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On Marketing:: Research & Consumer Satisfaction

January 24, 2010 2 comments

“… especially in today’s idea-based, design-obsessed economy … innovation calls for variation, failure, and serendipity” (Hindo). Our lives, as humans, may be categorized as a collection of needs. Though each individual’s needs are unique in their own respect, whether be it in time or essence, they do bare traits of resembles with the needs of the 6.8 billion people on this planet. Abraham Maslow, in his 1943 hierarchy of needs theory, stated that a human need can be classified in one of five categories; each addressing defined, non-overlapping, human necessities. What marketers spend most of their time doing, is influencing consumer wants, which are “specific objects that might satisfy the [preexisting] needs” (Kotler and Keller, p.52). The more compelling the influencing is, the more successful the marketing campaign, and underlying product/service. Given the myriad marketing campaigns that consumers get bombarded with on daily basis, an exceptional marketing campaign must be truly innovative to standout and demand attention. Professor Stephen Brown of Ulster University states that spending too much time on research and consumer satisfaction during marketing will kill innovation; there needs to be an element of surprise or inventiveness. “Research can be very helpful in deciding what to do, but not in determining how to do it” (Foltz)

Examples are abound of companies that push the innovation envelope; whether be it with their products/services, or marketing campaigns. Google, Apple, Nike and Whirlpool are but a few firms that define their domain. These companies are on an everlasting marketing crusade, to tap into the emotional psyche of consumers, to justify their product offering. Doing so requires knowledge of consumer needs coupled with innovation. Marketers want to instill in the minds of consumers that the marketed products/services provide the highest possible value; thus being the logical choice when consumers rationalize which product/service to select. Satoru Iwata, the president of Nintendo, defined the innovative spirit best when describing how their company have set themselves apart “with imaginative games” (Levine) and redefined gamer interaction. Capitalizing on that, through marketing, have placed Nintendo in the number one spot of Businessweek’s World’s Best Companies for 2009.

Though, let’s not forget that “finding that Holy Grail of marketing, the ‘unmet need’ of a consumer, remains elusive. You need time, just thinking time, to step out of the day to day to see what’s going on in the world and what’s going on with your customers” (businessweek). As important as innovation is, if consumer relevance is not present in the marketing, the underlying product/service will be a failure. At the end of the day, the marketing efforts are but a handshake gesture extended to the consumer in meeting their needs; it must provide them with value in order to be accepted. Understanding the consumer will effectively mean researching and satisfying the market segment that is being targeted. When Nokia wanted to position itself as the leader of low-cost mobile phones in the emerging markets [China, India, etc.], they needed to understand how “illiterate people live in a world full of numbers and letters” (businessweek); and thats how their all-iconic interface, made up of only images, was born. When companies put a sincere effort in understanding what their customers want, they will be able to trigger their satisfiers [factors causing satisfaction – as Frederick Herzberg defines them], and ultimately stimulate sales.

Where does this make us stand on the issue of research and consumer satisfaction in regards to marketing: does it kill or stimulate innovation? It is a universal law, that anything used in excess, will do more harm than good. Research and consumer satisfaction will deliver products and services that are more relevant to the consumer needs. On the other hand, progress is only brought about by exploring unchartered territories through offering and marketing new products/services. This is what ultimately defines a given product’s/service’s points-of-difference; seperating it from other competing offerings. Marketers must finely balance their innovation efforts, as they are curving their market-share slice.

~ Youssef Aboul-Naja

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Is ad pre-testing a waste of money?

January 19, 2010 3 comments

Is ad pre-testing a waste of money? I don’t think it is. Books get reviewed before being published and movies are pre-screened before their release; so why shouldn’t advertisements be pre-tested? The costs of the testing come at a fraction of the actual ad costs; and the benefits are well worth it, as pre-testing aids in generating “relevant attention” (McKee, 2008). As a matter of fact, with relevant ads, companies end up benefiting in the long-term, as “less media money [is needed] to be spent on achieving frequency and more available for increasing reach, since cut-through occurs faster” (Agee).

