pacific operations, notes that "nearly all households in Indonesia use ABC." That wouldn't seem to leave a lot of room to boost sales of its sweet dipping soy sauce, or kecap manis. So the company has introduced new products and tried to encourage broader consumer use through a "culinary academy" where chefs come up with new ABC recipes. (Up next: suggested nonalcoholic drinks made with ABC flavor syrups for the Muslim celebration of Ramadan, which starts on Sept. 1.) Heinz also added a new pouring cap for the soy sauce bottle and introduced lighter plastic pouches, a potential selling point to the majority of Indonesians who lug their groceries home.

Backing up their sales, ABC donated more than 1 billion dollars in aid money to Tsunami victims in 2005. The continued presence in Indonesia, both philanthropic and economic, has paid off, as Heinz ABC has shown greater profits and steady sales while many other food companies are faltering. Soy sauce has migrated out of its original place as an Asian staple and into a global food, which should help Heinz sell ABC in numerous markets, but at the same time, it’s smart of Heinz to keep ABC strong and flexible in its original context.

Gurus, Geeks, and Geniuses: Courting the computer store customer

2008-09-12T11:31:00.001-04:00

Okay, so I love my Mac. I still think the iPod is not only the coolest thing ever invented (despite recent drops in sales and the "less than impressive" presentation of the new lineup this week), but it’s like all Mac products: sleek and beautifully designed. And I think I've made clear how I feel about the iPhone. So there, with my biases on the table, I’m still trying to weigh in objectively about the newer retail service trends for personal computers.

Gather ‘round the campfire, as the nights are getting cool and it’s time to tell those Apple Store stories from the summer…

Here goes: in the last month I've made five (yes, five) visits to four (yes, four) different Apple Stores in three (yes, three) different states. Don't make me explain. Well, okay, you can find the longer version on another blog. But let's just say that lately I've had some good opportunities to observe the "Service is Marketing" mantra in action. For anyone who hasn't had the same multi-state retail pleasures, let me assure you that the system works.

Ah, the Apple Store! The Concierge in the orange t shirt directs you to where you need to go without trying to sell any product unless you ask. While you wait for your Genius Bar appointment, you don't have to browse. There are bar stools so you can hang out until your name appears at the top of the appointment list, which you can check on the digital sign behind the bar. The Genius bar staff, with their blue or black t-shirts, only do technical and mechanical support. They will sell you what you need -- but the two Geniuses who ended up having to sell me something beyond my repair bill almost seemed surprised to ring up an item rather than print out a tech report.

Apple has a good thing going. And of course, since it's working, Bill Gates is getting into the act: recently Microsoft announced that it’s going to introduce Gurus into major retail stores to help consumers with their PC problems. The goal is to get people to “think Microsoft” – but the problem is in confusing help with sales. Most people will likely need assistance due to problems with Vista. Microsoft's new commercials with Bill Gates and Jerry Seinfeld are entertaining, but they seem oddly disconnected from reassuring people that the product works or can be fixed.

Consider the taxonomy of employee names: A Genius knows how to fix your problem. A Geek supposedly can diagnose what's wrong, but I'm suspicious about his or her level of training for the retail job at Best Buy. "Geek" implies something of a hacker mentality. But a Guru? A Guru gives you advice about what to do rather than doing it for you. For Microsoft, the spiritual oneness we all desire with our computers (i.e. instantaneous response time) doesn't come from the gritty work of repairing the darn thing, but in selling one that works better in the first place.

When the "Service as Marketing" mantra works, it's because (especially with new technology and computers) most people lack is the ability to fix or work the item themselves. I live with someone who has a PhD in computer science and I still ended up a the Apple Store five times...

The color-coded t-shirts are more than eye candy in the white and grey store – each denotes a job title and only some are there to sell. The Gurus don't have that luxury. As much as I believe a sales representative should know a lot about the product they’re selling, I’m much more confident when I meet someone whose job is solely to fix things and not sell you a new one.

The point here is this: in each of the Apple stores, in each of the three states, on all five visits, the experience was exactly as it should have been (even in the one where they couldn't help me). For example, I'm deliberately avoiding any iPhone temptations and even though I had to walk right by them on the way to the Genius bar, there was no sales person to push in the wrong direction. On one visit, while I was waiting for repair work, my teenage daughter spent the time playing with iPods, unhassled by salespeople. There was one section with tables that are low to the ground and have small chairs. Around the table are screens with Mac game demos running for younger children. And with a list of appointments visible on the digital display, I knew when it was my turn and didn’t have to ask, even though the concierge would check in on me occasionally.

While Gates' Guru program is using his vast resources to take a step in the right direction, it can't rival the Apple Store in the long run unless Microsoft is ready, willing and able to take over the entire store experience, from product selection to staffing to layout and merchandising. And let's not forget corporate culture.

One thing that Apple understands better than its rivals: like the man behind the curtain in the Wizard of Oz, most of us don't really know how the thing works. People need non-judgmental guidance without a heavy sales pitch waiting in the wings.

Gentle guidance is good marketing

2008-09-11T22:01:00.000-04:00

Recently, Mass Mutual launched a new set of ads that they’ve been describing as “thoughtful.” When was the last time you heard a marketing campaign that was “thoughtful?” Aggressive, creative, innovative, suave, - sure, marketing comes up with every adjective possible, but "thoughtful" could mean you actually want people to think about what’s been sold.

That, I suppose, could be dangerous.

In reality, Mass Mutual’s newest campaign is much more than thoughtful. It’s smart. Taking back the notion of what really counts in life from those annoying MasterCard “priceless” ads, these spots show people making what are, subjectively, good decisions in their everyday lives. According to Forbes,

The campaign is an extension of the company's core position and tagline -- "We'll help you get there(sm)" -- that underscores the company's understanding of the real, practical issues consumers face when it comes to life insurance and retirement, and positions MassMutual as the company that helps consumers take the steps that are right for them.

Creative executions pose the philosophical and practical question: "What is the sign of a good decision?" The decisions captured in the executions are all real, almost everyday scenarios, like cutting short a fishing excursion to head for safe harbor at the first sign of a storm. Like real life financial decisions, the scenarios depicted all have consequences that can affect people beyond just the decision-maker. The campaign illustrates the value and confidence that come with making sound decisions for individuals and families, small business owners or plan managers at major corporations.

It doesn’t hurt that the ads have great soundtracks behind them (Bob Dylan on the one where a father decides to move his top-of-the-skyscraper-amazing-city-view office to his home after looking at a picture of his young daughter). Or that MassMutual puts a lot of family-friendly policies to the test in its own workplace. They've also sponsored a two-part documentary on PBS about retirement decisions and financial stability.

From a retail and advertising standpoint, engendered trust and a sense of guidance are some of the most difficult things to “sell” to customers. Not to mention that the company aims to do this at a time when established financial institutions are in trouble one way or another. The emphasis on gentle guidance is what works here – moving away from the hard sell to the simple straightforward assurance is the right move, especially for a company that could, in fact, play on people's anxieties in an anxious time. You can bet this approach won’t be appearing all over the advertising landscape, but it might not hurt for companies to stop and consider what exactly they have to offer that would make consumers choose one brand, one company over another. Brand loyalty is, of course, better if it’s actually earned.

Tags: advertising, branding, retail

Aldi to the rescue during crunch times?

2008-09-10T13:18:00.001-04:00

I've never been to an Aldi store, but after reading Tim Manners's take on them in a recent Cool News of the Day post, I just might have to. Owned by the same group that owns and operates Trader Joe's, Aldi stores are apparently small, intensely focused on private label goods, and even more intensely focused on low cost. How low, you ask? Well, as Tim puts it,

"Aldi’s focus on cutting costs makes Wal-Mart look almost like Whole Foods by comparison. To save costs, Aldi doesn’t take checks or credit cards, it provides neither bags nor baggers and you even have to pay a quarter to use one of its shopping carts (it’s refunded when you return it, saving Aldi the expense of an employee to round up the carts)."

While such tactics might have turned off some shoppers in the past, with inflation rates rising and the government handing over billions of taxpayer dollars to fund bailouts of entities that should never have been allowed to exist in the first place, even upscale shoppers are looking for new ways to save a buck. Consequently, Aldi's has been growing by leaps and bounds, and expects to add another 100 stores in the US in the coming year, bringing their total to 1,050. Want a box of Raisin Bran for $1.50? How's about a frozen pizza for under $4? If so, Aldi's might be for you.

Me? I'm waiting to see what happens to the price of Trader Joe's (in)famous Two Buck Chuck before setting out to yet another new shopping destination.

Guess I'm just a creature of habit.

Tags: retail, shopping

Supermarket Wars: Giant and Stop and Shop aim for the almighty food dollar

2008-09-03T22:55:00.002-04:00

Two big food retailers, Stop and Shop and Giant are both re-vamping their look and their products in order to keep customers from flocking to supercenters like Wal-Mart during tight economic times. The trunk of my van holds about ten reusable shopping bags: about a third from Giant, a third from Stop and Shop, and the rest from Whole Foods, Trader Joe’s, and miscellaneous sources. That does a fair job of capturing the distribution of my grocery shopping time.

Both Stop and Shop and Giant are my local stores (one in MA, one in PA). I’ve already confessed to being a snob and a skeptic about Wal-Mart, so I’m biased in favor of my two usual spots. I also spend a lot of my food budget at a local farm and the farmer’s markets. But I’ve also been riding the economic waves, one minute a semi-affluent shopper with lots of choices, the next crashed under a tsunami, hoping I might have some unexpired double coupons stashed in one of those bags…

So, is it good that Stop and Shop and Giant are competing mightily for my time and dollar? Absolutely. Despite the numbers that suggest more affluent shoppers are headed over to the big discount mart, I’m doubt it’s saving anyone a whole lot of money – it’s certainly not, in the long run, doing its share to improve the economy. If the folks with disposable incomes are doing the discount dance, who’s left to put dollars back into the system? We should be on their cases for not doing their patriotic duty and consuming at the level at which they are supposed to…

But seriously, regular grocery stores should be doing all they can to keep customers coming in. This summer I was happy to see how much local produce S&S had featured – almost everything in the front-of-store display, in fact. Giant Eagle can’t compete on that score – Massachusetts has an extensive network devoted to promoting local produce.

