Posted on March 12, 2010

In my previous article about how to connect to your customers with the help of research insights, I listed some of the key research questions that any business wanting to grow and succeed should ask. But, how do you do it?

Here we need to make a distinction between data collection methods and types of research based on analytical approach, which are often confused. Data collection methods differ based on whether we want to conduct quantitative or qualitative research.

Qualitative research, which is exploratory in nature, usually uses data collection methods such as focus groups, triads, dyads,  in-depth interviews, uninterrupted observation, bulletin boards, and ethnographic participatory observation.

Quantitative research, which looks to quantify a problem, collects data through surveys in different modalities (online, phone, paper), audits, points of purchase (purchase transactions), and click-streams.

As for types of research, I mean the approaches used to analyze the data collected. Depending of the business objectives, we may decide to gather data to conduct a market segmentation, product testing, advertising testing, key driver analysis for satisfaction and loyalty, usability testing, awareness and usage research, and pricing research, among others.

 When to use each of these data collection methods and types of research depends on the business issues we are dealing with in one or more of four key areas:

• Awareness: Let the market know that the product or service exists
• Targeting: Reach the target segments with the highest profit potential
• Acquisition: Optimize the marketing message, offer,  and price that will close the sale
• Retention: Generate repeat purchases from current customers

The chart below, which we call the Relevant Wheel, shows when it is most appropriate and relevant to conduct different types of research.

Our clients find this chart to be helpful and use it as a reference to determine when a particular type of research is needed. Once this is defined, we discuss the most appropriate qualitative or quantitative data collection methods.

 So next time you wonder what type of research to conduct, I invite you to ask yourself where the particular problem at hand belongs to (Awareness, Targeting, Acquisition or Retention ) and then use this chart to to guide your decision on the most appropriate type of research. I hope you find it useful.

Posted on March 10, 2010

I often meet entrepreneurs who have started, or are starting, a new business and who ask me what type of market research they should conduct. Some are inventors who have come up with a gadget they love, but don’t know if there is market for it. Others have launched products and services and soon realize they need to re-think product features, benefits, advertising and the customer experience.

Regardless of whether your customers are consumers or business decision makers, at Relevant Insights we always recommend assuming a customer-centric market research approach in alignment with our clients’ business objectives. This is based on two basic principles:

• Learn how to connect with your target customer by getting a 360 degree view of his behaviors, experiences, knowledge and emotions.




• Have a clear idea of what you want the customer to think and do regarding the company’s brand and products having in mind the ultimate business goals: acquire and retain customers.

A market research plan based on these two principles would include four key areas of research, which become relevant depending on the internal knowledge available inside the company in connection with the lifecycle of the product. These four areas are:

• Awareness: As a Cuban saying goes “the baby who doesn’t cry, doesn’t eat,” we have to let the market know about our products and services if we want buyers.




• Targeting: Businesses usually are more successful if they are able to define early on who their target customers are, and which customer segments have the highest profit potential. 




• Acquisition: Without customers any business is bound to fail, so we need to know how we can attract new customers through appealing product benefits, the right pricing model, and effective marketing programs.




• Retention: Generating repeat purchases from current customers is the most cost-efficient path to business growth, so a retention strategy is a must for any business that wants to thrive.

There are many research questions that can be asked within each of these area depending on the stage a product, brand or company is at. Below are some of the questions that should be in the short list of any business that wants to succeed.  

Find the answers to these questions and you will learn how to connect with your target customers and be light years ahead of your competition.

by Michaela Mora

Posted on March 2, 2010

In my previews article about why new packaging fails to drive sales I discussed how brain plasticity may explain the failure to drive sales in 9 out of 10 new packaging designs.

Neural connections are formed as we are exposed to different products and quickly get used to see them in a particular packaging (shape, size, brand logo). We know that it harder to unlearn old habits than to learn new ones, so when a new product surfaces on the shelf, we may not notice it unless the packaging is compelling enough to make us pay attention. Research has shown that contrast improves the odds of shelf visibility for a new packaging, so a contrast jolt may be needed to take us out of the rut. However, in the case of existing products aiming for a fresh look to increase sales, the contrast can’t be so big that consumers are unsure whether they are seeing the same brand, or frustrated by not being able to recognize it and find it, like it happened for Tropicana and Gatorade last year. This means that new packaging designs need to balance contrast and visual continuity in brand identity.

