We’re All Shopper Marketers Now

Spending on shopper marketing, along with agencies and consultants that have popped up to support it, has grown rapidly. Is shopper marketing just a “gussied-up name for trade promotion”, as a recent article in Ad Age suggested? After all, as the Ad Age piece points out, shopper marketing lacks even a commonly accepted definition. Within shopper marketing, there is no hotter bandwagon than neuromarketing. Since the publication of Martin Lindstrom’s Buyology book, there has been a spike in print, internet, and blog coverage of neuromarketing, a field of marketing that considers consumers’ brain response to marketing stimuli.

Perhaps neuromarketing can offer some interesting insights into how people view, interpret, and act on advertisements. However, the flashy science and technology sometimes gets too far out in front of practical reality and actionable results. Adweek reports that Japanese advertising agency Hakuhodo has taken a stake in Buyology, a new neuromarketing consulting company established by Lindstrom. Perhaps neuromarketing is the future of shopper analytics; after all, Japan is the country of the future, where scientists have developed robot exoskeletons to assist aging farmers and robot teachers that they hope to activate in the next five years. However, it’s all too likely that high tech brain scans and electronic imaging won’t be able to replace careful studies of shopper behavior any time soon. As David St. Hubbins said in Spinal Tap, “It's such a fine line between stupid and clever.”

The camera never lies...

...but lots of people do, especially when they’re talking to researchers or otherwise responding to surveys. A part of it might be attributable to the Lake Wobegon effect, from the mythical town of Garrison Keillor, where it is said all the children are above average. More technically, another driver is social desirability bias. This is where the respondent wants to provide an answer that will be looked at by others as favorable.

• A recent poll asked Americans who they voted for in the last election. This poll showed Obama thrashing McCain by more than 20 percentage points -- far greater than the actual Obama margin of victory on Election Day.

• When people are asked if they voted in a presidential election, the percentage of self-reported turnout is inevitably 10-20 percent higher than actual turnout.

• About 40 percent of Americans say that they attend church regularly. Counting and tracking methodologies used to determine true church attendance found that about half that number can actually be found in the pews.

• A number of years ago, a survey found that upwards of five million people claimed to be New Yorker magazine readers—an unlikely number given that circulation was barely above half a million.

People want to be on the winning team, and want to look virtuous and smart. So when we ask them to self-report, we often get responses that are wildly inaccurate. Researchers are exploring tools such as anonymous online polling and expressionless computer avatars in order to obtain more accurate survey results. But no matter how sophisticated surveys become, there is no substitute for the careful capture of actual human behavior, as we do with video-enabled behavioral analytics to see into the realities of shoppers in the shopping aisles.

As Yogi Berra once said, “You can see a lot by observing.”

The focus group: dying a slow death?

How much useful information can you get from a room full of twelve people being paid $75 to eat cookies and talk about a product, place or campaign?

According to a recent Catharine Taylor column in Social Media Insider, the focus group is dead. Taylor points out that focus group testing failed to predict customer outrage over Tropicana’s packaging change, the complaints of baby wearing moms about a Motrin advertisement, or the howls of protest over the Sci Fi channel’s name change and Facebook’s new terms of service. According to Taylor, focus groups are “contrived” and encourage companies to listen to “customers who were either not invested in their brand very much or not invested in it at all.” Taylor comments that “the very idea that a focus group is valuable is ridiculous -- when compared with the real conversation taking place among the people who really care about your brand.” Is Taylor right? Can the focus group, often as stale as the potato chips served to participants, really be replaced by following the conversations of brand loyalists on blogs, Twitter, and Facebook?

Focus groups can indeed be a problematic way to get information. Participants are often distinguished more by their desire for a cash stipend than by their insights. Some people habitually lie about their background and past participation in focus groups in order to gain access. There is little that is natural or realistic about a forced discussion conducted in a bland office room. Often the companies conducting focus groups have a desired result, and interpret the data selectively to support their preferred outcome. However, as participants in the lively comments following Taylor’s post point out, the marketers can’t only listen to the opinions of the most intense fans garnered via social media channels, because they could be overly intense and atypical. In addition to paying attention to loyal customers via social media, marketers should be devising ways to make focus groups more relevant, realistic, and reasonable.

Our argument is that focus groups can play a role in information gathering, but are too far removed from reality, and that being

Message to retailers: stop hyperopia now!

Bill writes: Is the American consumer dead or just dormant? An incessant barrage of news reports suggests that we have officially begun a new age of frugality, trading shopping mall binges and dinners out for saving accounts and home cooked meals. Shoppers are clipping coupons, switching to store brands, and picking out cheaper cuts of meat. The tried-and-true, knee jerk way for retailers to appeal to the newly frugal customer is to compete on price by issuing coupons and holding yet another sale. An intriguing article today in the New York Times suggests they might want to pursue a smarter alternative.

