Saturday, 28 November 2009

Mega Monday or CyberMonday

Monday, November 30th is being called ‘Mega Monday’, in part because it's the last payday before Christmas for many UK shoppers and in part because online shoppers prefer to buy on Mondays, says the Hut Group, which operates e-commerce sites for ASDA, Woolworths, Argos and WHSmith. Its online shop specialises in entertainment products, electronics, health and beauty aids plus dozens of other product categories.

In the US, Monday, November 30th is being called CyberMonday, promoted by, a division of the National Retail Federation industry trade group. The group posts info on its CyberMonday site and polls shoppers about their actual buying experiences after Black Friday and CyberMonday.

Shoppers seem interested in clicking for bargains instead of fighting crowds in person at the stores, but has this tradition caught on with holiday shoppers who buy early in the season? How will Mega/CyberMonday's sales compare with those of Black Friday's sales? We'll soon see.

Tuesday, 24 November 2009

Click! You've Bought a Cow

If you're active on Facebook or MySpace, chances are you play or know someone who plays Farmville or the Mafia Wars or Pet Society. The games are free, but every time you click to buy a cow or another virtual product to advance your standing in the game, you add to the revenue of developers like Zynga, Playdom and Playfish. In fact, Playfish was recently acquired by Electronic Arts, a combination that will only intensify the competition in this fast-growing market.

The social media angle adds to the enjoyment and the buzz has credibility because users recruit users. Farmville, introduced by Zynga, acquired 60 million monthly players in just a few months as players posted their scores and achievements on Facebook and invited friends to join the fun.

Yet some of the games are drawing criticism because players don't always understand the advertised offers for virtual products or subscriptions and inadvertently make purchases they didn't intend to make, says Time magazine.

To earn and retain the trust of players, game developers must be sure that offers are clear and unambiguous. Online, as in the off-line world, marketing transparency is the key to long-term success.

Wednesday, 18 November 2009

Choosing Segments to Target: Q&A with Erika Bruhn

This is the last in a series of Q&As with Erika Bruhn, a partner with Sawtooth Technologies Consulting Group. Today's topic is how to evaluate and select segments for targeting. Thank you, Erika, for sharing your expertise!

Question #3 for Erika Bruhn:

What kinds of criteria do you use when recommending which segments a marketer should target, and why?

Erika's answer:
Typical criteria include segment size, market share (volume and dollars), alignment with your current products, and alignment with your distribution channels. However, there is not a "one size fits all" approach to choosing targets. Segment size should always be considered, but targeting a niche segment that the broader market doesn't serve can be a winning strategy, especially for a new entrant in a market.
There is typically an alignment between attitudinal segments and the brands in the market, meaning that certain segments skew strongly toward particular brand usage. This is a good place to start when choosing target segments. Where does your brand "live" today? These segments are a natural target. Where do competitive brands live? These segments may be more difficult to penetrate.
Which segments' values are a good fit with your brand and company? What investment would be required to target a segment of interest? (For example, do you have the capital resources to target an Innovation segment which expects a constant stream of new and updated products?) Is there a segment that is underserved by the current brands? These questions will help direct you to the most appropriate target segments.

Question #4 for Erika Bruhn:

Once target segments are identified, what comes next? How is the segmentation used?

Erika's answer:
In an ideal world, all of your products and all of your communications will be focused on your target segments. The products you develop will be aligned with your segments' values, and in fact, future market research can and should be done with consumers who fit your target segments. Brand messaging and positioning should be based on your segments' values, as well.

It may require a radical shift in thinking from seeing every customer as a target to focusing on those in target segments. But aligning your brand and products with a small number of segments, and "owning" those segments, is the ultimate payoff.

Tuesday, 17 November 2009

Segmenting by Motivation: Q&A with Sawtooth Technologies

This is the second in a series of Q&As with Erika Bruhn, a partner with Sawtooth Technologies Consulting Group. In yesterday's post, Erika discussed the importance of understanding the motivations of customers in different market segments. In today's Q&A, she explains how to use such motivations as you segment a market.