Existing products are not condemned to live with the same packaging in which they were born, but in order to succeed, marketers should not ignore brand expectations formed by the experience consumers have had with a product or product category. Those expectations have a physiological base in groups of neurons firing together, being used over and over, and getting trained over time in perceiving a product – its packaging, mode of use and underlying needs it meets – in a particular way.

Aside from physical attributes (i.e. shape, size, colors,  graphic elements), a new packaging has a greater chance of success in attracting buyers if it fulfills unmet needs. The Heinz® Fridge Door Fit™ bottle launched in 2006 offering storage flexibility – which increased ketchup consumption by 68% - is a good example of how packaging can drive sales. Consumers may not be aware they have this type of needs until they see a solution. In this case new brain connections sprout and with them new expectations about a product or a whole product category are born.

Of course, we know that packaging alone is not the only factor weighing on a purchase decision. Deep seated product preferences,  the shoppers’ decision-making process and attitudes and lifestyles have often a greater impact on purchase decisions than packaging.

Some consumers enter a store with a tunnel vision, looking only for the brands they are used to buy. Others, however, may shop first for the product category and then consider competitor brands within the category, specific product benefits, a particular package size or a price point. For certain products they scrutinize the product labels looking for information that helps them decide which brand to pick, while for other products, they only care about the price. Again, it is about behaviors rooted in trained neuronal connections based on experience.

Finally, there are other situational factors that could make a consumer deviate from its habitual shopping behavior: the brand is out of stock, its price increased, a friend recommends trying a new product, competitor brands are giving an irresistible offer,  and a new and seemingly improved alternative is offered for trial, among others.

Having said all this, we can’t deny that packaging is a contributing factor to brand identity. As research has indicated, it is easier to damage a brand than grow it via packaging, so getting it right is not a trivial matter. Although many new packaging systems fail, packaging research can help to increase the odds of success. To that end, marketers charged with the task of launching a new product or refreshing the look of an established brand should conduct research to:

1. Understand how consumers shop the product category and what role packaging plays in purchase decisions
2. Understand brand and product perceptions and how deeply rooted they are
3. Identify unmet needs
4. Understand how the new packaging departs from consumers’ expectations and what visual elements can be used to preserve brand identity
5. Assess how the new packaging will stand out in a cluttered environment  among competitor brands
6. Test different packaging concepts and evaluate the effectiveness of graphic elements and label information in adding uniqueness and encouraging purchase intent

Posted on March 1, 2010

Last year PepsiCo received a lot of “buzz” thanks to a couple of marketing stumbles for two of its big brands, Tropicana and Gatorade. In both cases, the brands got makeovers that stripped their brand identity, for the sake of simplicity, and gave them a quite generic look. This resulted in confused consumers, which, in turn, hurt sales. In the case of Tropicana, after consumers’ protest, PepsiCo reinstated the old packaging with the familiar orange with the straw. But for Gatorade, now called “G,” PepsiCo continued ahead with the new packaging and label.

According to PepsiCo’s Americas Beverages chief Massimo d’Amore, who was interviewed by the WJS, in the case of Gatorade, certain level of confusion was expected, but that internal research indicated that “the ‘G’ campaign scores high in the coolness factor.”

For a while I wondered what type of research they did, who was the target sample and what metrics were used to measure success. Luck would have it that I had the chance this year to meet Jimmy Smith, the creator of the “G” TV commercials. He told me that the ads were targeting teenagers between 13 and 17 and they were looking to create buzz, which they did. I admit that “coolness” is likely to be an important driver in this market segment, but can misfire in other segments. I have proof in my own household. My husband, a fan of Gatorade and part of the 37.7% of consumers in the age group 35-44 who drink Gatorade monthly*, was certainly lost once the packaging changed. He thought that the new “G” packaging was one of Walmart’s store brands.

In July 2009, Beverage Digest estimated that Gatorade had lost a 4.5% share of the sports-drink market and its volume slipped 17.5% in the first six months of 2009 after the launch of the new packaging in January. It seems that the “coolness” factor may have worked against Gatorade’s brand equity.

