Look at this table of data of aided awareness vs. brand shares from a household products category and you’ll see little relationship.

Aided awareness is what we measure but it isn’t really what we want to know.  In an era of shopper marketing and Procter’s call for store-back thinking, CPG Marketers want to know how to get their brands noticed at retail.  That means the brand broke through the clutter and became relevant to that shopper at that moment; it got in the game.  It could even mean that a shopper became instantly aware of your brand and bought it. THAT is shelf-back thinking!

Getting noticed at retail is NOT a no-brainer; it is hard and requires great marketing. There are 40,000 SKUs in a typical supermarket and a shopper buys 1% of them over the course of a year.  John Dranow from Smart Revenue says the first thing a shopper does on a given trip is deselect 90% of what’s in the store. The 90% of products that are deselected are like the gorilla in the video with kids bouncing basketballs.  You are so intent on counting the number of passes by those kids in white shirts amidst the chaos, you don’t see the person in the gorilla suit.  “Inattentional blindness” is the name of the phenomenon and it happens to shoppers on every shopping trip.

What a marketer should want from their communications efforts is to make their brand relevant to break through the chaos.  Create anticipation, curiosity, meaning, and desire pursuant to actions like getting people talking, searching, visiting your owned media sites, and looking for your brand at retail and ultimately buying it.  Post-purchase, media can help guide the experience consumers are having with the product to get them to want to replenish as they run out.  Yes, media is about post-purchase influence; can you say “below the funnel”?

The ability for a marketer to get their brand noticed on the shelf and then instantly have people make meaning or mentally retrieve information about it is critical. Even better, is if it gets noticed first, which, any behavioral economist will tell you, is a really good advantage to have.  The best thing for a marketer is if the shopper puts THEIR brand on the shopping list by name and then every other brand becomes the gorilla. The best marketing and media strategies for accomplishing this will vary, depending on how people shop for that type of product so shopper insights must inform media strategy.

Literally, awareness is a survey construct that measures the ability of a respondent to retrieve a brand memory during survey questioning regardless of whether or not the product category was relevant to their lives at the moment they clicked the link.  In contrast, what CPG marketers really want to know is how to make the retail experience evoke a brand memory and create meaning while someone is shopping and what communications approaches best accomplish that given the path to purchase for their product.

If marketing research wants greater impact on marketing decision-making, if it is to get that seat at the table, it has to start measuring what the business really needs to know.

Postscript: if you still think awareness is a prerequisite to purchasing, come back tomorrow where I will post a picture of my shopping cart at mid-trip from yesterday with commentary.

What happens when that is wrong?  What does marketing do when it STARTS with the purchase?

This is an extreme version of what Procter calls “store back”.  However, based on shopper insights research I have conducted, I believe that, for grocery products, over half of first-time purchases are unplanned; in fact, the shopper might not even have been aware of the product before buying it.  In those cases, it all STARTS with the purchase and ENDS with awareness.  The purchase funnel is totally flipped.

When it all starts with the purchase, the role of marketing communications changes.  Now marketing must get the product noticed at shelf and impart meaning to it instantaneously for the shopper.  Packaging, shelf placement, thematic displays, signage, mobile messages that are location-aware, shopper offers based on that shopper’s history, and master brand familiarity become the main vectors for creating meaning.  In this communications model, when someone encounters a product they were unfamiliar with they should be able make sense of it instantly; to tell YOU (the marketer) what the product is about, rather than you having to tell them in a concept statement.  After the product is bought and being used, there is more sense-making that occurs.  If the consumer is really into the product as they are using it, now you have an opportunity to build engagement:  they might join a community, become a fan in Facebook, share comments, start seeking out advertising and recalling it, seek out the brand’s “creation story”, etc.  In this scenario, the impact of brand narrative, brand values, social media engagement, etc. come AFTER the purchase, so they solidify rather than precondition the brand-customer relationship. 

