Consumer behaviour changes? Look in the market basket!

The UK Office of National Statistics measures changes in the cost of living (inflation, specifically) by examining changes in the price of a typical household's 'market basket' of goods and services. Marketers are interested in the contents of this representative basket year to year because additions and deletions reflect changes in consumer behaviour and in the marketing environment, over time. Here's the ONS's explanation:

It is important when measuring inflation to take account of changes in the sorts of things people buy due to changing tastes and advancements in technology. If these changes weren't made, the basket (and therefore the measurement of inflation) would become increasingly irrelevant to households. For example, it wouldn’t make sense to base inflation nowadays on the price of mangles.

In 2014, the market basket consists of 699 items that might be purchased by an average UK household. Milk was replaced this year by flavoured milk; DVD rentals were replaced by on-demand entertainment rental services such as Netflix. The DVD recorder was deleted, due to much lower demand now that many consumers have other recording and viewing alternatives. Wallpaper paste was deleted. Canvas trainers were added.

The infographic above shows items (in green) that have been added at different times, and items (in purple) that have been deleted at different times. The mangle was eliminated from the basket in 1962; the microwave was added in 1987.

What will be added and deleted in 2015?

H&M for Stars, Brides and Sustainability

Fast-fashion retailer H&M is polishing its sustainability and affordability image with high-profile marketing initiatives.

At left, a custom designed H&M evening gown made from 'more sustainable' materials, worn by Penelope Cruz to the Vanity Fair Oscar party following the Academy Awards last weekend. From April, consumers will be able to buy a similar gown--sustainably made--in H&M stores. H&M has other sustainable products, including a collection of clothing made from recycled materials.

Providing clean drinking water is another sustainability issue supported by H&M. Each year, the retailer donates 25% of the proceeds from a summer swimwear collection to the not-for-profit group WaterAid. The 2013 promotion was supported by social media posts on Pinterest and Facebook. Customers and employees vote to select the causes supported by H&M's Conscious Foundation, including education, clean water and women's issues. 

At right, H&M's new wedding dress, priced at £59.99. From March, consumers will be able to buy this graceful gown in H&M stores. Other retailers (including M&S, Peacocks and ASDA) have launched affordable wedding collections in the past. 

Will brides buy from H&M? Or is the publicity generated by a pretty dress at a pretty price an affordable way to attract customers to H&M stores to look at the dress--and then buy something else?

Getty Images joins the 'sharing economy'

This week, the largest photo agency on the planet decided to make available, for free, many of the images in its database. With a right-click, bloggers and other noncommercial users can embed the code leading to selected Getty images.

If I wish to embed this recent photo of Joanna Lumley and Alesha Dixon opening the Kids Shwop Boutique in Marks & Spencer, I simply right-click, copy the code as shown below in the pop-up window, and paste it as HTML to put the image into my blog. Note that Getty's image identifier is on the photo, along with a photo collection identifier.

'Our new embed feature makes it easy, legal and free for anybody to share our images on websites, blogs and social media platforms', Getty's website explains.

Here's where things get interesting: Once a Getty photo has been embedded, Getty will be able to track views and possibly serve ads into that space or remove the photo at a later date, if it chooses. 

Content providers (meaning photographers) are unhappy that they receive no payment, however, which may complicate the situation. Still, Getty's move into the 'sharing economy' is an acknowledgement that images are being shared already, with or without proper credit or payment.

Entertainment streaming goes mainstream

Roku has just introduced a new product, the Streaming Stick, that plugs into a TV's HDMI port and allows easy streaming of programmes and movies via the BBC iPlayer, Netflix and more.

Like the Google Chromecast, which is widely available in the US but not yet on the market in the UK, the Roku's HDMI access is intended to replace a bulkier set-top box.

Apple TV competes with Roku and Chromecast, offering a compact unit that will stream content from iTunes, YouTube, Vimeo, Netflix and other sources.

In other words, more consumers are choosing to stream entertainment, accelerating trends reported in Ofcom's 2013 analysis of the media market. Consumers still watch TV but they also use a lot of devices to access content. And, of course, the tradition of watching TV live is eroding little by little. With on-demand content available for streaming at any hour, the viewing habits of the world are definitely changing. What will this mean for marketers who typically rely on TV adverts to communicate with viewers? Stay tuned.

It's a hashtag world

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Hashtags are everywhere. Remember QR codes? Still around, but not as stylish (not to mention possible security concerns). It seems your brand or product needs a hashtag (or more than one) to be hip and engaging in today's social media.