Question #2 for Erica Bruhn: How do you identify the attitudes and lifestyle preferences that affect customer behaviour towards a particular product or brand?

Erika's answer:

First, you must identify the level at which to segment. If your client is a chocolate bar company, you may think that you should segment the market for chocolate bars. However, that would be a very narrow definition of the competitive space in which your client operates.

You need to go broader to include substitute products. How about a candy segmentation or a snacking segmentation? Either of those may be appropriate. How about a food segmentation? Now we're getting too broad. There is not always one right answer here, but the principle is to expand the thinking beyond the immediate product category to include products which represent substitutes.

Second, you must identify the segmentation dimensions. What are the broad "buckets" of attitudes which will likely define key differences across segments? The segmentation dimensions are hypothesized and can be developed in a team brainstorming session or through qualitative research, such as focus groups. Think of segmenting dimensions as the polar opposites which may define different segments of the market. Some examples are Price Sensitivity (from high to low), Innovative (from early adopter to late adopter), Convenience-Driven vs. Service-Driven, Status-Driven vs. Function-Driven, etc. These dimensions will vary from category to category.

Finally, you must express each of the segmenting dimensions in a variety of ways. A market research survey will be written with a long list of attitudinal statements with which the respondent must agree or disagree. These statements need to capture the nuances of what drives a particular segment and how segments differ from each other.

For example, let's focus on the Price Sensitivity dimension. A very simple price statement might read: "Price is very important to me." When we express price in a variety of ways, the list of statements will be broader and more varied, such as:
  • Quality is more important than price.
  • I always buy the lowest priced product.
  • I frequently use coupons and vouchers.
  • I never buy anything on sale.
  • A low price means low quality.
These statements may come directly from qualitative research by asking consumers what is important to them and how they make purchase decisions.

Now that we have a variety of statements, when we have identified our segments, and one (perhaps) is a price-driven segment, we will have richer information as to which specific statements most drive that segment and which statements most differentiate our price-driven segment from other segments. This richness is the key to arriving at a full picture of the segments and their motivations.
The final Q&A post in this series will focus on selecting segments to target.

Monday, 16 November 2009

Q&A with Erika Bruhn of Sawtooth Technologies

Today's post is the first in a series of Q&As with Erika Bruhn, a partner with Sawtooth Technologies Consulting Group. The company is a leader in advanced quantitative market research techniques, including segmentation, conjoint analysis, and customer satisfaction modeling for consumer and B2B markets.

Erika specializes in developing insights to drive complex product development and pricing decisions. Given Erika's expertise, I asked her to talk about some of the key issues marketers face in segmentation and targeting.

First, a quick review: Segmentation is the process of grouping customers within a market according to similar needs, habits, or attitudes that can be addressed through marketing. Segmentation enables you to understand customers' needs, wants, and preferences, segment by segment, so you can focus your resources on the most promising opportunities--improving your marketing effectiveness and efficiency. In general, you can segment by customer behaviors, attitudes, demographics, geography, and/or psychographics.

Question #1 for Erika Bruhn: What are the benefits of segmenting a market according to needs, lifestyle, and attitudes, rather than relying on demographic and geographic variables?

Erika's answer:
Motivations drive behavior, and by understanding the motivations of different segments of the market, one can reasonably predict how those segments will behave. Products which save time will likely appeal to a high convenience segment, products with strong design will appeal to status-driven consumers, and so on. There may be demographic similarities of those within a segment, but demographics don't define a segment. So those valuing good design may skew higher income, but not all higher income people value good design.