So, if you ever get involved in a brand makeover or new packaging re-design, make sure to do branding research that allows to measure the overall impact of the changes on the brand recognition and sales. The best approach to branding research combines both qualitative and quantitative techniques. Neither alone gives a solid answer, so I would suggest to consider following this research plan:

1. Define the problem. First, make sure it is an image problem and not a problem with the product or service. Does the brand need an updated look to attract new market segments? Does the brand elicit negative associations due to blunders from the past and need a fresh start? Does the brand need to be aligned with a new vision and mission for the company? The answers to these questions will define how much of a radical makeover your brand can afford without alienating customers.




2. Explore current brand perceptions, usage patterns, customer experience, and problem areas. This will give you a feel for the brand legacy and how much you can depart from it. Depending on your target market and budget, some of the data collection techniques you can use might include focus groups, in-depth interviews, or on-site research (ethnography).




3. Create several new brand concepts and test them. Use the results from the initial qualitative research to develop different branding concepts. Explore initial reactions to the concepts, fine-tune them, and test them again using qualitative techniques.




4. Follow-up with quantitative research. Use a large enough sample to select a winner and project the results to your target population. Define the screening criteria of your sample carefully. To certain market segments, some brand attributes may be more relevant than to others, so make sure all segments are represented to avoid biased results.

The combination of qualitative and quantitative research techniques will give you in-depth insight and a solid foundation for decision making. Don’t be tempted to only run a couple of focus groups or an online survey and feel you know everything. Conducting branding research with the right approach will pay off and prevent you from making mistakes that will hurt your bottom line.

* SMRB – Summer 2009 Adult 6 Months (Feb 09 – Sept 09)

Posted on February 26, 2010

Packaging research shows that  only 90% of new packaging re-designs fail to drive sales.  Why? Brain plasticity may be one of the culprits.

I recently attended a lecture about  brain plasticity given by Dr. Norman Doidge, author of The Brain that Heal Itself, at the Center for Brain Health in Dallas. He defined neuroplasticiy as the property of the brain to change its function and structure in response to mental experience (perceiving, motor action, imagining) and other forms of stimulation (e.g. electrical), which goes on in many levels in the brain.

Through many case studies, Dr. Doidge illustrated the incredible ability the human brain has for continuous change and great potential for providing cures. This has always been the truth, but it has taken us 400 years to recognize it because of:

1. Lack of technology to observe the changes
2. Notoriously poor prognosis for brain injury
3. The mechanistic model: mankind has had three main analogies for nature – nature as organism, nature as machine, nature as historic process
4. The plasticity paradox: plasticity gives rise to both rigid and flexible behaviors, and our rigid behaviors lead us to assume that the brain is overly rigid

The fact is that neuroplasticity is responsible for not only cures, but also for illnesses, which led me to think that brain plasticity may be one of the reasons new packaging often fail to motivate shoppers to buy. Scott Young, president of Perception Research Services, argues, in an article published in the 2010 January issue of Quirk’s Research Magazine, that the increase in shelf visibility through contrast (via color blocking, unique shapes, and strong brand identity) is the single strongest driver of sales increases.  This explanation makes sense, but only explains it from the stimuli perspective. The question still remains as to why consumers would need a contrast jolt to buy a product because of its packaging.

From the consumer perspective, we may find the answer in the core laws of neuroplasticity, which are:

1. Neurons that fire together wire together, neurons out of synch fail to link
2. Use it or lose it
3. Plasticity is competitive: trained neurons fire faster more efficient signals

When a consumer is exposed to a product in a particular packaging, connections are made in the brain so that the product is associated with that particular packaging structure (its colors, shape, and brand logo). The more exposure she gets to it, the stronger the connections become as neurons get trained, leading to a “rigid” perception of the product. Consumers may not recognize it if presented in a new package or even revolt against it, as it happened when PepsiCo tried to change the image of the Tropicana orange juice in 2009.

In order to succeed, a new packaging needs to be able to create connections by first attracting attention, but then motivating consumers to give it a second look. Through studies conducted in collaboration with Wharton and INSEAD, Young found that reexamination of a product is an even more powerful predictor of purchase.

So in order to succeed with a new packaging re-design, marketers should conduct research to find the right balance between deep rooted aspects of the brand identity and new elements that strengthen positive perceptions of the brand and create new neuronal connections. These new elements should be enticing enough to persuade the consumer to give it a first and a second look and, assuming that the product meets her needs and is affordable, ultimately buy it.