Hashtags enable users to search for content and follow social-media conversations according to the tag or subject. A Twitter or Facebook or Google+ post might have a single hashtag or multiple hashtags, depending on the content. When I tweet about this post, for example, I'll use the #marketing label so that people searching for marketing-related messages will see my post in the results.

One social media marketing expert recommends a three-part strategy for using hashtags in marketing: (1) brand and/or campaign-specific hashtags (such as #Nestle and #HaveABreak), (2) trending hashtags (if you see a relevant hashtag trending on Twitter, you can join the conversation but don't spam) and (3) content hashtags (relating to a particular product, for example, or a specific event or occasion).

Marketers often create their own hashtags to capture attention and focus dialogue on their particular brand or campaign. Of course, once a hashtag has appeared in social media, anyone can add it to a post. This might be a positive, spreading the message to others--or it might prove negative if people use the hashtag to complain. That's what happened to McDonald's when it created the hashtag #McDStories. Twitter soon lit up with negative comments from consumers (whether true or not, the comments included that special hashtag). McDonald's saw what was happening and changed course within an hour.

If you're on Twitter, try a search for the following hashtags to see posts about these topics:

• #marketing
• #customerservice
• #advertising
• #customerretention
• #customersatisfaction
• #retail

Customer service goes social and mobile

Customers are increasingly sharing their customer service frustrations via social media and apps--causing companies to improve.

According to a 2013 study by the British Standards Institution, fewer consumers believe that customer service is getting worse. Even better news, more consumers today say that customer service is actually getting better, compared the number who saw improvement in 2008.

Not surprisingly, Twitter UK is promoting itself as a platform for customer service interactions. In particular, it's showcasing O2's #TweetServe hashtag, which enables O2 telecom customers to request account info via direct message on the Twitter platform and via text message.

Many businesses, including airlines and banks, use Twitter to encourage two-way communications with customers on the go. On the JP Morgan Chase Twitter account, customers can see who is responding and even request responses from particular reps. 'We have customers returning to the channel saying, "Hey, let me know when Theo gets in", or "I want to talk to Danni; she knows exactly where I’m at and what I’m going through"', says the bank's VP of social media operations.

WhatsApp, a real-time messaging app, also wants customers to use it for service inquiries and comments. WhatsApp says it has 200 million more users worldwide than Twitter. WhatsApp users can receive private, immediate responses from companies--a plus when sensitive info is involved. Already, WhatsApp is the top messaging app in India, so if a business outsources service functions to India, local reps there are likely to know and use WhatsApp.

Specsavers segments the market for eyewear

How does Specsavers, the retail eyewear company, segment the consumer market for spectacles?

It starts with the broad definition of the available market: Customers who are interested in and have sufficient income and access to the product--meaning people who already wear prescription spectacles or want the fashion or function benefits of reasonably-priced spectacles, both indoor and for the sun.

Specsavers then applies a number of segmentation variables, including demographics (men/women), geographic (location in the UK, Australia, and 8 other countries), lifestyle/personality (fashion consciousness), price sensitivity (affordable eyewear), brand loyalty and perceived benefits.

The company partners with local optometrists and retailers to open branded stores that combine the buying power of a large retail chain with the personal approach of eyecare professionals who are based in and understand the local market. The combination makes for powerful competition. When Specsavers entered the Australian market in 2008, it opened 100 retail locations in 100 days. Today, the company has captured 35% of the market, and high brand recognition is helping its 290+ locations attract and retain customers. The business has an Australian glazing laboratory to serve the local market efficiently and effectively.

Specsavers also gives special marketing attention to specific segments within the overall market. For example, its Corporate Eyecare division offers a free booklet to help fleet operators encourage drivers to protect their eyes and eVouchers that employers can offer employees for eyewear discounts. The idea is to reach consumers by targeting their employers.

Targeting children, Specsavers has issued a special kids' magazine to promote good eyecare habits and promote specific branded frames, including Moshi Monster frames (segmentation variables: age and family situation). Just for seniors, Specsavers has a discount that supports its targeting of this large segment (age, price sensitivity).

In its home country of the UK, Specsavers sponsors a Book of the Year contest, inviting consumers to vote for their favourite book/author. At the end of 2013, best-selling author Neil Gaiman won for his book, The Ocean at the End of the Lane. This high-profile contest keeps the brand in the public eye for literary reasons, not just because of the benefits of affordable fashion spectacles.

To see what Specsavers is doing these days, visit its Facebook page (122,000+ likes), its Twitter page (20,000 followers) and its YouTube channel (more than 1 million views).