Among the new introductions are expanded private label offerings, an increased number of fresh prepared foods, including soups, new fresh-flavored rotisserie chickens and more hot and cold side dishes. The store will also offer shoppers a handheld scanner device they can use throughout the store that checks prices, keeps a running total, and generates brand-related coupons for products as they shop. ... A Delivision kiosk allows shoppers to place deli orders when they enter the store, so they don't have to wait as long on line. The company describes the changes as "a further step in Ahold's global strategy to create powerful local consumer brands"

These are interesting, but not all the things I’d feature if I were them. For example, I’d like to see the store brands get better press. My kid are now enamored of a store brand of cereal that mimics Lucky Charms. This is good for both me and them because...

a ) Mom won’t buy Lucky Charms but the generic brand slipped by her in the cart last week because
b) it comes in a big economical plastic bag instead of a box and
c) it cost a THIRD of what the name brand cereal did and
d) it had a cool name (Hocus Pocus!!!)

So, yeah, it’s going to show up in our house a bit more often as a treat even though it doesn’t meet our basic healthy food. A product that makes us feel like we got a lot, got a bargain, and got something we like is key. So much of what’s in the supermarket today is extraneous to the whole idea of actual food, I'm a bit of a softy for treats that aren't completely mired in corn syrup.

At the same time, both Giant and Stop and Shop still has a ways to go in improving store layout and design and in that category, they should take a page from Whole Foods rather than Wal-Mart. My main Stop and Shop was recently renovated but was still fluorescent and difficult to navigate. The “health” foods are relegated to their own ghetto at the very end of the supermarket, near the pharmacy; other than the nice display of local foods, the produce lacks the verve of Whole Foods and the bakery is just a fancy bread counter. In contrast, our renovated Whole Foods has a great new bakery with the smell of fresh loaves and -- who can resist a little snobbery after the Lucky Charms? --- a gelato bar!

Do you think we can get Giant to look into that option?

Yes, it's back to school time again...

2008-08-31T16:21:00.001-04:00

I said I wasn’t going to even mention back to school as a retail category, but here I am, unable to avoid it. My children get on the bus on Wednesday of this week. Yes, we spent money on school. And yes, we weren’t the only ones caught up in the hype despite our desire to stay on a budget.

I normally deny that I am at all moved by the calendar or invented retail "seasons." Just as bad as hearing Christmas music in the mall before Halloween is being hit with flyers and circulars for B2S specials while August is still in full swing and I’m still not done with the second of my three beach novels for the week. We typically try not to splurge on more than a new backpack or lunchbox and, as we moved to a new school system, some desk supplies required for each grade, but even that can be fun for the kids. The first two years we tried to get our school supply shopping done over the summer at all the fun, weird stationary stores in the little towns where we vacation. It’s nicer to have folders with college logos than the endless busy patterns and kittens from Target. But this year we didn’t get the list in time and, well, there are only so many varieties of file folders. So we hit the back to school forced march.

All summer I’ve been commenting on how much or how little I see people in retail stores. But there’s been a limit to my own retail research: I studiously avoided the mall until I had no choice (There were those three trips to the Genius Bar at the Apple Store, but that’s a story for another time.)

Media Post's Karl Greenburg reports that specialty retail stores are particularly hard hit this fall. Stores like the Gap are down, of course, but they were already feeling the pinch, as they say. Still, it was hard not to notice the difference in the mall: the Old Navy was strewn with clothes and long lines, but the Gap was relatively empty. The sales clerks looked forlorn as we walked by. Much of the kid retail, like the Limited 2 and TCP were hopping, as you’d expect, but the big department stores – from Macy’s to Sears – were relatively quiet. Let's hope the Gap's new celebrity-driven ad campaign can pull in some late fall shoppers who still need classics that last longer than the Old Navy "ten minute t-shirt," as it's called in my house.

On the other hand, despite my derision of the JC Penney and Sears campaigns to get teens to buy their clothes, the jaded teenager in my house noted that the JCPenny television ad that mimicked the Breakfast Club -- and the clothes it featured -- were, in her words, “not bad.” Apparently I was supposed to like it, too: "We knew parents would relate to it," says Chief Marketing Officer Mike Boylson. The ad also has a twist for today's tweens and teens: a remixed version of Simple Minds' Don't You (Forget About Me) from The Breakfast Club's soundtrack. The hook? “What’s old is new again.”

And unless my daughter develops a sudden need, I think I’m keeping my artic parka and Madonna gloves in the attic for a few more seasons, thanks.

Tags: shopping, retail, b2s

Following consumer trends when there aren't any

2008-08-21T08:59:00.000-04:00

It's a bit dizzying trying to follow retail market trends in this economy. One day it looks like Wal-Mart and the other big box discounters are doing well. The next, people are cutting back. Today, Marketing Daily reports on a study by Cramer-Krasselt that basically demonstrates what common sense should tell us without the research expense: under tough economic times, it's hard to predict what consumers will do.

This downturn is like no other in generations," the agency notes in its study, "not because of its severity, but because it has given rise to a new set of consumer beliefs." It isn't just that people are frustrated (as 50% of the survey's 500 respondents are), worried (48%) or annoyed (29%). And it isn't even that the sense of financial security is so weakened, although 61% of the people polled feel less financially stable compared to a few years ago, and only 26% of people feel very secure about their financial future.

Consumers are simply following patterns they've already established, sticking to certain brands in some cases, going with store label and generics in others, and cutting back in places where they can. The lack of predictability is bound to create a bit of frenzy in the retail marketing world: what do you do when you've developed a whole industry around reading behavior that now seems hard to read? At the same time, there's opportunity for creativity. It's useful to note that people are still spending -- and they believe these trends will not go on forever, an important factor in creating brand loyalty. If they can count on a product now, they can count on it later, too. This holds true for luxuries as well as necessities: Despite the complaints about the new 3G iPhone, the Apple stores I visited in three northeastern malls were packed with customers every time I visited. It's a desirable product with some long term viability, especially as new reports suggest greater customer satisfaction with Apple than any other computer products. The Genius Bar was buzzing and appointments were filling up fast. The rest of the malls had a stale quiet air in comparison (admittedly, this was a week or two before the Back to School hype began to kick in. This week, I notice, the parking lots are filling up). NPD reports that consumers are choosing more judiciously from among these offerings, too. Not everyone needs a new backpack this year, despite the endless variety rolled out in all kinds of stores.

Although it may seem contradictory, there are two simple lessons for marketers in this climate: one, stick to what works and two, be creative. Anyone who can master that relationship can stop worrying about where the spending may happen next.

Cookies, grass, and other stuff: giving 'multimedia' a whole new meaning

2008-08-14T13:18:00.000-04:00

Whether digital or not, alternative out-of-home formats are exploding as advertisers try to catch consumers during those few precious minutes between work and home (or anywhere and home, for that matter), when their guards might be down and they might be a little bit more receptive to viewing ads.

So aside from digital, what other kinds of things fall under the 'alternative' umbrella, you ask? Well, a few recent ad campaigns were highlighted in the New York Times and other media for their uniqueness, always creative, though not always directed entirely at a point-of-sale:

My favorite involve unusual sites and familiar materials. One was a giant Oreo cookie decal on the side of a glass elevator that dunked into a giant decal of a glass of milk on the exterior of the bottom. The giant dunking Oreo is gone now, but the You Tube video is still popular.

Another great example is from Wimbledon, where the firm J. Walter Thompson hired UK-based artists Heather Ackroyd and Dan Harvey to create grass portraits of three figures in the tennis world. The process involves exposing the seeds to different amounts of light in order to get shadings of green, creating a kind of negative effect, varied by the length of the grass. The campaign originally involved planting grass in other sites (bus stations) to highlight Wimbledon’s uniqueness, but the company ended up using artificial turf (which, of course, is precisely what’s NOT in Wimbledon). Either way, the portraits have gotten Ackroyd and Harvey some attention and while it may not have directly increased revenue for the tournament, it did put it back in the news.

The Times also noted Papa John's giant pizza construction, which is designed to bring attention to their new whole wheat crust. While I think giant food is always fun, I'm not sure it's in the best taste at the moment, where people are beginning to strain to fill their supermarket carts.

For some other companies, it’s not about where the ad is placed or how it’s constructed, but the stories being told. Using a format similar to “This American Life,” KeyBank is running a new version of testimonial ads that are designed to encourage people to figure out how to manage your money. In a timely fashion, one ad features an animated video voiced over by U.S. Olympic swimmer Diana Munz who tells how she decided where to keep her gold medal:

As she tells her story, animation depicts her storing the medal in a clam, à la a pearl, putting the clam in a blowfish and having the blowfish swallowed by a secure steel whale. Instead, she opts to put it in a KeyBank safe deposit box. Other spots depict a man's decision-making process on how to finance a home remodel, and another family's work to create college savings funds.

All three of these campaigns do something unique, but all three tell a story, whether it’s a short familiar one (Oreo into milk) or a more complicated one (taking care of you money), it’s all about using different tactics to engage the jaded viewer.

Tags: advertising, out-of-home, ooh

Megabrands make a soggy market

2008-08-11T14:20:00.000-04:00

In Advertising Age, Al Ries recently commented on the pitfalls of Megabranding. Megabranding, you ask? What’s that? Remember when a name was attached to a single product? Megabranding expands products in two directions:

One, we get more varieties of the basic item. The first person to point this out to me and the larger public was Marion Nestle, author of Food Politics and Public Enemy #1 to the Food Industry. Oreos come in the following (not exhaustive) variety: Double Stuf, Mint chocolate covered Oreos, Fudge Covered Oreos, Springtime Oreos, Reduced Fat Oreos, White Fudge Covered Oreos, Halloween Oreos (Orange Colored 'Stuf') Holiday Red Creme Oreos, Oreo Magic Dunkers, Oreo Big Stuff, Giant and Mini Oreos and, the most necessary of all, Chocolate Cream Oreos.