Could it really be that it all starts with the purchase?  Well, for certain types of products and retailing situations, I believe it does.  Consider this:

• Conduct a study to measure the percent of products bought for the first time that are discovered in-store (I got 50%+)
• Do you think the products bought for the first time on impulse in a Kroger’s, Trader Joes, Costco, Target, etc. are all the same and were previously known? If not, then you believe that brand adoption can START via the shopping experience.
• Consider shopping styles that people have, reflecting their relationship with a product category.  Can you imagine categories (e.g. artisan cheeses) where shoppers like to explore and find new interesting products to buy?

This last point is perhaps the most important.  People have different shopping styles for different product categories which means that the heuristics they use to make decisions are systematic.  You might not ever buy carbonated soft drinks the way you buy interesting dips that you just tried at a tasting station.  This is where behavioral economics intersects marketing; the study of how people decide is often more interesting than theoretical purchase intentions.  Hence, some products will predominantly be bought via a process that starts in-store.  Others will be bought based more on the traditional marketing model requiring awareness built via mass media. You need to study HOW people decide in order to understand when to start from the traditional end of the funnel and when you start from the other end of the funnel.

When it all STARTS with the purchase, everything that you thought was upstream becomes downstream and the thing that was the most downstream of all, the purchase, becomes the most upstream event. 

This is “store back” on steroids.

Now, the researcher in me has to ask the rhetorical question, “Does the marketing community have the research tools to act on this new way of thinking?”  Rhetorical because, I don’t think we do.

Cass Sunstein, co-author of Nudge, created this idea which is about deciding how we are going to decide.  As an example (mine, not his), let’s say you want to buy a smart phone but know there are an overwhelming number of options.  You might manage this by doing a lot of research ahead of time (online, ask friends, observe what others have) to make it easier to decide when you get to the store.  That decision STRATEGY is your second order decision and what you actually buy when you get to the store is your first order decision.

Shoppers can be segmented and targeted based on their second-order decision strategies. When we can repeatedly observe how a shopper decides, like in packaged goods, it is likely that a shopper mostly exhibits the same path to purchase for a given type of product, as their underlying decision strategy is likely to be very stable for a given product category. For example, if you know there are sales to be had on bottled water and you wait until an acceptable brand is on sale, you are a “system beater” (a term I helped to create in 1994).  That strategy of searching for sales becomes the core of the shopper’s second-order decision. The first-order decision becomes greatly simplified with that strategy (buy/not buy, how much).  Not all shoppers are system beaters (for example, some are highly brand loyal) suggesting that shoppers can be segmented on their decision strategies and marketed to in that way.

Second-order decision making can be affected by marketing and the economy.  During the recession, I believe that many shoppers changed their second-order decisions.  People’s shopping patterns were greatly affected (more planned purchases and acceptance of store brands increased.) imagine the heuristic at point of purchase becoming “see if a national brand is on sale; compare price to the store brand”.  Dramatic increase in the use of coupons has been documented (highly intensive second-order decision-making/searching for sales that then simplifies the first order decision).  It is the changes in second-order decision strategies that have challenged the value proposition for national marketers. 

Do you want the brand decision in or out of the store? A national marketer with strong brands wants the brand decision to be made at the time the shopping trip is being planned, not in the store.  In other words, they have a strong preference for people using a PARTICULAR second-order decision. What are marketers doing to encourage the second-order strategy that benefits them?  How are their packaging and website encouraging consumers to simply use habit and replenishment as their decision strategy? If you are the new brand or a price brand, how are you DISCOURAGING people from doing that and encouraging shoppers to be more explorative?

What type of second-order decision do you want people to use? I imagine that AT&T and iPhone do not want people to have a high-effort second-order decision strategy.  They want people to just go to the AT&T store and get the leading smart phone (iPhone).  Verizon and Motorola Droid should want people to get curious and to engage in much more information search; a highly engaged second-order decision approach.  In other words, the marketing battle needs to be fought on shaping people’s strategies for deciding and targeting those who have the preferred second-order decision strategy.

One way to get people to engage in a more evolved second-order decision process starts with the realization that it is a coping mechanism when people perceive many available choices.  This idea turns the Schwartz Paradox of Choice concept on its head.  Choice is NOT bad; people want choice to reflect their individuality (that’s why there is a long-tail of choices.) However, when there is a lot of choice, people cope by employing heuristics and second-order decisions to simplify the first-order decision.  Hence, more PERCEIVED choice leads to involved pre-planning. That is what iPhone COMPETITORS should want; get people to see the choices out there.  On the other hand,Apple should want to convince people there is really only one choice.  The battle is waged over the second-order decision strategy.