In today’s technologically connected world, companies must be especially careful with their advertising. Although a company might be releasing an advertisement for a specific region, its reach could become global, via web technologies {youtube, facebook, blogs, etc} – especially with ads that generate reactions at the extremes: if an ad is brilliant or horrible. So, with the help of pre-testing, companies increase their chances of outputting brilliant ads, all the while steering away from potential pitfall.

We shall also not forget that the non-technical world is also connected, as a by-product of globalization; products/services are constantly crossing borders. Pre-testing becomes especially important, as a successful ad in one country, could have a whole different meaning in another. There is a story that goes along the lines of a cola company placing an ad in the Middle East made up of two adjacent pictures: the first is of a man lying in the dessert exhausted from the heat, the second is the man all refreshed after drinking the cola. Though the ad was successful in the West, it was a complete failure in the Middle East, as Arabs read from right-to-left (thus the message they understood was: if you drink the cola, you will die). “Ad testing [serves] to sniff out potential pitfalls in the ad” (Sara), increasing the ad’s potential to be as effective as possible.

“The new currency is measuring engagement” (Businessweek); the more an advertisement has an “emotional impact” (Walid), the higher the chances of converting the advertising costs to consumer purchases. Thus pre-testing plays a crucial role:

  • In the early life stages of a product/service; as no connection exist with the customer
  • With creative or controversial ads; as consumer’s reaction is unknown.

Some companies claim that pre-testing can’t predict the real-world, as the testers usually “select the strategy that is less differentiated..[thinking they are being critical] as they munch on nachos … on a Sunday afternoon” (McKee, 2007); effectively killing ad creativity. Countless examples are raised of how some ads failed pre-testing, yet were extremely successful with consumers.

Although the science of pre-testing is still imperfect, but the solution is not to stop it altogether; we must remember that countless other examples also exist on the flip side of the coin: brands saved from bad advertisement at the pre-testing phase. As technologies advance, testing methods are becoming much more accurate. Also, companies are increasing the size of the test groups in creative ways, yielding more accurate results; for example, Google has done so by taking user-generated video entries when creating their Gmail commercial (Google’s email solution). Pre-testing should be used as a “compass … to explore … and not [like] a map” (McKee, 2007).

~ Youssef Aboul-Naja

Winning the Consumer’s Wallets: Point-Of-Purchase

January 17, 2010 Leave a comment

We are living in interesting times! Our market environment is evolving faster than ever, as it is shaped by the various factors, that include:
– The need for target advertising: “Our market is being more and more fragmented by the day … mass media doesn’t cut it any more” (Abbott et. al)
– Informed customers: influencing customer’s wants and effectively defining their view of value
– Heightened competition & market reach: fueled by globalization; made possible by cheaper communication and transportation
– Different shopping roles: “Shopping is no longer about securing necessities but has become an avenue to pursue the spiritual” (Tian)

If we focus out attention at the consumer market level, we notice that a particular factor has had a a significant role in shaping our market environment; the increase in “retailer’s power” (ArabianBusiness.com). The widespread of hyper-markets is a testimonial to that. Large retailers nowadays, carry thousands of goods; which goods they carry and where they place them on shelves play a major role in influencing customer’s purchasing preferences. The retail’s influence became of particular interest to suppliers, when recent studies emerged, approximating that “40 [to] 70% of purchase decisions are made in-store” (ArabianBusiness.com). Thus marketers beefed-up their marketing efforts aimed at persuading the consumer to purchase a given product where sales are made; known as Point-Of-Purchase (POP). In-store samples, promotions, fancy displays and packaging, counter salespeople, all fall under POP. Point-of-purchase has such an influence on consumer spending that Tobacco companies, for example, spend more on POP advertising than “the amount [they spend] on either print or outdoor advertising” (Feighery et. al)

Below, are two POP advertising that I have encountered; and their overall effectiveness:

#1 Are your teeth as white as they should be?: This catchy question was printed on checkout conveyor belts in supermarkets. The advertisement was for whitening chewing gum – there was a picture of it beside the question. I believe that the marketing executives have done a good job with this particular advertisement as it was:
– Relevant: most of us would like to have whiter teeth
– Inescapable: you will eventually have to make your way to the checkout counter; missing the advertisement is not an issue!
– Location: the chewing gum is located right beside the checkout counter
– Low price point: the gum is not an expensive item; so making a decision whether or not to buy it does not require much thought.
– Dialogue-type marketing: the question engages the consumer in an internal dialog with themselves; “dialogue-type marketing is a good way to generate awareness” (Helm)
On many occasions, I ended up buying the chewing gum, since well, it whitened my teeth (which is valuable to me), and I could never forget – as the ad was always there. The Advertisement, with its radiant colors, was actually welcomed, as it brought the monotone-colored conveyor belt to life.