Two, is the name gets attached to other products (Ries calls this “line extension.”) So, while there’s Oreo ice cream, megabranding would give you oreo candies, even (Marion, cover your ears), perhaps, Oreo breakfast cereals. We already have: Oreo Pie Crust, Oreo ice cream and ice cream bars, Oreo Chocolate Cones (for ice cream), Frozen Oreo Cookies n' Cream Cones Oreo Granola Bars, Cookies 'N' Creme Flavor Hershey's Nuggets chocolate candy), Pillsbury Oreo bars Deluxe, bar mix (, Oreo Brownies, Oreo Snack Packs, Oreo Crunchies, Oreo snack cake mix, Ready-to-Spread Oreo Frosting, Oreo Twist, and the ultimate, Oreo Cake. I'm sure I've missed a few...

Megabranding seems extremely problematic at a time when people are having to make more constrained choices about how they fill up their grocery carts. Choice is not always a good thing, especially when it’s essentially a choice of the same item in only slightly different iterations. Then there’s “overbranding,” where a product logo begins to appear on way too many unrelated items. The New York Times recently profiled Under Armour, an extremely successful athletic wear company whose tiny logo has become ubiquitous to pro football and military personnel. Now, however, the Times wonders, as the brand expands to sports shoes and a women’s line, can Under Armour become a megabrand? It's certainly already on its way.

While sports-minded young men have propelled the brand into popularity, the tiny logo has gotten bigger to stretch across the abdomens of non-athletic middle aged men across American suburbs. It’s on water bottles, umbrellas, bags, hats, and sunglasses. Watching my daughter’s soccer game, I always see more Under Armour in the stands than on the field. I'm not begrudging people's fantasies (after all, the ads are a textbook example of marketing masculinity), but wasn't the original point about a functional piece of attire? How far will it go before Under Armour is unable to wick away the saturation?

Personally, I've decided that my limit is when the Oreo Bagel shows up on the breakfast table and Under Armour puts out a line of energy drinks.

Mad Men and mind reading

2008-08-03T08:31:00.000-04:00

AMC’s series Mad Men has been generating a lot of positive attention from critics lately. It’s a slick show set in the 1960s that follows the experiences of Madison Avenue Advertising Executives and the people around them. The New York Times review captures what everyone likes about it:

The advertising executives, who called themselves “mad men,” were at the front of the consumer rat race, hypnotizing the American buyer with huckster campaigns created off-the-cuff in smoky meeting rooms or on a cocktail napkin at El Morocco…. The advertising business was flush, blissfully unburdened by aging readerships, failing newspapers, DVRs or the Internet, and only barely accountable to the federal government or public opinion.

That kind of unbridled freedom is the series’s one speck of sentiment, evoking nostalgia for a time before the current audience-knows-best rule of business, in which viewers vote on who gets to become a pop star, publishers ask readers to choose their authors, and politicians ask viewers to decide what issues they should discuss, as is the plan in next week’s live Democratic debate, a joint project between CNN and YouTube. When Don Draper (Jon Hamm), the suave creative director of the Sterling Cooper Advertising Agency, receives consumer data from the research director that suggests there is no way to avoid addressing Americans’ concerns about the health risks of smoking, Don coolly drops the report in his wastepaper basket.

While some of the big agencies are still run by a few iconic personalities, for the most part it's quite different today. While at one time the industry might have been enthralled with some new creative campaign, data, analytics and big business practices grab the lion's share of headlines these days. Case in point: Brandweek reports that its parent company, Nielsen is partnering with Mindset Media to develop a method of tying consumer behavior (actual purchases) to behavioral data (personality mapping). The idea is to expand Nielsen’s ability to target types of consumers beyond surface demographic information. Retailers may know who buys what, but it’s hard to link that information with good answers to the “why” question.

Personality profiling is nothing new – and certainly the rise of the psychological mindset was important to advertising in the 50s and 60s, too. But today, agencies and retail companies adore it even though everyone admits it’s not an exact science and requires a fair amount of interpretation. But what’s most interesting about this announcement is Nielson’s attempt to link personnas with actual purchasing behavior -- people who allow Nielson into their home get to scan their purchases and then match their behavior against personality tests. On one level, this is good multi-method research, attempting to link actions and ideas. On another level, it’s based on a rather shaky premise, that personality is fixed, measurable, and drives consumption.

It’s not clear that today’s ad campaigns have a better fix on the human imagination than those Mad Men of the 1960s. Neither group really knows how people make decisions. The only research that could actually show this is long term ethnographic work, watching the same people shopping over a long period of time. Reacting to the Nielson news, Russell Jones from AlixPartner put it well when he said:

"The real question in my mind is this: How does it help me make branding decisions any better than the information I used to have? It doesn't tell me who I should target, although it tells me who responds to various brands."

It’s not clear what exactly Nielson and Mindset Media will find out. But I can tell them one thing: whoever came up with the retro-lighter package design for the Mad Men DVD boxed set was right on target.

Tags: retail, branding, advertising

Libby dusts off an old standby, the Family Meal

2008-07-31T14:51:00.000-04:00

One of my main interests is people’s eating habits. The late writer Laurie Colwin once summed it up well:

“I’m not very curious about what people had out. I’m interested in what people have in, because I’m very interested in people’s domestic lives. I used to think I was fretting away my time, but the fact is, what is more interesting than how people live? I personally can’t think of anything. Maybe war or death or something, but not to me.”

I’ve spent a lot of time asking people who they eat with, what their daily meals are like, and how often they eat together as a family. So, I couldn’t help but comment on Libby’s new campaign to get families to eat more dinners together – and of course, to include Libby foods in those meals.

Parents and kids who visit the promotion's site will also find the "Top 5 Reasons to Get Back to the Table" (better grades, nutrition, confidence levels, etc. for kids); a database of easy, low-cost recipes featuring Libby's vegetables; and tips on planning meals and saving time and money at the grocery store - some from "Total Mom" author/TV personality Hannah Keeley.

Indeed, there’s definitely a new science that tries to support those claims. A recent University of Minnesota study found that adolescent girls who ate with their families at least five times a week during middle school were much less likely to drink, smoke or use marijuana five years later. The same, alas, did not hold true for boys. Even the researchers are not really sure what that means, so forgive me if I’m not quick to jump on the Return of the Family Meal Bandwagon. Most of the data shows that people do make an effort to eat family meals, perhaps not every night, but in a regular and sustained pattern. So why is Libby marketing nostalgia for something that isn’t really gone?

History shows that worries about family dinners come back like the tide whenever there’s certain kinds of social upheaval – let’s see which ones apply today: war (got that), economic downturns (got that), changes in men’s and women’s work and home roles (got that, too) and, oh yeah, rising food prices (got that, too!).

It’s really not surprising: concerns about the family are part of the social and economic concerns of the broader society. What even historians tend to forget is the role of advertising in helping to fuel those concerns, especially around the dinner table. In the early ages of advertising, the food industry tried to convince women that their performance as mothers and wives depended on choosing the best brand of canned foods for the family. Laura Shapiro, author of Something from the Oven convincingly demonstrates how into the 1950s, food ads were unusual in just how many kinds of insecurities they manipulated. After all, you need to be a Total Mom to be able to work 40 hours a week, deal with a budget, and come home and make dinner every night. That’s why advertising has always tied women’s maternal adequacy with a mix of “add love, but make it more convenient.” (I'd like to be able to say we've progressed enough for them to market this to the "Total Dad," too, but I'm not seeing any signs of that in these campaigns.)

So, Libby’s attempt to promote its canned goods in this manner is a longstanding cultural tradition. What’s different is that the tide has changed: it’s very difficult to sell canned vegetables today when fresh are shipped quickly across the globe, making asparagus available year round. So, tastes – or at least the arbiters of taste -- have moved away from the canned and towards the accessibility of fresh. The movement to get people to eat fresh, local food is gaining ground.

But Libby’s rather unabashed promotion of its canned vegetables flies in the face of so many things. At the same time, it recognizes that sooner or later, the ability to buy fresh and continue to buy whatever produce you want out of season may be more difficult for people under the economic crunch. It’s not surprising that the family meal has returned – articles about comfort food are just around the corner, waiting for the fall weather and heating bill crunch. As Libby rightly knows, smart moms are already thinking about stocking up on canned goods before the recipes start asking for pureed pumpkin. How about some pie?

Tags: retail, shopping, food

The next POPAI Digital Signage 101 webinar is coming up on August 7th

2008-07-31T13:51:00.001-04:00

This is pretty much a cut-and-paste from the announcement two months ago, but if you, a client, a partner or some other interested party you know about is starting to explore the exciting world of digital out-of-home media, POPAI's holding another "Digital Signage 101" webinar on August 7th.

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.

Dale Smith at Peerless will be leading the way, covering topics including:

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, August 7, 2008 at 1:00pm EDT

Tags: digital signage

Mixing it up when marketing to children

2008-07-28T13:51:00.000-04:00

Today there’s two interesting bits of news related to kids and marketing, not all of it bad:

First, Packaged Facts presents data that suggests kids may be a driving force behind a family’s decision to "go green" in their purchases. Here’s the scoop:

Quoting data from the Simmons Kids National Consumer Survey, the study says a significant majority of kids express concern for environmental issues, and that nearly three-quarters of them believe in buying recycled paper products.

Furthermore, more than half of 6- to-8-year-olds encourage their parents to buy green products--with Hispanic children leading other demographics by a wide margin. The Hispanic kids' environmentalism, in turn, may be the reason why the Pacific region--with its large Hispanic population--leads all other areas in numbers of kids pushing their parent to go green. Also, Hispanic families were found more likely than other American families to seek out organic and fresh foods when they shop. These attitudes toward food may spill over into other environmental issues, according to Packaged Facts.

