Woolies finally get it together

Woolworths (aka Woolies) are really getting their act together. The big supermarkets in the UK introduced a loyalty card to their customers about 20 years ago. This year Woolies introduced their version – the Everyday loyalty card. After Coles introduced their card, it’s a distinct case of better late than never. And from what I can gather it’s been a great success, which isn’t a surprise.

Woolies has around 4.5 million people signed up to the loyalty program, and is sending an estimated 1 million emails each week to the 3 million who have registered their personal details, according to The Age. Their offering is centred on petrol, with the card a simpler alternative to dockets for providing customers with fuel discounts. Their tie-up with Qantas has apparently given their card a strong boost.

More importantly, Woolies now have the buying habits and shopping patterns of its customers in a mega-database, which it can, in turn, use to target customers with promotions and offers (and this is important) that are relevant to them. This drives loyalty differentiation.

Having registered online for my Everyday card, I recently received this very good DM piece from Woolies. Essentially it was a solid promotion targeted at and relevant to me: it offered me a good credit card deal with 5% off my groceries for 3 months (this was pertinent because I usually buy my groceries with a credit card) and 40c/litre off my next fuel visit (again, this was attractive because I top up each week).

Above all that though, the look and tone is so right. It’s colourful with not too much text. The informal, un-corporate-like tone is pitch perfect. The first line says, “Hi Alex, Here’s a new offer from Everyday Money that I thought you’d be interested in.” There's no off-putting hard sell here. Just a “thought you might be interested in this” sentiment. And with its “Yours Sincerely, Deborah, Everyday Rewards” sign-off, I was left with the feeling that Deborah was a pal, not a faceless corporate big wig. Nice work Woolies.

Entertaining mobility

I recently read that the US computer game industry is now bigger than Hollywood. Multi-player gaming as well as file sharing, online communities, and user-generated content are redefining entertainment as we know it.

A key driver of this change is that one-man band of digital devices, the mobile phone. Consumption of games, music and TV on mobile phones is growing along with the uptake of 3G services.

A recent survey in Europe suggests that 70% of teens use their phones to listen to music, with games and video penetration just behind. The mobile facilitates seamless retailing with ‘purchase and play’ whenever and wherever we feel like it. Handset manufacturers are pushing the next phase of mobile music consumption hard. The Nokia Music Store http://www.nokiamusic.co.uk/#/manifesto4/ and iTunes http://www.apple.com/au/itunes/mobile/ allows you to download music to a mobile. It seems the hardware, the connectivity and marketing dollars are all in place to deliver a new form of music on the move, assuming the price is right.

From a gaming and video perspective, made for mobile shows and games have created a new usage occasion and a commensurate need to cater for the additional opportunity, increasing the size of the industry. Mobile games will incorporate additional features, such as a GPS, enabling a truly unique gaming experience.

User-generated content has added a new dimension to entertainment. Cameras on mobiles are enabling opportunistic content creation that can at times have a profound effect on the viewer - think of the recent images, beamed around the globe, of the disgraceful treatment of protesters by authorities in Iran.

Additionally, social networking has become compulsive viewing. The mobile products of both MySpace and Facebook have been hugely successful, allowing you to communicate for less than an SMS, share anything you want instantly through mobile upload and see exactly what everyone in your life is doing all the time. Global CEO Chris De Wolfe said he expects up to 50% of MySpace traffic to be from mobile devices within the next 2 years. Interestingly, he went on to say that users return multiple times per day, indicating snack consumption for the moments in between times.

It seems unlikely mobile TV will replace home entertainment centres, but it can augment your entertainment experience. For example, in addition to made-for-mobile content, Foxtel iQ has launched a mobile product that allows you to plan your evening’s entertainment from the comfort of anywhere but your lounge http://www.foxtel.com.au/discover/mobile/default.htm. It’s a great example of how the mobile platform can act as enabler and add value to other platforms.

With processing power ever-increasing, you’ll soon be able to continue playing World of Warcraft even when you leave the house. Because of the constraints determined by the size of the handset, it’s debatable though whether the mobile phone will ever replace the mainstream gaming console. However, it looks certain to complement the online variant, with the trading and training of characters being activities that will be managed on a mobile.

An increased consumer repertoire will continue to grow the entertainment market, specifically the share attributed to mobile. Some of this will be pure entertainment on the handset, but increasingly we shall see cross-over with other entertainment platforms.

The impact of web development on brands - some predictions

I’ve been thinking a fair bit lately about the future of the web. It’s tough to make predictions, but hey, it’s fun to think about how radically the web will transform our lives and the way brands will need to evolve to attract and retain customers. With computing power doubling every 2 years, it’s predicted that at the current growth rate computers should be equal to the intellectual processing capability of humans by 2019! This seems a bit far fetched to me.

Nevertheless there is no doubt that sooner rather than later computers will become super-smart, meaning that the future may be less about what we do as a race but more about what happens to us as a consequence of the technology we have developed. Indeed, it has already begun - many folks claim that visiting virtual worlds helps them understand more about themselves.

The number of people ratings products and services on the web will increase. Only those brands that can monitor and respond effectively to this online scrutiny will prosper. Consumers will discuss benefits rather than features. Niche players will multiply leading to greater diversity of product and offer and, ultimately, consumer choice.

The online space will eat up an ever increasing portion of the sales cake due to lower cost of sales and consumers' buying habits. Brands on the High Street will have to increasingly create innovative, experiential environments to attract customers, like the Apple Store in Sydney or Nike Town in London.

Tools for creative self expression will continue to emerge, allowing for works limited only by the imagination. Brands that celebrate the individual nature of humans will increase. As consumers experience greater variety and diversity, they will tend to value the unconventional over the conservative.