#2 Unique Packaging: Galaxy chocolate sells, in the Middle East, boxes of bite-size chocolate pieces, under the name of ‘Galaxy Jewels’. This highly successful product positions itself as high-end chocolate geared for the general population; thus price and location take that into account. During the holy Muslim month of Ramadan, Galaxy changes the packaging of Jewels from a box to a lantern (symbolic for festivity) in the Gulf countries; where the majority of the people residing there are Muslims. In fact, out of all the supermarkets I frequent, this lantern packaging is the biggest one across the chocolate and non-chocolate products. The advertising effort is not particularly annoying; on the contrary, it is very nice, especially that the Ramadan period has a special place in the hearts of Muslims. My issue is that, although the lantern is catchy, it doesn’t tempt me to buy the chocolate; I prefer other chocolate brands that have a more rich taste. I think that if the marketing executives spend on increasing the quantity size, opposed to making lantern shaped packaging, the chocolate will sell more, given that during Ramadan:
– Quantity plays a significant factor than other months – as people are fasting
– People visit each other more often – thus more chocolate is needed to offer guests.

~ Youssef Aboul-Naja

Unlock Your Human-Networking Potential

January 13, 2010 5 comments

I want you to recall any recent conversation you had with a friend lately; what did you guys talk about? Most people will answer along the lines off “…many things but nothing really specific”: weather, sports, money, last week’s party. Now if I ask you about the last conversation you had with a person whom you have no social connection with [salesman, civic worker, waiter, etc] you would probably either:
– Recall exactly what you talked about; as it would have revolved around something very specific: otherwise, why would you talk to them in the first place!
– Or not recall a thing; really … who cares; it was something unimportant and you will most likely never meet that person again.

Given life’s growing complexities, people find themselves strapped on time; which eventual spills into other areas of their lives. They often complain of not finding enough time to socialize. Socialize, are you serious? Even when we are ‘very busy’, we are constantly surrounded by other people. Albeit they are not our ‘closest friends’, but it is us that elect to engage with them in a direct, lets stick to the topic, style of conversations.

The need for socializing is inherent; we are after all social beings. Socializing helps us forget what’s on our minds and feel that ‘hey, life is really good after all – whatever pressures we are facing now are only temporary…and normal’. Ever had an interesting conversation with a complete stranger? [maybe the cashier at the grocery store, or the lady standing near the bus stop]. You feel really good afterwards: you induced change into your system. Thats why most of us love to travel; to engage ourselves in new experiences – escaping reality [which is really relative – you create your own]:: this is exactly what conversing with friends does: the topics are multi-threaded and spontaneous.

It is unfortunate that a lot of people deal with friendships in a ‘closed-circle’ manner: you are either a friend or not. Friendships should be more of a fluid concept; ‘concentric circles’ if we may call it, with you being in the center. By doing so, you at least break down the social stress that life throws at you, while unlocking your human-networking potential. Don’t miss out on meeting new people – so many great ones exist out there. “Each person’s life is lived as a series of conversations” [Tannen] … make the best out of it!

~ Youssef Aboul-Naja

Three Future Retail Trends

January 12, 2010 1 comment

In a market environment, where “the value proposition guiding … purchases is changing” (Maxwell et al.), retailers are required more than ever to deploy their offerings in a more, non-traditional, consumer-maximizing approach; a criterion of which is form and combination. This value proposition change is attributed to various factors, some of which include:
Knowledge revolution: consumers are becoming more savvy, as they have access to a ton of information a ‘mouse click’ away.
Generation transitioning: baby boomers are being replaced by generation Y, triggering a whole new way of how and where to shop
Greater competition fueled by globalization: made possible by cheaper transportation and communication