What’s also interesting is that they found kids as young as 3 were aware of environmental issues. This strikes home for two reasons: one is the niche market angle. If Latino and African American adults use media and shop in different ways than other racial groups, it’s not only important to market goods for their needs, it’s important to consider their kids, too. Latinos are a particularly diverse group with a variety of cultural and economic backgrounds, so it’s interesting to see cohesion around environmentalism. Marketers tend to think of upper middle class whites as the classic organic food consumer, mostly because they are looking at consumption in regular and organic supermarkets, which is not necessarily where Latinos are getting their pesticide-free produce.

The second is that shaping the consumer mind starts early. I’m not sure that’s good news for parents, but in this case, it’s good to note that consumption is tied with a positive social and moral message rather than whether or not Bugs Bunny is dancing on the box of your healthy kid meal.

Second, here’s a marketing issue that may be taking things a bit too far (although I’m not sure in which direction…). The Center for Science in the Public Interest, a decent watchdog group, has recently denounced the Girl Scouts for lending the name of their most famous cookies – Thin Mints – to a Dairy Queen drink that contains more than 1,000 calories. So, you ask, why is this different from any other tie-in? Ben and Jerry’s names its ice creams after all sorts of celebrities and cultural icons and we’re not reading the nutrition panel in dismay, are we? Here’s the rub, according to CSPI:

The large, which weighs more than a pound, has more than 1,000 calories, 31 teaspoons of sugars, and provides more than a day’s saturated fat. It’s like drinking two Big Macs, according to CSPI. Selling cookies door to door is one thing,” said CSPI executive director Michael F. Jacobson. “But renting out its nonprofit brand name to a junk-food chain is a major badge of shame for the Girl Scouts. It runs counter to the Girl Scouts’ mission, and this product and its marketing campaign deliver a very unhealthful message to young girls and others. If you were designing a product with the intent of promoting obesity and type-2 diabetes in girls, it would look exactly like the Thin Mint Blizzard.”

While weight issues among young adults are not trivial (note the recent news about young adults and prescription medication for weight-related health issues), should we really be up in arms about the Girl Scouts promoting fatness and ill health? And are they even promoting those things? After all, a major part of the teachings promoted by the Girl Scouts (and Boy Scouts) is self discipline and personal responsibility -- so it's okay to get a Thin Mint Blizzard once in a rare while, just not all the time. Saying otherwise would lets both the food industry (who developed the product in the first place) and the consumers (who are really over-consumers a lot of the time) completely off the hook. Aside from my personal skepticism about how to address the so-called obesity epidemic, I’m pretty sure that if the food industry, government policies, the school system, and parents aren’t already under the gun, it’s not going to help much to blame an organization for 7 to 12 year olds. My recollection is that you have to earn merit badges in physical activity as well as cooking and cookie selling.

Isn't it also a misunderstanding as to to whom the Thin Mint Blizzard is being marketed? After all, it’s not Girl Scouts who are buying all the cookies. Ask any Scout parent who takes to the street with their budding entrepreneur: it’s adults who shell out like crazy for Samoas, Trefoils, or Tagalongs. Will buying a Thin Mint Blizzard make you feel more like a Girl Scout? Or can you make it six more months until the doorbell rings and it’s time to order Lemon Chalets?

A new kind of retail shrinkage hits consumers instead of retailers

2008-07-25T08:43:00.000-04:00

In a classic Seinfeld episode, Jerry and friends are staying at a beach house with people they don’t know well. George is changing his clothes and a woman walks in on him, looks down at his crotch, bursts into laughter, and runs from the room, with George yelling after her, "I was in the cold water! It’s shrinkage!"

While "retail shrinkage", the technical term for inventory loss occurring inside the store, is a universal problem, another kind of shrinkage stands to harm brands more than retailers... Like a dose of cold water on consumer pockets, another new trend in retail survival is package "shrinkage." A number of grocery products have been "outed" recently for the less-than-overt practice of making the contents slightly smaller and charging the same price, counting on the fact that consumers won’t really notice why the cereal or ice cream is running out a little faster than it used to. The amount is often slight -- a few ounces here, a few grams there -- but almost all the manufacturers have been very quiet about these changes. (Honestly, not that we expect them to brag about making things smaller when the trend has always been Bigger is Better. But it'd still be nice to know!) For the most part, it’s a lot easier to do this quietly rather than announce to consumers that prices are going up. And inevitably in the food industry, they are going up.

Consumer watchdog Mouse Print points out the Kellogg’s cereal has shrunk the box and reduced the calories on Apple Jacks, Corn Pops, and Fruit Loops, among other cereals. At least Kellogg’s is honest, including a little box on the side explaining why:

"This package change is considered a price increase, in that box size is smaller. The reason for the price increase is the rising costs of ingredients and transportation."

Ice cream has been a big culprit – dairy prices are way up and transportation and refrigeration depend on energy costs. Mayfield Dairy decided to tie the package shrinkage to their premium line of “select” flavors.

"With the price increases we are seeing in cocoa, nuts and dairy ingredients, we are facing a substantial price increase," said Scottie Mayfield, president of Mayfield Dairy. "Instead of raising our price, we have chosen to reduce the package size by 8 ounces."

Here’s another one: Earlier this year, Dial Soap shrank from 4.5 to 4 ounces. Who would expect tallow (cattle fat) to get more expensive, too? In this case, the new size was marketed as streamlined packaging (getting a grip on Dial for Men).

Although consumer watchdog groups and blogs have been commenting on the package shrinking issue for a while now, there’s not much industry tracking of the effect on consumers and spending. The Nielson Co. has information for their clients, but they’re not sharing it with the rest of us. One estimate was as many as 30% of packaged goods have gone to smaller sizes in the last year, but that data doesn’t tell us whether the price went up, down, or stayed the same.

The solution, unfortunately, for consumers, is to check the unit cost (price per ounce) on the things they buy. One analyst even recommends saving your cash register receipts and comparing them over months --- to use the point-of-sale data yourself rather than let the industry have all the fun. But that’s time consuming, and let’s face it, I'm not sure consumers want to extend the duration of their "retail experience" just to find out that they're paying more for everything anyway.

At the same time, I’m wary of encouraging marketing folks to give this a positive spin – like George and the laughing woman, it may be a futile exercise in damage control. Or worse, tied to questionable tactics: I can just see the tie-in to anti-obesity campaigns (shouldn’t we all be eating less anyway?) or environmental concerns (smaller packages mean less waste!). It’s hard to convince people things are better for them if they’re paying more for it, especially when we’re talking about staples like groceries. Americans in particular are used to spending a very small percentage of their income on food in comparison to people in the rest of the world. Like higher gas prices, higher food prices will require some adjustments from everyone, from the farmer to the producer to the retailer all the way to the consumer. I don’t particularly like paying more to keep the pantry full, but it’s one of the last things I’m going to sacrifice in my budget-trimming. I’m already buying the less expensive brand of shampoo, the generic household cleaners, and clothes on sale. And if I’m buying less at the grocery store, I’m still buying the things I think are essential, delicious, and part of our regular meal patterns. Isn’t that a kind of brand loyalty?

So here’s a novel idea for package shrinkage: be honest.

Tags: retail, shopping

Wii wipes out recession blues

2008-07-21T08:13:00.000-04:00

I’m opinionated – how else could I write these columns? But I’m also pretty open to changing my mind, admitting I’m wrong, or re-thinking the whole enchilada.

From some of my past posts you might think I’m not a big fan of the Wii, but I just came back from dinner with friends and their 13 year old (who's a serious athlete AND gamer), who gave me a detailed description of why I should re-consider the Wii Fit as a fun challenge.

I’m not an uninformed critic – I’ve put in some time with the Wii , Guitar Hero, and Garage Band. All of it for the sake of research, mind you. (And now I'm itching to try the Wii Fit, despite my preference for real yoga). But as a person and, more importantly, a parent, I’m still pushing for the real over the virtual. I expect my kids to play outside, play sports, and be active in the world as much as possible. At the same time though, we’re movie hounds. We’ll watch a downloaded episode of one of our favorite shows over breakfast if it’s a quiet morning. We all check our email a lot. I mean a lot. We all work on blogs (even my 9 year old has one about ecology and rescuing worms on rainy days). And there’s a big amusement and water park about a half hour’s ride from here. We’ve gone to events in Boston (two hour’s drive), plays in the Berkshires (another two hours), and concerts nearby. We’re planning one or two beach trips, but I have to start budgeting for those. After all, it’s expensive just to buy groceries right now, let alone drive to the shore, buy lunch and dinner, and stay overnight.

I’m not the only one who feels the pinch in my leisure and family life. Marketplace recently an a great segment about the way families are relying on at-home media for summer entertainment when they can’t afford vacations. Here’s what they found in talking to the Dorn-Wallerstein family:

They've been taking more walks, dealing more hands of Go Fish and playing a whole lot more Super Smash Brothers on the Wii console they bought six months ago….The Dorn-Wallensteins apparently aren't alone. Retail industry researcher NPD Group reports Nintendo sold twice as many Wiis last May than it did in May 2007. And this year, overall video game sales are expected to reach a record $21 billion.

Wedbush Morgan Securities analyst Michael Pachter tracks the video game industry. He predicts sales will remain strong as more people stay home to save money. “I think that consumers really are going to make a trade-off between very high-cost entertainment activities and they're going to shift in favor of lower-cost forms of entertainment. The Wii is going to draw families together and I think you're going to see a big shift.”

The argument is that the Wii is a better investment for fun and leisure than movie tickets or a summer’s pass to the water park. I like the idea that new technology can be a boon in difficult times, rather than an expensive or resource-draining way of distinguishing the Haves from the Have Nots. Usually most of the “how we’re changing our lives” recession news is all about retrenchment. I’m sure the articles about comfort food and cooking at home are being primed for fall publication. There’s definitely been an increase in home gardening and other do-it-yourself activities. But can it be more than pre-industrial amusement? This home entertainment approach at least considers how to incorporate the new and interesting products into a less expansive life. Moderation, adaptation, and fun are much more appealing than deprivation, aren’t they? Can there be a positive side to financial struggle? And does this mean the Wii Fit is better than my yoga class? That I’ll have to learn to like gaming?