Product development efforts in particular will be more successful when executed with a specific attitudinal segment in mind. How do you design a new shampoo for a woman, 50 to 65 years old, who lives on the West Coast? I don't know either. But now imagine there's a segment called the Whole Beauty segment. This (hypothetical) segment sees personal beauty as a larger part of the beauty and longevity of the Planet Earth. Can you imagine the type of shampoo which would appeal to this segment? The product's ingredients, packaging, and positioning would all be driven by the segment's motivations and values.

Tomorrow's Q&A will focus on segmenting a market according to customers' attitudes and lifestyles.

Friday, 13 November 2009

Let the Price Wars Begin

Supermarkets are starting their pre-Christmas price promotions early to capture shoppers' attention and protect market share. Sainsbury's chief executive told the Telegraph that consumers' "feistiness" will make promotions as important as ever this holiday season.

Asda's chief financial officer, quoted in the Guardian, predicts that shoppers will benefit from this year's hyper-competitive promotions:
This year will be the most aggressive on price in a decade, which is good news for Asda shoppers.
Tesco's director of retail, quoted in the Times Online, makes the important point that easy-to-understand pricing is the key:
What customers want is everyday low prices. When customers are tightening their belts they like certainty of pricing, they like round price points and they like being able to rely on prices being consistent.
How will the price wars affect shopper loyalty? And even if price promotions sustain turnover, what will retailers' profits look like?

Wednesday, 11 November 2009

Preview: Q&A with Sawtooth Technologies

Coming soon! Q&A interviews featuring the experts at Sawtooth Technologies Consulting Group, leaders in advanced market research techniques, who will be discussing market segmentation and targeting for insightful, effective marketing.

Friday, 6 November 2009

Soft Toys Aid at IKEA

IKEA's latest Soft Toys Aid campaign has begun. For every toy purchased from now to December 23, the retailer will donate one pound (one euro in Europe, one dollar in the US) to UNICEF and Save the Children. IKEA has raised nearly 17 million pounds since 2003, not counting the millions of pounds the company has committed to UNICEF projects through 2015.

The retailer got involved with the children's nonprofits when it discovered that some of its suppliers were employing children. Instead of simply dropping the suppliers, IKEA asked the nonprofits for advice. Then it began monitoring its suppliers and established pilot programs to prevent the use of child labour. It became a strong supporter of children's rights and later created Soft Toys Aid, which allows shoppers to feel good about helping children without spending an extra dime.

Soft Toys Aid has a fun social media component. The microsite features singing stuffed animals and invites members of the public to "Join the choir" (record your voice and upload for one of the animals to sing) and "Share" (on Facebook, Digg, etc). Sing out for children!

Wednesday, 4 November 2009

Must-Have Toys for the Holidays 2009

The Telegraph asked its reporters to find the must-have toys of this year's holiday season. They came back with this video. I don't know whether kids will agree with their choices, but the reporters are definitely having fun.

The Toy Retailers Association released its own list...with some new toys that update last year's Bakugan craze as well as toys linked to movies like Transformers 2.

Toy News reported on what Toys 'R' Us thinks will be its top 2009 holiday best-sellers. No surprise, Bakugan is on the list.

On the Argos Top 10 list are a LEGO toy, a Transformers 2 toy and Lulu My Cuddlin' Kitten. Only 50 shopping days left. Then we'll see which toys really topped the lists.

Monday, 2 November 2009

The Consumer Forum

The Consumer Forum, formed by King of Shaves, Lovefilm, Ella’s Kitchen, Photobox, Reading Room, A Suit That, Sharpham Park, and Chemist Direct, is a new site dedicated to promoting great customer service:

This site empowers consumers and supports businesses that listen and act upon consumer opinion.
The idea is to focus businesses and customers on the idea of, well, focusing on customers. MarketingWeek and Real Business both covered the announcement of this forum.

Although the forum is just getting started, it's a good way to reinforce that customer relationships must be a top priority for businesses. The next step is to enlist the participation of thousands of consumers and to get more companies involved in the site. How much influence will this site ultimately have?