The “one-size-fits-all approach of the mass chain store format” (Steverman) is a thing of the past, as the consumers want to feel they are getting more out of the retailing-experience; either by having the experience more adapted to their needs, or by being accentuated through a collection of retail combinations. If I were to peek into crystal ball, would probably see the following three retail combinations in the near future:

Hospitals + Hotel/fitness clubs: hospitals are regarded as the place where the sick go to; though it should also be viewed as a place that promotes health and well-being. An underdeveloped retail combination is hospitals and fitness clubs; this combination should make sense, as each promotes for a healthier living. In some countries, there exists a few hospitals/fitness club combinations; and they have prove successful.
Another combination that is also missing, is hospitals and hotels. Many times, patient guests require to stay overnight; and hospital rooms are not the most comfortable of places. A hospital/hotel combination will make the hospital visit a more convenient, value enhancing experience, for overnight clients and their guests.

School + Diet centers: Obesity is a world wide epidemic, and is being addressed aggressively; especially when it comes to kids. One place where children may have access to “unhealthy lunches” (Arnst) is schools. Many countries around the world, have banned, or are on their way to banning unhealthy snacks; but I think that more can be done in that regard. A retail combination of schools and diet centers would make sense, as the diet center can create custom ‘lunch’ plans for each student; delivering healthy, portion controlled, meal to each student’s specific body structure. Such combination, would bring about move value for the parents, as it addresses their needs at various levels: kids getting help with the obesity problem, kids eating healthy foods, and parents not worrying about packing lunch for their kids.

Supermarkets and web service providers: Supermarkets are in a continual pursuit of reaching out to consumers, making their experience as efficient as possible. “Fewer shoppers want to go out of their way for food … as people [are] on tight schedules” (Joseph), so supermarkets engage in many practices from weekly flyers, RFIDs, smart shopping carts and self-checkout lanes; all of which aim at understanding consumer’s shopping patterns and/or providing convenience. One retail combination that I expected to see in the near future is supermarkets and web service providers (such as the likes of google and yahoo!). Shoppers would have some sort of card (or their mobile) link their purchases that are rung at the cash register with the web services company. By populating such information, an array of complementing functionality may follow (from the consumer’s perspective): more relevant advertising, easier way of submitting opinion, the data can be interfaced with other technologies [smart fridges?], etc. The shopping experience would be more ‘personal’ (Maxwell et al.) and relevant. As for the retail’s perspective, supermarkets would be getting further insight into customer’s shopping patterns, easier way of receiving opinion, and more savings gaining with effective targeted marketing. The web services company would gain by getting a wealth of customer data information. Supermarkets cannot pull this feat on their own, and would need the web services provider, since as they have superior computing power, various other deployed services [possibly future additional functionality], and a positive track record with people in respect to information security.

~ Youssef Aboul-Naja

Target Marketing: Adapt-Or-Die

January 11, 2010 1 comment

Is target marketing EVER bad? Sure it is! Nothing is ‘always’ good; else this question would not be raised in the first place. But is target marketing beneficial?

Companies are out there to enhance the ‘wealth’ of its stakeholders. This wealth can take on many dimensions; depends on how the stakeholders define wealth. But what is not open for debate is a company’s survival is dependent on the demand it generates from its clients. The higher the demand a company generates, the higher its chances of survival.

In the United States, “the minority market will represent $2.6 trillion in purchasing power by 2009” (Lowry). In fact, this is the case in a lot of countries all over the world. Cheaper means of communication, transportation and information have empowered consumers and raised the competition amongst the suppliers as their reach became global. Consumers want products that suit their purpose, and companies have to be able to justify their offerings by showing their value-proposition; “One size doesn’t fit all. Consumers buy shoes to fit their feet, not average feet” (Everett).

The truth of the matter is that “opinion leaders are not [only] Bob … It could be Vijay or it could be Chan or it could be Mohammed” (Strauss). In applying targeted marketing, companies are required to learn more about their customers: their cultures and their hierarchy of needs; all of which contribute to defining their ‘satisfiers (factors that cause satisfaction)’ (Kotler and Keller, p.203).