Related Posts:

- Packaging Research Needed to Drive Sales
- Never Underestimate the Need of Branding Research to Avoid Marketing Blunders

Posted on February 9, 2010

I recently came across the new ad from Domino’s Pizza where they show a clip of focus groups they conducted with consumers about their products. I love it! The message was clear: they listened to their customers. Their management and product teams were brave enough to really pay attention to what customers think. I’ll be eternally grateful to Domino’s pizza for the message sent about the value of market research.

This may not sound as a novel idea, but many, many companies go about their business thinking they don’t need to conduct market research in order to improve their products and grow. They believe they know enough about their industry and product category that there is nothing new to learn. Then there are companies that are barely aware of the importance of research, but see it as an expense and not an investment. They prefer to throw spaghetti at the walls and see what sticks.

I don’t know how many focus groups Domino’s did or if they also used other research methods to test their improved pizzas, but the important thing here is that they were willing to listen to their customers.

Now regarding methodology for new product development, I always advise clients to combine qualitative (e.g. focus groups) and quantitative research (e.g. surveys) methods.

Qualitative research is by definition exploratory, and it is used when we don’t know what to expect, to define the problem or develop an approach to the problem. It’s also used to go deeper into issues of interest and explore nuances related to the problem at hand.

Quantitative research is conclusive in its purpose as it tries to quantify the problem and understand how prevalent it is by looking for projectable results to a larger population.

Here are some guidelines to use both types of research in new product development:

Combining both approaches when developing new products will give you a solid foundation to make the right decisions for your business grounded in consumer insights.

Posted on February 4, 2010

Often when I work with a client in developing a questionnaire, I get asked whether we should include a neutral point in rating questions (e.g. Very satisfied, Satisfied, Neither Satisfied or Dissatisfied, Very Dissatisfied).  A lot of research has been conducted in this realm, particularly by psychologists concerned with scale development, but not definitive answer has been found and the debate still continues. Some studies find support for excluding it while others for including it depending on the subject, audience and type of question.

Those against a neutral point argue that by including it, we give respondents an easy way out to avoid taking a position on a particular issue.  There is also the argument that equates including a neutral point to wasting research dollars, since this information would not be of much value or at worse it would distort the results. This camp advocates for avoiding the use of a neutral point and forcing respondents to tell us on which side of the issue they are.

However, we as consumers make decisions all day along and many times we find ourselves idling in neutral. A neutral point can reflect any of these scenarios:

1. We feel ambivalent about the issue and could go either way
2. We don’t have an opinion about the issue due to lack of knowledge or experience
3. We  never developed an opinion about the issue  because we find it irrelevant
4. We don’t want to give our real opinion if it is not considered socially desirable
5. We don’t remember a particular experience related to the issue that is being rated

By forcing respondents to take a stand when they don’t have a formed opinion about something, we introduce measurement error in the data since we are not capturing a plausible psychological scenario in which respondents may find themselves. If the goal of the question is to understand the variation in opinion, we should not only use a neutral point but also a “Not sure/Don’t Know/Not Applicable” option. This would allow respondents in scenarios 2 and 3 to provide an answer that is true to their experience.

For example the other day I got a customer satisfaction survey from Blackberry after a call I made to their support desk. The survey had a question in which I was asked to rate the representative, who took my call, on different aspects.  One of them was “Timely Updates: Regular status updates were provided regarding your service request.” I wouldn’t know how to answer this, since the issue I called for didn’t required regular updates. Luckily, they had a “Not applicable” option, otherwise I would have been forced to lie, and one side of the scale would be as good as the other.

An increase in non-responses and survey abandonment can also result from respondents who don’t want to air their opinion because of perceptions of low social desirability. If they are given the “Not sure/Don’t Know/Not Applicable,” they are more likely to use it than the neutral point. This would be preferable since they could be excluded from the analysis for a particular question, but information on other questions would not be lost. A better alternative yet is to provide a “Prefer not to answer” option if the question touches particularly sensitive issues.