Honestly, I’m still more of a fan of the great outdoors. But if it takes gasoline to get there, perhaps I should have bought that Wii when it was on sale. For now, we’ll just have to run across the street to the neighbors and hope they don’t get wise to our penny-pinching approach to fun! I hope they're going to get the Wii Fit attachment soon.

Safeway's plan to target kids has parents asking "What's up, Doc?"

2008-07-17T09:26:00.000-04:00

When my kids were young, we used to have a yearly event called Bad Food Weekend. One of us would take the kids to the supermarket and buy all the foods we saw advertised on television in between and blended in to the Saturday morning cartoons. We’d sample everything from fruit snacks that spurted out blue goo to cereals whose main ingredients were sugar and chemicals (with a vague reference to grains), to curly cheese doodles that turn your hands orange for a day. Usually by Saturday afternoon the girls had decided that 90% of the stuff was disgusting and one parent or the other was asked to make “a real meal.” Unfortunately, one year some nieces and nephews participated in the event, never reached the same gross-out point, and continued to ask for Sugar Coated Marshmallow Goodness in a Box for months afterward. My sister never forgave me -- I’m sure she’s sending her now-in-college son care packages full of carrots and whole wheat muffins just to counteract any lingering effects of that weekend long ago.

It’s easy to alarm parents (especially mothers) about getting kids to eat healthy foods. No surprise, as there’s more than a hundred years of "expert" advice – from the government, social service agencies, scientists, nutritionists, politicians, and of course, food companies --- telling women how to feed their families. And now, with fears of a fat nation starting in kindergarten, salmonella in your tomatoes, and Ronald McDonald as an exercise guru, the level of anxiety that must go into every meal is profound. Food vigilance is an around-the-clock job. In the last ten years, the obesity epidemic rhetoric has gotten fierce, starting with scientists at the Centers for Disease Control showing color coded maps of a creeping wave of fatness across the USA to Morgan Spurlock’s Supersize Me for kids. Whether you blame sedentary lifestyles, an out-of-control food industry, a lack of grocery stores and fresh produce in poor urban and rural areas, or parents (moms, really) who don’t make home cooked meals, it’s hard to ignore the statistics about type 2 diabetes in American children. Whether any of this warrants the label “epidemic,” there’s no question that the food industry knows it needs to start selling as much function as fun in their product lines.

So, it’s no surprise that Safeway, which like many supermarkets, food companies, and fast food chains, has launched a health kids set of meals and food products designed to ease parental guilt. Not a bad thing, you think, especially since one major complaint is that families do need guidance as to what counts as nutritional and healthy food. But unwilling to leave well enough alone, the new line will be packaged with Bugs Bunny and the rest of the Warner Brothers cartoon gang. According to Promo Magazine,

Warner Bros. chairman-CEO Barry Meyer said the deal is a way to turn its well-known cartoon characters into "ambassadors of health and fitness." He said the partnership "allows us to utilize the Looney Tunes characters' enduring popularity with kids and teens to promote a lifestyle choice that's healthier for them."

I wish I’d come across this story when I was writing the post about unbelievably bad marketing strategies, because it tops all the ones I’d mentioned. Like Sears hooking up with LL Cool J, there are some retail identities and pop culture items that really should be kept in separate rooms, locked away from one another. Otherwise we’ll end up with some crazy public service ads with the round green hero Shrek, (who’s been a fast food toy at least twice) promoting exercise. Oh wait, it’s been done.

(So do you think they'll use Porky Pig to promote the Soy Bacon Lettuce and Tomato Sandwich?)

To distinguish this campaign from the last thirty years of cartoon characters splashed across every imaginable kind of junk food, Bugs and his buddies are now exclusively featured on the Eating Right Kids line of food. Because Daffy, Taz, and Bugs are free of all that crass commercialism. Right?

Th-th-th-th-that’s all Folks….

Tags: branding, advertising, retail

Sell me a ticket for the retail rollercoaster?

2008-07-14T10:31:00.000-04:00

Today my daughters and I had an hour to find a light colored shirt and dark pants or skirt for each of them to wear for an orchestra performance. Amazingly (and especially after my recent complaints about the Gap chains), we found three out of four items in the Old Navy sale rack in half an hour. For under $20! So far this summer I’ve split my time almost evenly between big retailers and local merchants and it’d take a crystal ball to predict when or where I’ll end up on any given day.

Some of the most insightful comments about retail behavior links consumption patterns to the suddenly shifting waters of socioeconomic stability, creating what, to others, might look like chaos. Paco Underhill is one such commentator. Here is his version of what's coming (summarized in C B. Whitmore’s blog):

+ One third of the American population lives from one paycheck to another, with little savings [note this includes middle to upper income households]. For them, "...shopping is going to come to a standstill. Forget the organic produce at Whole Foods; they will buy food at ALDI, Trader Joe's and Wal-Mart."

+ Another third "is not at immediate risk, but they are scared... This group of Americans is taking pride in spending their money well..." They are the ones doing tons of research on the Internet, asking questions and making sure that anything they purchase captures the full bundle of value that they expect.

+ The last third is financially secure with mortgages paid off, retirements plans fulfilled. "The recession will have limited effect on them.... They'll go to Trader Joe's because they like it, and to the department store whenever they want."

Paco predicts that "the world of shopping is on the edge of a new form of chaos." Why? Because despair from one-third will mean little to no shopping; frantic bargain hunting from the middle third means a lot of channel churning, and from the last third you can expect disinterest because they essentially have all of the stuff they need.

He says "It will get ugly."

As we’ve been pointing out, it’s ugly already. Retailers are scrambling to scale back over-ambitious expansion plans (Starbucks), propose marketing strategies aimed at demographics that still seem willing to spend (Old Navy), reconsider plans to merge with too-similar competition (Sears), and try to re-make notions of value and necessity (Wal-Mart). Not all of it is working, especially since none of these strategies addresses any of its respective retailer's market segments squarely – and there’s movement between them. As someone who frequently moves back and forth between at least two of those categories, I’m sure my own shopping patterns look like a roller coaster ride through the retail amusement park – and like a lot of purported thrill rides we don’t choose to be on, not all of it is fun.

Underhill goes on in DDI to make a bunch of suggestions about how retailers might address this more appropriately. I have two favorites: one is supply chain management. Rather than focus on constantly upgrading or tweaking products that don’t need it, make sure the ones people want are in stock, available, and well designed enough to last. There are very few stores, even ones that capture my loyalty, that I can truly count on for a dependable product.

The other suggestion is about bringing decision-making closer to the retail floor. One lesson I’ve learned in the last three years is that not all chain locations are alike. In my new Pittsburgh suburb, the Panera is extraordinarily clean and always has at least two or three big sample trays heaping with bread or pastries, which the extremely solicitous workers encourage customers to take by the handful. It’s almost always packed with different sets of regulars throughout the day. Although the Panera here in Massachusetts is equally spotless, the workers are more of the bored college student variety and the sample trays are always empty. There’s the usual wireless crowd, but the real camaraderie takes place at the local coffee shops downtown.

Getting it right with customers at the local level is certainly a skill worth honing whether it’s bust or boom times. Implicit in Underhill’s message is the idea that retailers shouldn’t sacrifice creativity and innovation, but channel it in new directions. After all, I’d be much more willing to get back on the roller coaster if I was sure that after all the ups and downs, it was going to be good clean (maybe even safe?) fun.

Starbucks: closer to the end of Its universe?

2008-07-09T08:24:00.001-04:00

Of all the stories about Starbucks, the best is comedian Lewis Black’s segment on the end of the universe, where he describes walking out of one Starbucks in Houston, only to see another across the street. Who, he wonders, would need two Starbucks within two steps of each other? After careful thought, he concludes that the only group would be people with Alzheimer’s. As Black says, “When you build a Starbucks across the street from another Starbucks, that’s it. Game over.”

Apparently the marketing and expansion plans for Starbucks must have been organized by folks who believe that people with memory loss are a growing segment of the population, since there are now hundreds of Starbucks within less than a mile of another. (There's even a great website with examples from around the country.) Even so, we still might be able to avert the end of the universe: today’s news is that Starbucks is planning on closing 600 stores across the U.S. Most of them are newer stores, (one analyst claims it’s about 20% of the stores opened in the last two years. While that affects approximately 12,000 workers, it’s not clear how many jobs will be lost overall, since some of these baristas may simply be transferred to the surviving store across the street.) According to the Associated Press,

Starbucks estimated $8 million in severance costs. In total, the company forecasts up to $348 million in charges related to the closures, $200 million to be booked in the fiscal third quarter ended June 30... The locations were not profitable or were not expected to be profitable in the foreseeable future, and the majority had been opened near an existing company-operated Starbucks.

Two other bits of news signal a re-thinking of the “blanket the world with coffee” expansion strategies that have gotten Starbucks into trouble. One is that they are cutting back on their attempts to be a cultural marketplace, firing executives in the entertainment division and removing the large cd racks from the main store floor in order to concentrate on a few featured titles near registers. The second issue is with the coffee itself: the newer, mellower beans featured in Pike Place Blend have also been a source of controversy – not so good, say the majority of loyal Starbucks drinkers who prefer the more heavily caffeinated and “bolder” dark roasts that dominate the daily choices.

It’s no accident that Starbucks introduced this milder coffee at a time when both McDonald’s and Dunkin Donuts have explicitly challenged the coffee king with robust blends, cappuccinos, and lattes to go. Still, CEO Howard Schultz claims that Starbucks is holding its own ("we control our own destiny," he asserts) since he believes their coffee is better, more authentic, and fresher than the fast food competitors. But when you have the hubris to expand hundreds of stores directly across the street from yourself, perhaps it’s time to re-consider destiny and pull back before you're consumed by the black hole looming at the galaxy's edge. Here's a hint: it's not coffee.

Game over?

Image (inspired by Escher's Relativity) created by Alien Loves Predator.