But what does this mean to the consumer? I believe that consumers’ standards of living would be improved with targeting marketing. As companies understand the needs of a certain targeted group, they start to tailor their products/services to provide further benefit to them. Darker skinned women are getting foundations that match their skin tone, Muslims are getting financial services that correspond with their faith, Hispanic-Americans are able to purchase products that suit their taste, and countless other examples. Targeted marketing doesn’t stop at products and services. Applications of it have been found at governments, were the Tories party in Canada is planning to beat the Liberals party in vote count, by targeting the “Jewish community and those visible minority communities which are accessible” (Leblanc).

Several arguments exist against ‘targeted marketing’, in that it is exploitive and often is stereotypical. Targeted marketing is a tool that could have multiple uses; like any other tool. Though it is a company’s moral and ethical responsibility to use the tools they possess in a beneficial manner, if they step out of line, this is when censorship bodies would step in; the most crucial of which is consumer demand. “If advertising does not pay attention to ethnic minorities, businesses could be missing significant market opportunities.” (Khan). As the Darwinian law has it: adapt-or-die.

~ Youssef Aboul-Naja

Prices: What do they really reflect?

January 10, 2010 3 comments

“This is the first time in the history of Starbucks that we have lowered prices … providing a value for our customers” (Andrejczak, 2010) explains spokeswoman Anna-Kim Williams on August 2009. Though the statement has some truthful elements to it, the reality of the matter is that consumer’s perception of coffee and ‘value’ changed; especially with the slowing economy. Earlier that year, McDonalds entered the coffee market, with prices that were much lower than that of Starbucks; and Starbuck’s ad campaign which tried to convince consumers that it’s coffee is “higher in quality” (AssociatedPress, 2009) failed miserably. Simply put, consumers weren’t willing to pay extra anymore for Starbucks coffee; and thus the price cut!

In the world of business, self interest is the influencing factor in decisions taken. In that respect, in order to maximize its stakeholder value, companies work on winning a share of consumers’ disposable income by offering products and services loaded with benefits; while consumers select those offers that provide them with maximum benefits. Since ‘price’ is one of the elements that play a significant role in a consumer’s decision, companies are constantly measuring the “trade-off between setting prices low to stimulate sales volume [and] setting prices high so as to communicate a quality image and secure higher margins” (Subrahmanyan, 2000)

Many factors shape the consumer’s perception of a given offer, inadvertently affecting their willingness to pay the stated price; some factors include:
-> The nature of the product/service being offered: as a general rule of thumb, the more a given product/service is differentiable, in short supplies and/or more man hours are put into it, the higher a price it may command.
-> The availability and price of substitutes
-> The benefit gained: what kind of need – Maslow’s heirarchy – is the product/service addressing? A liter of water in the desert doesn’t cost the same as a liter near a mountain spring.
-> Consumer’s future expectations of the economy
-> Product/service’s country of origin: in a study of 767 individuals, it was concluded that in many situations, people are “willing to pay [more for the same] product [if it] was made in Germany, the USA, or India” (Drozdenko and Jensen, 2009) opposed to being made in China.
-> Appearances: “appearance impacts the customer’s subconscious view of … value” (Kahle, 2010)

Therefore, when companies do set their prices, they must take into consideration the consumer’s willingness to ‘shelling out’ the stated amount. At the same time, company’s are in business of making profits. So, it is only natural that for everything product/service, there is a minimum price threshold that companies cannot go under; the cost of production. It is to be noted that the definition of ‘cost’ should have a wider scope than that of the accounting sense. Additional costs that can creep into the final cost of production include: environmental and social impact, effects on brand equity, effects on corporate strategy, etc.

In a market space plagued with imperfect information, it is imperative that companies define and understand the market segment they are going after; in order to understand the targeted consumer’s definition of ‘value’. It is from such knowledge, that companies can understand the consumer’s willingness to purchase their product at different price points; aiding in setting the final price and controlling production costs. Such information may also aid in “changing [the] perceptions of value” (Hamilton and Srivastava, 2009) in the minds of consumers; allowing companies to charge higher prices. Companies that set their prices relative to only the costs they incur, while neglecting the consumer, are playing a high stakes game of blackjack: they are relying only on the cards in their hand; the majority of the time, the house wins!

~ Youssef Aboul-Naja