I will then moderate a panel of other leaders, Gayle Fuguitt Vice President, Consumer Insights, General Mills;  John Forsyth Principal, McKinsey & Company, Inc.; and Susan Wagner VP, Strategy & Insights, Johnson & Johnson who will demonstrate that Stan is not alone; other leaders also believe the time is now.

Research transformation isn’t just about changing a department; it’s about being an agent of change for the culture and beliefs of the whole marketing organization:

1. Stop thinking of people as consumers and start thinking of them as humans.  The word “consumer” is marketing-ese for slicing off that part of daily living that relates to what you can sell someone and throwing away the rest.  That keeps you thinking in the box.  Stan from Coke says, “When you study consumers you get incremental ideas; when you study humans you get breakthroughs”.
2. Move from a control mentality to an influence approach.   Brand teams no longer control brand messaging thanks to the web-based social media infrastructure. Ask Motrin, or now Toyota.  Research departments no longer control the flow of information about consumers.  Marketing teams can search Twitter, or go to digital analytics, or…  Are you ready to do what Vitamin Water did, where they let their fan base in Facebook design the next new flavor?  Are you ready to let go?
3. Think of research as a source of anticipatory insights rather than just testing and measuring.  The risk reduction and measurement parts of what research does are important but those are downstream activities. The insights team needs to be thought of as an insights engine that builds strong brands and durable customer relationships.  We do more than quantify the expected; we also listen for the unexpected, bringing breakthrough ideas that inform strategy.  If the insights team is thought of this way it will be brought into to business issues at the start and regarded as an investment in the future of the business, rather than just an expense to be managed down over time.

What a different corporate environment!  Creating a fast learning organization where ideas can come from anywhere and where every test has a learning objective not just an action standard!  A way of working together where the insights team is integrated into business leadership teams, where we are part of and potentially lead the social media cross-functional teams, and where the voice of the human is brought by research into every marketing decision.

We are not just being quixotic about this.  The ARF is launching a Research Transformation Super-Council and along with those speaking on March 23^rd, we have leaders from great organizations like Unilever, Kraft, MTV, Cambridge, Cambiar, Colgate-Palmolive.  The super-council will have working committees to map out the transformation blueprint for organizational impact, creating insights-led strategies, and a working committee that will tackle engagement/talent/process.

This is our time, but with it comes the responsibility to up our game, to become leaders rather than just technicians and analysts, and to leverage what we know about humans (cognitive science, behavioral economics, anthropology) to bring insights that shape the strategic glide-path of the organization.

I hope to see you on March 23^rd at the ARF annual Re:Think conference, Succeeding in the New Normal for the start of this phase of our journey together.

However, brand extensions are not always a good idea.  Through the years, I have been involved with forecasting the sales potential of hundreds (maybe thousands) of line and brand extensions and wanted to share what I think are some important insights.

Insight #1—a brand extension strategy for launching a new product only works if your existing brand has high enough parent brand penetration.

The success of a brand extension as has much to do with pre-existing brand equities as it does with the characteristics of the new items.

In the early 80s, General Mills launched a new flavor of Cheerios called “Honey Nut Cheerios”.  Concept test results were good but not off the charts yet when this new flavor was launched, it got an unpredictably high level of purchase trial given its modest advertising and promotion budget.

When I analyzed actual in-market results regarding trial rates for Honey Nut Cheerios and many other line extensions separately by those who bought the parent brand buyers vs. non-buyers, I found that parent brand buyers had a 2-6X HIGHERHIGHER trial rate (e.g. 18% trial among parent brand buyers vs. 3% among non-buyers).  Furthermore, it was only partially explained by higher purchase intent.  The big factor was that the conversion of positive purchase intent into trial among parent brand buyers was much higher.  In fact, the knife cut both ways; people who did not buy your brand were LESS likely to try the new line extension relative to their stated purchase interest than if it had a new brand name.  Hence, overall trial for your new brand is the mixture of trial rates (one much higher, one a little lower), weighted by what percent of households buy your existing brand.  It’s easy to envision that there is a tipping point that denotes when your parent brand is big enough that a brand extension approach makes sense to consider.

Insight #2—Brand extensions that are not connected with the meaning of the base brand are destructive even though they might hit year one sales targets.

If you launch brand extensions that don’t reinforce the parent brand image you might be turning your brand into a Frankenstein’s monster of spare parts. That’s why naming Spaghetti Sauce “Prego” rather than “Campbell” or calling a premium line of autos “Lexus” rather than “Toyota” made so much sense.  It’s also why I question Starbuck’s instant coffee. What the marketer thinks is a brand extension the consumer might not view the same way. Here is how you can tell. In concept testing, if positive purchase interest towards the new product isn’t at least 30% higher among parent brand vs. non-parent brand buyers that means that your buyers are not seeing the connection between the new product and your existing brand.  This is a warning sign that, while the sales potential for the new product might be acceptable, unconnected products will share the same brand name.

Insight #3—Emphasize brand-building (e.g. advertising, social media) to build the master brand and shopper marketing and couponing to sell the brand extension.

The key point is that line extensions are bought out of preference for the brand and acceptability for the line extension, not preference for the line extension.