Rethinking the concept of consumer intent

2008-07-07T07:04:00.001-04:00

Back in 2005, we did an article over on the WireSpring blog about calculating the ROI for digital signs, and started out by describing an "awareness funnel" that took walked through a shopper's first moment of truth with an item -- from becoming aware that the product existed to actually purchasing it. It looked like this:

              / \
             /   \ <- SALES
            /_____\
           /       \ <- IDENTIFICATION
          /_________\
         /           \ <- PREFERENCE
        /_____________\
       /               \ <- PERCEPTION
      /_________________\
     /                   \ <- RECALL
    /_____________________\
   /                       \ <- RECOGNITION
  /_________________________\
 /                           \ <- AWARENESS
/_____________________________\

As I was reviewing some old blog articles from Advertising Age recently, I came across another description of the same concept, this time from the perspective of consumer intent. As the article's author Troy Young notes, "Intention is one or two steps before purchase and far removed from 'unaware.' Brand advertisers love intention, naturally, but the real magic is the part before intention -- moving a consumer from being 'unaware' to being 'predisposed'.... What the data show is this: In creating value for brands, we need to look beyond 'intent to buy' and toward 'intent to engage' with a brand message." Consequently, his funnel looks roughly like this:

              / \
             /   \ <- SALES
            /_____\
           /       \ <- ??
          /_________\
         /           \ <- ?
        /_____________\
       /               \ <- INTENTION
      /_________________\
     /                   \ <- PREDISPOSED
    /_____________________\
   /                       \ <- AWARE
  /_________________________\
 /                           \ <- UNAWARE
/_____________________________\

While Young states that "the real magic is the part before intention", from where I'm standing, I'd say the real magic is in fact after it, when you complete the 2-stage process, whatever it is, that converts a mere shopper into an actual buyer. Of course, Young notes that such a process will only happen when the purchase actually demands a decision - nobody's going through 6 or 7 steps to buy a can of soda or a pack of gum. But I guess that's the difference between a brand-focused guy like Young and a sales-focused guy like me: for the brand-centric, building the consumer psyche to the point where there's real intent to buy is the biggest challenge, and thus garners the lion's share of ad funds. That's why we see so many commercials for stuff, and none of them actually say "look, just buy me already!" We're instead finessed into wanting, desiring whatever it is -- a car, the latest clothes, a new computer. But very few actually take the direct route and say "buy me now." I suppose it's because unless the viewer has an immediate need for the product, the message is lost and there's no "residual" value. With a brand-centric message, on the other hand, each commercial, print ad, banner on the 'net or other marketing device builds on previous messages, essentially assuming in advance that the viewer doesn't want to make the purchase right now, but might need to in the future.

My funnel, on the other hand, is more heavily weighted towards the top. I assume that, being a good brand marketer, the product's already going to be in the hearts and minds of my viewers. My job is to figure out how to turn all of that goodwill and built-up brand recognition into an actual sale of the product. That's one of the reasons I like digital signage so much - it's hard to find a more direct route to shoppers, or a better place to put a message like "hey you! buy me right now!" -- in as elegant and beautiful a way as possible, of course.

Tags: in-store marketing, marketing at-retail, digital signage, shopper marketing

Don't cry over spilled milk, even if it's green

2008-07-06T07:13:00.000-04:00

Milk is one of those products at the heart of American consumption. Most people purchase milk on a regular basis. We can gauge rising food costs by the price of a gallon of milk from one week to the next. There are many arguments about how milk can be advertised: is it hormone-free? What counts as a hormone? Is organic better than local or local better than organic? Who’s left drinking whole milk in the midst of an obesity panic? Should people drink so much milk?

The New York Times came out with a great milk story recently which dovetails nicely with my recent re-consideration of big box superstores like Wal-Mart. Costco, Wal-Mart, and Sam’s Clubs are all switching to a re-designed milk carton that’s square and flat on top. The new jugs are not only cheaper to produce, but they cut energy, transportation, and storage costs. The more familiar shaped gallon container is a pain to store and stack. They require plastic crates for shipping, which add weight and return costs to trucking operations. The new jugs fit together like puzzle pieces and can be packed together with a single layer of cardboard in between and shrink -wrapped, four layers high. There’s also less water use (no crates to wash) and the store can fit three times as many gallons of milk in store coolers than it did before. One other surprising result:

The whole operation is so much more efficient that milk coming out of a cow in the morning winds up at a Sam’s Club store by that afternoon, compared with several hours later or the next morning by the old method. “That’s our idea of fresh milk,” Greg Soehnlen, a vice president at Creative Edge, said.

The new plastic jug seems to be recyclable in most areas, but Costco has shifted towards using plastic shrink-wrap to encourage consumers to buy two gallons at a time. The plastic wrap, which is more and more ubiquitous at these stores (as a means of encouraging buying in bulk), definitely ends up in the landfill.

For consumers, the store-driven innovation is a mixed bag (or jug?). In Sam’s Club, the new carton sells for less than a “traditional” plastic gallon, but the company also has in-store demonstrations on how to pour from the new container because it’s easy to spill. The sales clerk recommends a “tilt” rather than a “lift” when filling a glass. Even with training and a reduced price, some people were still complaining about how easy it is to spill the milk, a problem that might, in another scenario, be considered a design-flaw. In this case, because these companies dominate the grocery market and have a commitment to lowering production costs and energy use, their design needs trump those of the consumer. It will be interesting to see how and when consumers adapt. I don’t see a mass rejection, a Costco Milk Revolt a la the Boston Tea Party, because the change translates into some savings at the checkout counter.

I’m going to get a few containers and see how they work, but for now, I’m sticking to a really old-fashioned approach: for the summer, we rely on a local dairy that delivers milk in glass bottles. We’ll have to wait until September to see how long it takes us to learn not to spill.

Channeling the thrifty Puritan

2008-07-03T09:45:00.000-04:00

It’s no surprise that recent retail news has focused on marketing to the budget-conscious consumer. In Marketing Daily, Sarah Mahoney asks, "Will women embrace their new role as Chief Thrift Officer?" In an attempt at positive spin, she suggests that women might be "enjoying" shopping for bargains in stores and online. This would be interesting news, were it based on some actual data.

Without a doubt, every woman I talk to (whether for research or in casual conversation) complains about rising food prices and the extra effort it takes to make economical choices, find bargains, and stock the pantry without huge sacrifices. Shoppers are definitely buying less and sticking to the necessities, but it’s not a source of pleasure. Things are not dire for everyone yet: the local farm markets are packed on weekends, people still talk about inviting friends over for barbecues, and the aisles of Whole Foods are still filled with those who can afford it. But is there a shift in sensibilities for the women who do the majority of this shopping?

"Women like feeling smart and efficient," and enjoy things like finding more ways to save money with "shopping on the way" strategies, says Marti Barletta, president and CEO of TrendSight, a Winnetka, Ill.-based firm specializing in marketing to women. And in many ways, she says, this economic funk presents more appealing ways to save money. "First, unlike past downturns and recessions that have been driven by job loss, this one is largely centered on gas prices," she says. "So no one feels singled out. Everybody gets a sharp reminder every single time they gas up their car, and no one is immune from this kind of sticker shock."

Despite TrendSight’s emphasis on market research about women, their conclusions about pleasure and control seem imposed rather than discovered. No one I spoke to mentioned enjoying cutbacks or budgeting for a household. In the everyday world of providing for a family, it’s important not to confuse responsibility with control. Research has definitely shown that women are not the “gatekeepers” to what is purchased: they may have some decision-making power, but their decisions are shaped mightily by family preferences, particularly men’s likes and dislikes. And even if there was some sea change in women's responsibilities, control over a shrinking pie is definitely not the same as having control over a whole pie. One is definitely more fun.

That’s not to say that a subset of the current population doesn’t embrace a do-it-yourself ethos. Given today's circumstances, we could certainly benefit from a popularization of ideas about Slow Food, “green” living, and local lifestyles. It's an attitude that can travel across economic lines. But these approaches require more cultivation if they are to become mainstream, so that combining pleasure with thriftiness is a general value. We can’t fault TrendSight for wishful thinking. But while there’s potential for wealthier women consumers to practice comparative shopping, it’s important not to gloss over the real sacrifices and hardships that some people are already facing. So what practices can take both into account?

In a recent New York Times piece, Ron Lieber highlights a somewhat upscale small grocery chain in Cleveland, discovering that stores can keep customers loyal by helping them buy quality goods in the most economical fashion. His list of things grocers and shoppers can do is terrific. Key pieces include having knowledgeable sales staff, figuring out how to cut waste, and finding alternative high-end food products at slightly lower costs.

It seems that the important news here is that engaging in thrifty practices without sacrificing high standards and quality products is a job for both retailers and their mostly women customers. But I’m betting most people will do it without the forced optimism and hokey title of Chief Thrift Officer.

Re-thinking Wal-Mart

2008-07-01T09:10:00.002-04:00

We all have retail biases – stores we prefer, brands that we’d never buy, and products that seem to define our very core. When I analyze retail trends, I don’t try to hide my preferences (Apple anyone?) but I do promise to suspend my likes and dislikes until after I’ve done my homework. Sometimes a bias runs so deep, it’s almost impossible to overcome and it’s best to keep quiet. So far in this medium, I’ve carefully avoided Wal-Mart, except in the most trivial or passing reference, safe from judgment.

Wal-Mart bothers me for a number of reasons. First, I might be a bit of a retail snob now and then. I have plenty of yuppy and professional friends who don’t think twice about getting basic items from Wal-Mart. I, on the other hand, am turned off by the big yellow smiley face and the "prices slashed," overstuffed aisles of things I don’t really need but am enticed to buy. This is personal snobbery and I’m not proud of it, so I try to keep it to myself… but boy was I grateful when a new Target opened nearby.