Finally, the best antidote against having respondents gravitating towards the neutral point is to make sure that we show the questions to those who can really answer them. With the help of skip logic, we can design surveys that filter out respondents with no experience, knowledge or interest in the subject being rated. In my Blackberry example, they could have asked me first if my request needed regular updates, and if that was the case then ask me to rate my satisfaction with it. Most likely, the researcher that designed the Blackberry survey was trying to make the survey shorter, but I still could have introduced measurement error, if I hadn’t seen the “Not Applicable” option at the end of the scale, which I almost didn’t notice at first.

You may have guessed by now in which camp I am. Survey questions should be as close as possible to the way respondents would naturally answer them in real life. Sometimes we need to get there in several steps by filtering out those who can’t answer, but sometimes we just have to give them the option to be neutral.

Posted on January 27, 2010

Response Magazine reported recently that free-standing insert (FSI) coupons emerged as a key component in promotional programs of many manufacturers and retailers during 2009 with more than 272 million pieces dropped. But what was the coupon redemption rate in 2009?

Well, it seems many cent-off coupons were put to use. The Experian Simmons National Consumer Survey showed that 7 out of 10 households used coupons in 2009. Although most were looking to save money, others used coupons to try new products. One out of two consumers claimed they used FSIs cent-off coupons, placing this coupon category at the top followed by coupons received by mail, found in packages, magazines, on the Internet or handed out in or near stores.

For many years, coupon redemption among Hispanic consumers has been reported to be lower than the general population due to a number of factors including cultural barriers, lack of familiarity with the redemption process, different product preferences, wrong distribution channels, requirement of multiple purchases, low coupon face value, and refusal to accept coupons by stores frequented by Hispanics, among others.

However, the last couple of years in a down economy may have help Hispanics to get with the program. In 2009 Hispanic weren’t too far behind the average non-Hispanic household as 6 out of 10 Hispanic households used coupons, with Cubans leading the way, followed by Puerto Ricans, other households of Hispanic heritage, and Mexicans. Nearly 4 out of 10 Hispanic consumers used coupons inserted in newspapers (FSIs) and 3 out of 10 used coupons received by mail.

Given the diversity and expected growth of the Hispanic population in the US from 15% in 2009 to 30% in 2050, there is a big opportunity for manufacturers and retailers to introduce new products to Hispanics with the help of coupons. The key is to develop promotional programs – with a coupon component – that appeal to the diversity of the Hispanic market in the US. Sensitivity toward cultural differences based on country of origin, product preferences, regional variations of the Spanish language, and levels of acculturation, among other factors can send coupons to the trash can or get Hispanic consumers to try new products.

Sources:

- Census Bureau – Projections of the Population by Sex, Race, and Hispanic Origin for the United States: 2010 to 2050

- SMRB – Summer 2009 Adult 6 Months (Feb 09 – Sept 09)

- Jacqueline Renfrow, “FSI Couponing Reaches Record Levels,” Response Magazine, 20 Jan, 2010

as published on January 8, 2010  by the Dallas Business Journal

Every business that wants to acquire and retain customers needs to conduct market research, particularly in these current economic times. Here are three fundamental questions about target customers that businesses should ask:

1. Will they use the product or service? Product usage is conditioned by many factors, but the most important one is whether there is a need for it. Other factors include socio-cultural trends, competing alternatives, situational factors, perceptions, attitudes and habits.

2. Will they buy it? Even if there is a need, this does not necessarily mean you can sell it at any price. There are numerous instances in which a product has great appeal, but customers are not willing to pay the price the company wants to charge. Pricing is also influenced by a number of factors beyond a company’s financial situation, including competitors’ pricing, alternatives, brand perceptions and more.

3. How will they have access to the product or service? Product awareness, positioning and distribution are keys to the success of a business. Low awareness, poorly executed marketing and brand strategies, inadequate operational systems and an inefficient supply chain will often lead to wasted resources, higher customer acquisition and retention costs and revenue loss, despite all indications that a need for the product exists and that customers are willing to pay for it.

When thinking about customers, think of perceptions, customer experience and behavior in the context of their core values, lifestyle, family situation, culture, the competitive landscape, their particular socioeconomic situation and the economic and political state of affairs that surround them.

Companies come in contact with target customers through public relations activities, advertising and promotional programs; product or service usage; and interaction with sales representatives, employees, technical support and customer service.

These customer touch points often overlap, meaning a company would benefit from a customer-centric market research plan that permits a 360-degree‐view of its target market. This will ultimately deliver insights to guide business decisions that lead to sustainability and growth.