According to the story, we are experiencing a rise in a phenomenon that consumer psychologists call “hyperopia,” or excessive obsession with preparing for the future. According to the piece, we’re likely to regret our excessive frugality. “People feel guilty about hedonism right afterwards, but as time passes, guilt dissipates. At some point there’s a reversal, and what builds up is this wistful feeling of missing out on life’s pleasures,” according to Ran Kivetz, a professor of marketing at the Columbia Business School. The story reports Kivetz and a colleague found that consumers who were asked to imagine how they would feel about their purchases in the distant future shortly before Black Friday spent more money and bought more indulgent items than consumers who were asked to imagine how they would feel the following week. In the fable of the Grasshopper and the Ant, Aesop described “two types of people: the virtuous Ant who saves for the winter and the improvident Grasshopper who’s punished with starvation.” Another consumer study found that even the most disciplined Ants found ways to “pre-commit to indulgence” -- more than a third of participants selected a less valuable spa gift certificate instead of cash so that, as one participant wrote, “I’d have to pamper myself and not spend the $ on something like groceries.”

Retailers need to change how they think about their stores. If they pursue a purely transactional approach, merely bringing in merchandise and promoting it in hopes of a sale, they will miss an opportunity to appeal to the more hedonistic Grasshoppers among their customers. Retailers might consider finding their Grasshopper customers, inviting them in for open houses where representatives from the retailer and various manufacturers demonstrate products and experiences. These open houses would allow people to come into stores and see, feel, think and experience without obligation. Retailers could give the visitors a small gift certificate for use at another time. This would appeal to the indulgent, hedonistic Grasshoppers, and even to the more frugal Ants, awakening the “inner Grasshopper” in all of us.

Other thoughts on treating hyperopia?

Can we do an MRI in Aisle 11?

Ron writes: The search for the perfect predictor of advertising effectiveness continues. According to a recent story in the New York Times, a Yale undergraduate is using magnetic resource imaging to “study brain waves and determine why people respond to some advertisements but not others.”

Emily Yudofsky became curious about the potential of neuromarketing in high school, when she worked in a laboratory that did research on the consumer response to Coke vs. Pepsi. Yudofsky’s neuromarketing company will specialize in research on public service advertising, hoping to develop anti-smoking or don’t-drink-and-drive campaigns.

The article suggests neuromarketing is “tremendously controversial,” both because it is seen as “creepy” and, as scientists point out, “just because a neuron fires does not mean a consumer likes Coke better than Pepsi.” If neuromarketing is indeed effective, we will see it used for more commercial applications. It is tempting to believe that brain scans can provide a complete understanding of how consumers make decisions. However, no matter how refined this technology gets, it won’t be a substitute for the observation of behavior and the resulting insights that bring true understanding of the consumer. At least not yet.

In the trenches

Bill writes: Best Buy’s incoming CEO Brian Dunn started with the company 24 years ago as a salesman, and in some ways never left his roots. He still spends a great deal of his time on the sales floor, “where the rubber meets the road,” he says (see Wall Street Journal article “Best Buy Confronts Newer Nemesis,” March 16). In his quest to now differentiate Best Buy from competitors Wal-Mart and Amazon.com (now that Circuit City is history), Dunn has used a series of store visits to provide inspiration.

In the olden days of shopkeeping, owners minded their stores at all hours and lived upstairs when the lights were out. Nothing got past them since they were always there. In a world of multi-unit retailing, bosses are far removed from the action of the floor, often held hostage in meetings to consider new companywide dental plans and how to defer equity awards. Still, they take it as an article of faith there’s no substitute for being in the trenches, and “make time” to do store visits as often as they can.

While Brian Dunn’s efforts should be applauded, there may well be a limit to how much inspiration can occur when a CEO makes a guest appearance. Certainly there is value in talking with the troops, where good ideas might arise and unaddressed problems can surface. At the same time, these are all too often staged as goodwill/PR events to rally the troops, and the real value back to the CEO is diminished. One legitimate substitute for management’s inability to be in stores all the time is the use of video-enabled behavioral analytics, which provides a volumetric assessment of how shoppers use the stores and what are the effects of the experience the employees provide. It’s an interesting way to fuel inspiration and find out what’s really happening with thousands of customer actions, interactions, and transactions, when you can’t be everywhere—or anywhere—at once.

On second thought, bring back the lasers

Ron writes: Getting a hard count of how many people pass through New York’s Times Square every day is an important measure for a number of commercial interests—setting retail rents and outdoor advertising rates most particularly. According to this article in the New York Times, the Times Square Alliance pays $100,000 a year for a team of Russian immigrants who are paid $8 an hour to count the masses. The NYT reports that high-tech gadgets such as video recordings, vertical cameras, and even lasers have been considered, but that the immense volume of traffic overwhelms the technology. Instead, the human tide is counted by “dozens of Russian immigrants armed with clipboards, folding chairs and counters.”

Still, the low tech hand clicker approach employed by the Russians doesn’t work perfectly either. According to one of the counters, “When people walk en masse, it’s useless.” So when Times Square is most crowded, and counting accuracy is most important, the low tech method breaks down, too.

Having worked with many companies to help them understand customer traffic and behaviors, I know the best results come from employing both higher tech solutions such as video cameras, along with a low-tech, more labor-intensive approach. Perhaps if the Times Square Alliance employed this one-two punch, they would be able to get true head-count fidelity.

Even so, the most crucial assessments would still elude them—like how many people are actually stopping into the stores and buying, and who and how many are actually looking at the billboards. Those are the numbers worth real money.