Then, there’s the social consciousness side, where I’ve watched small local stores close, workers lose jobs and then (if they’re lucky) get lower paying ones at Wal-Mart. There are case studies that show how the company manipulates production and can push even a profitable producer over the edge in its demand for items regardless of seasonal or economic rhythms. There are class action suits and anti-union sentiments. There’s the disregard for transparency in the supply chain, meaning that we get cheap goods without knowing the conditions under which they’re produced. And finally, there’s the moral imposition, stocking guns and ammunition, but not certain kinds of "objectionable" music or birth control. All of these issues are particularly important to me as a social scientist who teaches about labor, business, global trade, and human rights. If I couldn’t afford the alternatives or I lived in a more retail-isolated environment, I’d reluctantly go there. But since these matters are at the heart of what I teach about community, I have an obligation to hold up my end of the moral bargain and avoid the place. (And yes, I know other big box retailers like Target are not immune to some of these charges. But it’s the volume of problems and the scale of Wal-Mart’s reach that draws my attention.)

What’s important here is that my biases do in fact, connect to a larger public sentiment. While there are still plenty of people shopping at Wal-Mart, there are significant polls that show even the mid-to-lower income people who frequent the store are disheartened by stories of employee mistreatment and community disruption. Up until recently, the company seemed, at best, indifferent to these complaints.

But then Wal-Mart went and got all environmental on us. First there was the announcement that they would begin offering organic foods and produce in their supermarkets. Now Wal-Mart has drawn the eye of green groups everywhere by replacing all the lightbulbs in stores, working on overall store energy efficiency, and selling more “green” products. The CEO has explicitly defined Wal-Mart’s role as a "good steward for the environment." Their new long term goals include 100% renewable energy, zero waste, and 20% reduction in greenhouse gas emissions.

The changes are not all about ecological goodness: there’s been a marked increase in the company’s overall charitable donations. They’ve made some small progress on opening up about their supply chain information. Partly as a result of the class action suit, they are also committed to hiring more women and people of color at the management level. Is this enough to change my mind? Or is it simply, finally, good public relations? Women’s Wear Daily does an excellent job reviewing some of the pros and cons of Wal-Mart’s new moral face. But, rightly so, the critics are not totally convinced yet:

"Wal-Mart has made some progress, but the progress is not what we should expect from the largest company in the world," said David Nassar, executive director of Wal-Mart Watch. "It gave $298 million to charity. Americans aren't looking for a handout. We work hard and expect to be treated fairly by our employer. Wal-Mart needs to reform. It needs to reduce the amount of energy it's using for every dollar it earns. Producing so much in China increases Wal-Mart's carbon footprint. Wal-Mart heard the criticism and is trying to do something to address it. All the changes it's made so far have passed costs onto someone else, whether it's a health care plan that's increasing costs for workers or environmental initiatives that pass costs on to suppliers."

Whether it’s PR or deep shifts in practice, I’m not sure it matters as long as the changes happen. So, while I’m still going to drive by the Wal-Mart on my way to the farmer’s market or the local shops in the quaint town where I’m living, I am going to start to pay close attention to what’s going on in the big box. As the marketing executives in Sam Walton’s company probably know, their latest actions may not make me (and many others) into a new customer, but it might stop me from thinking – and talking – negatively about the low price giant. And that’s worth just as much.

While my Guitar (Hero) gently weeps

2008-06-30T19:18:00.001-04:00

The last few weeks have had a lot of marketing and retail news that’s made me stop in my tracks and say, incredulously, “really? Are you kidding?” Despite a background in consumer research and design, I still consider myself a mere fly on the wall of marketing strategy. Still, there are some gleefully optimistic advertising campaigns that just call out for commentary. Here are three that Marketing Daily highlighted all on the same day, without a trace of irony.

First, the Corn Refiners Association has sponsored a new advertising campaign to try and convince women consumers that High Fructose Corn Syrup (HFCS) is not the evil substance behind the growing numbers of children and adults with type 2 diabetes. The ad campaign must convince consumers that HFCS is all natural (made from corn!) and no different than other sweeteners and that the American Medical Association has concluded that HFCS is no greater contributor to obesity than sugar. With my social scientist hat on, I’ve developed some critiques of the whole obesity epidemic scare and I do think most consumers are smart enough to realize that one item in their diet isn’t the cause. This is true no matter how ubiquitous the food is (just try doing your weekly shopping without buying HFCS and see what I mean). But HFCS has been deeply vilified by scientists, consumers, and policy-makers, while at the same time corn production has been heavily subsidized by the government. HFCS is a good stand-in villain for a host of larger problems within the food industry and culture. Any positive-spin ad campaign has to combat a whole combination of problems: a supremely bad reputation, a relationship to a non-sustainable public policy, the possibility that it’s probably not good to have any single food item appear so uniformly throughout our diet, and, the clincher I think, is changing women’s minds about what’s healthy for their kids. Unless HFCS is suddenly discovered to cure the common cold, I’m not seeing a whole lot of moms running out to buy more Lucky Charms based on this one, are you?

Second, an old but struggling stand-by has had a mid-life crisis: Sears has launched a new marketing offense aimed at bringing teens into the store, using LL Cool J and a new media blitz called “The American Mall.” According to the Associated Press,

 “The American Mall,” produced by the team responsible for the tween-loved “High School Musical” series, is a massive cross-promotion between MTV and Sears.  Scenes for the 87-minute film were shot in a Utah Sears store. Characters wear Sears clothes, which shoppers can purchase. And the actors will appear in Sears advertisements and circulars. Meanwhile, Sears will sell the DVD and soundtrack in stores, while promoting the film and getting commercial time when the movie airs on MTV on Aug. 11.

While Sears may have some success with this approach, it’s not clear to me if it's going to distinguish their brand from the other mass of department stores and specialty clothing lines all vying for the mighty teen dollar. Even if Sears is no longer the place to get your washing machine or power drill, selling clothes to teens (in this tighter spending market, even) leaves the company with a fickle core consumer base and a lack of true retail purpose. Not to mention that it's Sears. And honestly, L.L. Cool J?

Finally, the one that gets me off the observer's wall is the news that two game companies are potentially vying to create a Beatles version of Rock Band and/or Guitar Hero. Sony, Apple Records and EMI own the rights to the majority of Beatles titles and they have been notoriously careful with licensing Beatles songs for commercial use, even keeping them off iTunes for an unbearably long time. (Remember all the flak Michael Jackson took when he owned a larger chunk and we got Revolution-backed commercials?) Rumors of licensing agreements reappear every few months -- when, for example, the original iPhone release featured “Lovely Rita” coming from the phone. Recently, American Idol featured a Beatles Week, where certain songs were performed with permission. Similarly, Cirque de Soleil’s LOVE show in Las Vegas was backed by a 78-minute collage of Beatles tunes, orchestrated by Sir George Martin. And then, of course, there was Across the Universe, a Beatles-inspired version of Hair for the Lion King generation. But if the rumors are true (and the rumors are, themselves, a pre-marketing campaign), many of you will be listening to Helter Skelter played by the wannabe rock star in your living room – before you’re able to download Lucy in the Sky with Diamonds onto your iPod.

Tags: retail, marketing, advertising

When the brand isn't enough

2008-06-25T00:24:00.001-04:00

Following up on Annie's post yesterday about when brands matter (and specifically brand packaging, in that particular case), I came across this article at Media Buyer Planner that suggests that under the right economic circumstances, the "luxury" aspect of a name brand may outweigh the potential value that habitual buyers place on the brand. To wit:

A sizeable 42 percent of consumers say they have given up favorite food brands because of rising prices and economic concerns, according to a study from Information Resources, Inc. that shows the lagging economy is driving a dramatic move back to basics and a reversal of decades-long trends for convenient and healthier foods, writes MarketingCharts.
Though changes in shopping and purchase behavior vary based on life stage and presence of children, those with lower-incomes report being the hardest hit (see chart):
Roughly half of all consumers with incomes less than $55,000 per year say they have trouble affording the groceries they need.
Nearly a quarter of those earning between $55,000 and $99,000 also say so.
Among those with incomes over $100,000, 16 percent report having trouble.
As a result, consumers are increasing purchases of basic ingredients and meal components, reducing restaurant spending and decreasing purchases of “non-essentials” (see table):
53 percent of consumers report that they are cooking from scratch more now than they were six months ago.
About 59 percent say they are buying fewer single-serving products.
55 percent say they are buying fewer prepared meals.
52 percent say they are buying fewer organic products.
Stores are seeing a resurgence in sales of frozen foods, perishables, and “center-store” items.
Private-label products show strong gains, with 50 percent of consumers saying they have stepped up their spending on such products in the last six months.

Despite America's love affair with food, at a certain point the economic pain becomes such that items that were once thought of as essential get reclassified as not really necessary, and thus, luxuries that can be cut back on.

What does that mean for the grocer or food retailer? Well, it depends on how they're handling their product segmentation, and who their target customers are. Obviously those catering to the upper-middle class will be hurt less, as fewer of these people have (so far) reported having any problems. That means they probably haven't cut back on luxury spending yet (or, more accurately, they haven't needed to reclassify brand-name food item purchases as luxuries yet). For the rest, though, the news might be more sobering. One possible exception is grocers with strong private label brands. For a lot of these guys, their private label is becoming a high-margin and increasingly upscale brand that can stand head-to-head with more established name brands while still offering strong value to the consumer. As consumers continue to tighten their belts (figuratively), expect to see more of them hold off on tightening their belts (literally) by trading brand loyalty and perceived brand value for the bona fide value that high-quality private label brands can offer (note that crappy off-brand goods probably won't get a boost in this case, which is as it should be, if you ask me).

Tags: branding, private label, retail

When brands matter

2008-06-24T16:23:00.001-04:00

I’ve been trying to think of a catchier title today, but what I want to talk today about is as simple as those three words.

In a number of previous posts, we've written about the significance of trusted brands for certain niche groups of consumers: the “pink collar” shopper, men with high incomes, gays and lesbians, Latinos, and African Americans. Creating and building product recognition and reputation comprises the great mission of marketing, one that seems increasingly difficult in a world where advertising has all but imploded, social networking dominates the discussion, and economic conditions pressurize the creative process. It’s no surprise, then, that even with a great brand, companies have to follow some solid guidelines to maintain their spot in the collective imagination. Keep the design in tune with your target audience, keep the price in line with the perceived value, and keep the product itself consistently good.