This post updates and extends the opening example in Chapter 3 of Essential Guide to Marketing Planning, 3d edition.

Subscription beauty boxes: Try, learn and buy

Birchbox, founded in 2010, pioneered the concept of selling a monthly subscription to samples of women's beauty products delivered by post. The concept, according to the co-founders, is 'try, learn and buy'. Once a customer has tested a sample of a new mascara or new bronzer, she'll know whether it is right for her--and be more willing to buy the full size at regular price. No wonder so many beauty brands want to participate.

Two years after it began operations in the US, Birchbox acquired JolieBox to gain entrance to the UK and European markets. Today, Birchbox has a multinational presence and faces considerable competition but continues to acquire customers. It now offers sample boxes for men as well as for women.

Nearly 900,000 people have 'liked' Birchbox UK on Facebook and the firm has posted hundreds of how-to and brand-specific videos on YouTube. To reinforce the brand's connection with style, Birchbox has (for a second year) wrapped London cabs in colourful patterns during London Fashion Week. The cabs highlighted the brand name and style connection, and distributed a free Birchbox filled with sample products at the end of every ride.

One of Birchbox's top competitors is GlossyBox, UK-based and also focusing on men's and women's personal care products. This company has customers in 16 nations and offers both monthly and limited-edition special occasion boxes by subscription. GlossyBox's Facebook page has nearly 600,000 likes. It also posts how-to videos on YouTube to encourage customers to try new techniques and new products.

Other competitors are entering the market all the time, and subscription sample boxes are popping up for many other types of products, from pet food to healthy treats. Try, learn and buy is a good way to reduce the inherent risk of new products--meaning products you've never used before. Once you know what suits your personal needs, you will buy the full size with confidence (and, just possibly, become brand loyal to this new product). 

This post updates the Birchbox feature in chapter 9 of Essential Guide to Marketing Planning.

Village England enters the middle as Mulberry moves upmarket

Just in time for London Fashion Week, an art gallery was transformed into a pop-up shop to showcase the new line of Village England leather handbags. Founded in 2012, Village England is establishing itself as a brand for women who favour classically stylish handbags in the affordable luxury price range.

Co-founders Julia Dobson and Eddie Knevett set out to design a leather handbag 'you can fall in love with but isn’t so precious that it can’t be thrown in the back of the car'. In other words, the product is fashionable yet functional, a handbag for walking downtown, taking the Tube or driving into the country.

The co-founders have a background in fashion marketing, and they see a promising opportunity in affordable luxury as Mulberry moves upmarket into premium luxury leather bags, priced as high as £2,500. Lately, Mulberry's upmarket momentum seems to be stalled, with the firm issuing profit warnings even as it eyes the buying power of Asian status-seekers who covet British luxe brands with tradition and cachet.

Mulberry's upmarket move leaves a gap in the market, which Village England aims to fill. Most of Village England's handbags are priced below £300, although some (like the Elsworth Black Tote featured in House of Fraser) carry price tags around £395.

Sociable from the start, Village England is building its brand in social media, especially important for building buzz after its pop-up shop shuts. Click to its Facebook page, Pinterest board or Twitter feed to see the brand's messages and its growth trajectory.

Brands speak up about their values

Rolls Royce  (manufacturer of gas turbines, engines and more--but NOT the car brand) says its brand is 'trusted to deliver excellence':

• Trust: can only be earned by the way we behave with customers, shareholders, partners and colleagues
• Deliver: we develop long-term relationships with customers and we must deliver consistently on their behalf  
• Excellence: a standard, our way of life, few companies can aim higher.

Bentley Motors (super-luxury car brand owned by Volkswagen), says its brand is 'a journey of powerful luxury':

• For the brand, it represents the skills, passion and pride of our people. Their craftsmanship is evident throughout, right down to the initials carefully etched into the upholstery inside every car. An individual hallmark of absolute quality.

Jeep (SUV brand owned by Fiat) says its brand is 'iconic':

• The iconic Jeep brand is recognized the world over — forever tied to freedom, capability and adventure. Every Jeep vehicle has a unique story to tell, with a rich heritage that links back to the original Willys MA. 

Burberry (luxury clothing brand) says its brand is 'quintessentially British' and reflects the firm's core values – Protect, Explore and Inspire:

• Digital luxury positioning and the optimisation across innovative mediums of the trench coat, trademark check and Prorsum knight heritage icons make the brand purer, more compelling and more relevant globally, across genders and generations.