An extension of a brand someone buys enjoys instant credibility because users trust anything they connect with that brand. For new flavor and size line extensions you might not need anymore than to be visible in the store or offer a coupon.  Because line extensions are bought out of acceptability, there is random component to whether they buy it or not.  Therefore, the more SKUs your brand already has, the lower the trial rate will be among your own parent brand buyers.

Marketers want to use brand extension strategies as much as possible today because it is a more affordable way to introduce products but the key is having enough rocket fuel, i.e. brand equity, to get the rocket (i.e. brand extension) off the ground.

For over a year now, I’ve been saying “research is cool”; is it? Could a marketing researcher bring a new, edgy perspective to the table that others would find compelling?   There is no cooler mag than “Fast Company”; given the opportunity, I had to put it out there and see.

To do this, I didn’t blog about research methods; I created “Brave New Marketing” so I could blog about marketing issues but with a researcher’s lens.

I wrote the piece, “What’s Love Got to Do With It?” based on three sources that led me to hypothesize that only 10% or so of brand/customer relationships, are predicated on love or engagement.  Therefore, even though an engaged customer is much more valuable, marketing can’t be all about building engagement—you must also win at trench warfare for those people who are making decisions about essentially equally acceptable product and service alternatives.  The idea converged from analysis of beta distributions which are used to model loyalty curves, the level of friending/fanning/following of brands in social media relative to their user base (single digits mostly), the percent of conversation that is actually about brands relative to the number of brands we use in a day.  Keep a brand diary—you’ll see that you don’t “love” more than maybe 10% of the brands you use.

I wrote the piece, “The New Rules of Brand Competition” noting the rise in store brands’ market shares, and observing the increasing power of retailers in the negotiation with manufacturers.  The path forward that I suggest comes from the Research Transformation initiative at the ARF where we have agreed that putting the human at the center of marketing thinking and then bringing the human to life for the boardroom is the key X-Man superpower we have.

A meta-analysis of TV advertising effectiveness was critical to the “7 Predictions about the future of Advertising”.  Again, I wanted to ground the predictions in a factual basis rather than what I was hearing from the echo chamber.  It turns out that advertising on traditional media still work as well as in the past at achieving marketing objectives and in fact, internet advertising works by some of the same mechanisms rather than via the immediate click.

“The need for Simplification Marketing” comes from an ARF desire to bring behavioral economics thinking into marketing research practice and represents a vision of why this might re-shape marketing programs.

The Fast Company editors told me that the web analytics for “Brave New Marketing” were strong and that I can submit new material anytime.  I also picked up over 300 followers on twitter the week I blogged. Conclusion: Research IS cool!

While I will certainly continue my CRO-ing (like “crowing”) about research” blog, I’ll also take www.fastcompany.com up on their offer to keep blogging for them and extend the voice of research to non-traditional audiences.

The panel’s blend of perspectives turned out to be an effective mix, based on the tweets (and other feedback.) Tweets:
–I’m a professional cynic, but Pete Blackshaw’s “Innovate or Die” was one of smartest panels I’ve heard in a long time. #adtechsf
–Too much to say about the Innovate or Die roundtable. Obama as brand?Layer tennis? Database of wisdom of moms? Good stuff. #adtechsf
–@peteblackshaw. Fab roundtable keynote at #adtechsf
– Joel Rubinson -innovation comes from storytelling, brands should use consumer story to get others to tell their own story. Yes! #adtechsf
–@joelrubinson was really smart on the panel on innovation today #adtechsf

When I got back to the office, people asked, what did I say that had such impact?  Really all I did was stay on message with the ARF Research Transformation initiative.  I talked about how research does two things: quantifying the expected and listening for the unexpected.  I said that innovation starts with the unexpected and that happens by having research broaden its mission beyond the activity of surveys to include listening to social media and via communities.  Then I talked about communicating insights in unforgettable ways via storytelling.  I talked about the need to put humans at the center of our thinking rather than our brands.  Especially in social media, people control the agenda; they talk about what they want to talk about.

Last but not least, I mentioned that social media will transform marketing organizations because it lives at the intersection of advertising, PR, customer care, and perhaps most of all, insights.

Separately, I note that most marketers are still toddlers regarding social media strategies.  Facebook and Twitter are brand/celebrity-centered while community sites are often interest-based (e.g. Dove Campaign for Real Beauty, Beinggirl). Some marketers are big in Facebook but have little presence in Twitter.  Some are big in Facebook thanks to fans (Coke, Ford Mustang).  Some have had their brands hijacked by political causes. Some focus on viral videos (e.g. Blendtec, Cadbury gorilla).  Some build community everywhere (e.g. Harley-Davidson). In some cases the passion point is at the master brand level (e.g. Coca-cola) and for others passion is at the sub-brand level (e.g. Ford Mustang, McDonald’s French fries).

So, consider this:

1.      social media will transform organizations by providing a new organizing principle around brand/consumer conversation

2.      most marketers are still struggling to find a coherent social media strategy

3.      The passion points that could be at the center of a social media strategy might or might not yet be identified

4.      insights are the rich exhaust of that conversation

To mix metaphors, the insights function must buy a first class ticket before the social media train leaves the station and that’s a table we BETTER get a seat at! Ad:Tech reactions validated the importance of the research/insights role regarding a marketer’s social media strategy.  The ARF has no higher priority than to continue to work at a listening blueprint, including the relationship of social media and insights.

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