When we think about advertising and marketing firms as products in and of themselves, it turns out that similar criteria matter for both steady profits and reputation. According to Media Buyer Planner,

Premium-price firms reduce uncertainty by focusing on profit and value and are more likely to use value-based pricing to price their services (43 percent versus 21 percent of the bargain price firms). These firms first consider the value they can provide, then back that up with the confidence and in their ability to provide that value.

This logic is slightly reminiscent of trends in college tuition pricing, where “second tier” schools (not Ivy League, but with solid academic reputations) – keep tuition high as much for the appearance of a premium value as for actual budgetary needs. Let’s keep in mind that we’re talking about high-end firms and products.

The specific relationship between a brand (be it a product, a firm, or a seat of higher learning), and its perceived value varies based on the niche to whom it’s being marketed. There’s a whole range of possibilities between luxury and discount that make up the vast majority of purchases in daily life. How can a firm remain creative in that vast landscape of possibilities? One other interesting finding was that the most profitable firms had the least pressure from their clients, a hard thing to manage in economic tight times, but a good one to remember.

Here’s a great example of how design and positioning matter: a study in the Journal of Marketing finds that people buy wine based on the appearance of the label. The study used photographs of wine labels to determine that buyers associated certain designs with different price and quality rankings:

They asked 125 experts — graphic or industrial designers — to analyze the aesthetic attributes of each bottle. Then, they sorted responses into five primary design types: massive (or bold), contrasting, natural, delicate and nondescript. Next, researchers showed photos of the bottles to 268 consumers in Oregon. They asked 15 questions about each bottle’s “brand personality,” including whether the brands seemed sincere, exciting, competent, sophisticated or even rugged.

Not surprisingly, people associated delicate designs with competence, and “massive” designs with low price and low quality. The goal was to help a marketers think about matching design factors with premium customers, but unfortunately, the study operated on the presumption that all wine buyers only used one set of criteria (packaging) to choose a product. By contrast, Wine By Joe, one of the brands critiqued in the study, positions itself deliberately outside the “premium” crowd, arguing for people to “drink the wine, not the label.” This is an interesting back-end way around the reputation and design issue, creative and economical all in one. I’m almost convinced to go get a bottle and see what my brand personality has to say!

Dollar days and pink collar blues

2008-06-18T08:47:00.000-04:00

Sometimes I’m an affluent shopper, roaming the aisles of Whole Foods and Macy’s, using my Banana Republic credit card and searching out deals on name brands. In tighter times, I’m cruising the dollar store aisles for generic sandwich bags and cheap liquid soap for the bathroom. Because I’m a woman and do most of the shopping for my household, my spending should matter a great deal to retailers, no matter which category I’m in.

Recently, Meyers Research Center highlighted a somewhat overlooked group of shoppers they called “the Pink Collar shopper,” who is generally a working woman whose income places her in a tighter budget bracket than either non-employed housewives or wealthier middle to upper income working women. I’m not sure what color collar we’d give these ladies (golf shirt for the first, white collar for the second?) but there are definite differences in their shopping patterns. In particular, it’s no surprise that the pink collar shopper is often working with a single income and has less resources to fall back upon in tight times.

Seidl and Friedlander of Meyers suggest that this demographic group will be growing as economic times make it tougher for everyone. As someone who’s moved between all of these categories in the last ten years, from single struggling wage earner to upper middle class professional couple to out of the paid workforce and back again, my shopping patterns mirror all of the groups that Meyers captured. Indeed, it’s worth noting that people do shift in and out of different categories throughout their lifetime. This helps to make sense of one of their findings, which is that the Pink Collar shopper browses a lot but doesn’t always buy. Here’s what they said:

While low-income working women use fewer specialty stores, they have a strong affinity for those they do visit. They tend to visit these specialty stores just as frequently—and sometimes more frequently — than do affluent career women. This is particularly noticeable in the apparel and sporting goods categories. Although she cannot compete with the affluent shopper in all aspects of lifestyle, the pink-collar shopper does commonly reserve some area of special interest, development or pride, and may spend hard-earned money and time in that area. Retailers can certainly appeal to such interest.

This gels well with ethnographic work on low-income women that shows that they are more likely to buy a product they perceive as being a longstanding value -- worth the money -- even if it costs a bit more up-front. A loyalty to brands is part of that mindset: after all, who wants to get something inexpensive if it doesn’t work? We also shop with our future selves in mind. We live in America, the Land of Opportunity, and no one wants to believe they’ll be stuck in a low-income life forever. And while we may not aspire to (or even believe in) the retail-worshipping world of the Sex and the City women, it’s worthwhile window shopping to know what you really want when that lottery check or Working Girl promotion finally comes through. It’s the same reason women are the target sales audience for “shelter” and fashion magazines. Some of it is vicarious living, some is future planning.

What’s interesting is that at the same time, these women are also more frequent shoppers at the Dollar Store. Tying these two thoughts together, it makes sense for dollar stores to start thinking more carefully about branding. Target, while certainly no dollar store, gets this more than many other retailers. Although they’ve had mixed luck with their lower priced designer goods, in general people describe the merchandise as high quality for a good price, despite the fact that Target goods are categorically less expensive than the name-brand counterparts sold on the same shelves, just a few slots away. The cache of Target, (say it “cashay of Tarjay”), is strong even if some product lines are more successful than others. (no one wants a skirt with giant polka dots even if a famous designer claims it’s hot -- I don't care how hard Target marketers try to convince me otherwise.)

People want consistency and quality when they worry about every purchase. They’ll return if they know they can get a well designed or reliable product for a small additional investment. Still, it will be a long time before the dollar store becomes a clothing boutique. Granted one-stop pharmacy stores like CVS and Rite-Aid have begun selling some clothing, but those that have ventured into marketing their own branded lines have struggled and typically collapsed after very lackluster sales. It’d take a very creative marketing campaign to shift sensibilities about clothing and the dollar store. One good example does spring to mind though - Payless Shoes, who needed to position itself as both designer friendly and inexpensive, did manage to substantially improve their image among non-sustenance shoppers. It'd definitely been a struggle for them.

Clothing at the Dollar Store would also compete with a well established set of retail outlets that have their own cool cache: Goodwill and Salvation Army stores. Developing a market sensibility and a following helps. Consider: among women, it’s no longer okay to say you’re on a diet (say “I’m doing Weight Watchers” or “Jenny Craig” and you’re okay) but it’s perfectly okay to say you shop at Goodwill. It's partly because college students, hipsters, and folks of all types converge in the aisles of vintage and not-yet-vintage goods. So, until someone develops a brand strategy that works, I think I’ll keep getting my plastic ware at the Dollar Store and buy my t-shirts elsewhere.

Love in the time of downloads: dating Netflix, Blockbuster or Red Box

2008-06-16T15:45:00.000-04:00

I’m a big film fan, but I don’t go out to the movies much except during the summer, when I live in a little town with a refurbished classic theater. It’s the kind of place where they show offbeat first run and art house films in air conditioning. There’s a swanky coffee shop on one side, a grungier one down the street, and plenty of sushi bars, so it makes for a great night out. But the rest of the year, I do all my viewing through DVDs and downloads.

When we first got to Pittsburgh, the city offered Mega DVD stores inside the local supermarket chain, Blockbusters all around, and, in case you were sick of the top five releases, one good local alternative store. In Massachusetts, I’m loyal to a friend who owns a small local store and special orders Japanese anime for my kids and foreign films for me. When we left, I made a promise to avoid Blockbuster, as a token of appreciation for my friend and his amazing collection of old, foreign, and odd movies.

With the move to Pennsylvania, we signed up for Netflix and spent the winter in a new town catching up on past seasons of Deadwood and the Sopranos. I probably should have gone for something with a bit less death, but hindsight is, well, you know. Even so, the little red envelopes that appeared in my mailbox every few days made me happy.

Two years in, I’m less in love with Netflix. It’s definitely better as a monogamous relationship, where I’m not negotiating the top of the list with kids, weekend guests, and spouse. There’s also that whole category of times where, no matter how fast they are and how many processing centers they have, you can’t really wait a day or two for a movie you need. The teenage girl sleepover, the “hey, we’re stuck home with nothing to do” Sunday evening, and the “I have the flu and need something to watch” scenarios all require movies immediately. So, sometimes we peruse the "on demand" selections offered by our cable company. Not a bad solution, although it’s often the same limited selection as the big stores.

Being tech-savvy folks who like to travel, we got into the habit of downloading movies onto our computers for the kids while they’re in the airport or car. At home, the rest of my family is now addicted to a series called Chuck, which they watch in bed, squashed around the laptop. At some point we even figured out how to connect the computer to the television so we could watch it on a slightly bigger screen. Not bad at all, although the laptop-tv configuration is a bit cumbersome and requires the sacrifice of a computer when someone requests a movie. I still find myself running into a chain rental store every once in a while on a whim or a need (hoping my friend in the local DVD store in Massachusetts can’t sense my treachery from hundreds of miles away). Recently I noticed that the supermarket had replaced its Mega DVD Store with Red Box, but I am not tempted to try it. It's too much like the vending machines in highway rest areas – something you might turn to out of dire necessity rather than falling asleep at the wheel, fully aware that there wasn’t a Starbucks or diner for the next 60 miles. Apparently I'm not the only one who views my movie source as a kind of relationship: On TechCrunch, Michael Arrington claimed he was "breaking up" with Netflix for Blockbuster back in 2006! It's clear that some of these preferences are driven by convenience as much as romance.

But maybe my love affair with Netflix isn’t over. Although it’s already sold out of its first shipment, Netflix has teamed up with Roku to offer a $100 streaming video setup – a small box attached to your tv that allows you to download and order movies on line using WiFi technology. Early analysts were complaining that the back orders would take six to eight weeks, although now Netflix claims two weeks tops.

Well, for true love, I can wait a bit longer. Even with season three of Deadwood on the top of my list, it’s almost summer. After all, my friends in Massachusetts think there might be a gelato place opening up next to the local cinema.