How can Apple (or any market leader) take a marketplace where there are many choices and make it one with few perceived options? Own the one thing that people should really care about. Taversky pioneered the concept of “elimination by aspects”; all items that don’t possess a certain desired feature are immediately put out of consideration. Dr.  Gerd Gigerenzer has documented many simplifying heuristics that people use, including “take the best” which describes an approach of focusing first on the attribute that is both the most important AND that differentiates the choices. We become blind to other choices.  That’s why Schwartz’ Paradox of Choice is misleading for marketers. 

How do we recognize? The final point I want to make today is the importance of understanding how we recognize things.  When the second-order decision carries the entire load, the planned purchase becomes a foregone conclusion.  Then, the retailer and manufacturer challenge shifts from influencing decisions to influencing recognition.  Gregory Bern, in his book “Iconoclast” talks about perception as a predictive system, where low level visual stimuli are interpreted via retained images and concepts. What cues will best connect your brand to this “predictive system” that people use to recognize things?

Behavioral economics has given us a new path to marketing opportunity.  Let’s study how people decide.

This is the second of two posts on applying behavioral economics to marketing issues.  The first posting is here.

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.

Marketing is forever changed by the “two-way world” we live in. People are no longer just members of passive audiences they are now also active participants.  They can pull information via search, going to owned media sites, become brand ambassadors (or angry activists) by exchanging ideas with friends in social networks. 

Marketers now need to build their brands in a mental marketplace to connect with people in four ways; functional needs, social attraction, self-expressive value, and offering entertaining and informative content that stimulates curiosity.

Brand building in a two way world means it is more important than ever to understand the changing world and how people are living their lives, which is the final theme within the ten “rock my world” changes. 

8. Multicultural becomes the American mainstream

According to the US Census Bureau, by 2023, minorities will comprise more than half of all children and by 2042, minorities are expected to become the majority. Maximizing brand relevance means that marketers have also made their brand culturally relevant. Two 2009 ARF Ogilvy Award winners who clearly demonstrated this were Honey Nut Cheerios and Allstate. Regarding Allstate, research found that Hispanics’ understanding of insurance products, the motivators and the process by which they go about buying insurance were different from Anglos’ approaches. Allstate re-engineered its owned media and agent environment (both English and Spanish) resulting in dramatic business success. 

9. Staying ahead of changing societal and personal values

As the values of society change, product and service marketers, as well as retailers, must stay in rhythm with society. Trends towards wellness, our aging population, and concern for the environment are examples of drivers of packaging, product ingredients, labeling, messaging and shopping experience. 

10. The new marketing research: commitment to quality and listening to the unprompted voice

As consumer values change, a commitment to insights generation is essential to bring the human into the boardroom. As telephone research gets less practical and less affordable, online surveys become essential for marketers, yet, data have not always appeared reliable. The ARF-led Foundations of Quality research program and Quality Enhancement Process are intended to understand and address the root causes of lack of data reliability. 

The research function in an organization really should do two things; quantify the expected (provides metrics that chart business progress and direct resources) and listen for the unexpected (to fuel new thinking about innovation). Listening gives us a way to tap into naturally occurring conversations and behavioral signals found in social media and search to hear changes in vocabulary and sense the next big thing. Listening is essential for innovating new offerings, media strategies, and having an existing brand adjust course.  Listening also opens a portal to impacting the rest of the organization as it merges insights and learning together with marketing action.  First you listen, then integrate yourself, then hopefully create a community of brand enthusiasts who even become ambassadors. 

The Changing World: The Bottom Line

Marketers must become fast learning organizations in a world where society and technology evolve at accelerating rates and change the consumer landscape. Management intuition based on past behaviors and preferences are becoming increasingly inaccurate predictors of the future, which makes a future-focused marketing research/consumer insights function more important than ever. Marketing research must not only measure but should also use a full range of listening tools to guide the marketing organization based on anticipatory insights.