The discovery revolution

In his now-famous book The Long Tail, Chris Anderson describes how the web is transforming mass markets into millions of niche markets, observing that the "tail of available variety is far longer than we realise" and that "all those niches, when aggregated, can make up a significant market".

Companies have begun chasing those niche markets. Consumers have found themselves inundated with an unprecedented amount of choice, in music, video, movies, information and products that span a huge range of interests. Add to that the explosive growth of user-generated content (from blogs to You Tube and Flickr) and you begin to see the problem facing users today: finding a way to navigate this vast landscape of choice.

By using the power of collective intelligence, that is by getting millions of consumers to share their tastes and recommendations, companies going after the niche markets in the long tail are providing ways to ease that navigational problem.

The idea of web discovery is not new. Yahoo began as a portal with pre-selected links to help users find interesting websites by topic. The web outgrew these editorial "best of" lists and instead the best lists became based on the wisdom of the crowd.

As Mr Anderson puts it, "millions of regular people are the new tastemakers...These new tastemakers aren't a super-elite of people cooler than us: They are us."

More importantly, Mr Anderson says that "for the first time in history, we're able to measure the consumption patterns, inclinations and tastes of an entire market of consumers in real time, and just as quickly adjust the market to reflect them".

This notion of crowd-sourcing is at the heart of web discovery. With the enormous amount of data and processing power residing on the web today, the discovery process is largely automated. Launched as a browser toolbar, StumbleUpon lets users give thumbs up or down ratings while the tool profiles their tastes. This profile data feeds into a set of algorithms that decide which sites to display next.

Discovery is burgeoning. Music in a way is all about discovery. Apple's iTunes app Genius recommends new music based on your past purchases. But my favourite music discovery service is MOG, an online community that combines social networking with music, where you can "discover people through music and music through people". You can download an app that can in turn upload the basics of music collection so that MOG can automatically make recommendations. Next thing you know, you'll be inviting your friends to use the service, link to your MOG page and further enhance your music discovery experience.

Another website that provides an innovative approach to entertainment and discovery is Funny or Die, where users get to vote on whether a video is funny. If it is, it stays. If it's not then it's relegated to the "crypt". In a way, Funny or Die represents an attempt to provide some structure for the disjointed content found on sites like YouTube.

I believe that web discovery is an important business lever for many companies. A sure-fire way to increase revenue is to surprise and delight customers and a fantastic way to do that is to deliver recommendations quickly and with minimal input, gathering preferences that in turn allow a progressively better discovery experience.

Market research is under threat of extinction

It’s now widely acknowledged that human behaviour is causing climate change. If we don’t stop polluting the earth’s sea, there’ll be no more fish in the sea. If we don’t stop polluting the atmosphere, we’re heading for drought and famine and many more parts of the world will be under water.

Similarly, the ecology of market research is under threat of extinction. In 2007, the Advertising Age in the US reported that 50% of respondents come from less than 5% of the population. And 0.25% of the population supplies more than 32% of responses to online surveys. Clearly, this will not give us a reliable basis to make important business decisions. There appears to be a dangerous slide taking place where market research is dependent on a small number of professional respondents. This means we’ll not have a representative sample that reflects reality. Why? Well as the Advertising Age article put it we’re in a Catch 22 – “No-one really knows whether people who don’t answer surveys are similar to those who do. Because they don’t answer surveys”.

There is an interesting dichotomy here. Many people are willing to share their opinions and views via blogs and online forums, but not so willing to take part in market research surveys. Let’s face it – market research doesn’t have a good name. Ask around what people think of market research and their unlikely to say that it’s about businesses understanding their customers better so they can provide better products and services. Many people just feel like their being played – some are asked to participate and then later get harassed by sales calls, some are called/emailed out of the blue without opting in to participate. Respondents give their views but nothing changes, like the bank still treats them harshly and charges an exorbitant fee when they go overdrawn a few dollars.

So how can we use the digital environment to enhance respondent engagement, and what measures can we take to ensure market research has a sustainable future?

Over recent years, there has been a shift from telephone to online surveys. This has been driven by a number of factors including reduced cost. Many online panels have been created. The better research operators recruit a good number of their panel offline to ensure the panel is representative of the population. They make it clear to their panellists that their details will not be passed on and will be used for market research purposes only. They make it clear that panellists will only take part in approx. 6 surveys a year, and are not paid per survey. Essentially, the better panels are compliant with ESOMAR guidelines.

Perhaps the main benefit of online panels is that it helps researchers to build a trusting relationship with respondents. A panel website with clear communication and the opportunity to feedback on surveys offers vital reassurance for respondents and enhances their engagement with the operator and the survey. Rather than a financial reward per completed survey which encourages professional respondents, entries into a prize draw should be considered or perhaps a non-financial reward.

A good panel should seek to establish a sense of community – panelists want a sense of belonging to something worthwhile and valued. They want to be part of the process in developing a user friendly and effective survey. Co-operation depends not just on the now, but how the respondent feels about previous surveys. If participants know that this is an ongoing communication, not just a one-off invitation to participate, then they are more likely to give of their best.

We also need to tailor our research approach to the needs of the specific audience to remove some of the obstacles of participation. There is an array of data collection interfaces available from SMS polls to blogs to asynchronous online discussions.

Mixed mode data collection may be appropriate, for example, where it is important to get a representation of the entire population and not just the research population. An online data collection method might be complemented by an offline method, combined with propensity weighting, which takes account of demographics, beliefs and attitudes.

The development of the web has triggered a social change where consumers are more informed, involved and connected. Marketing is no longer about one-way communication; we seek to engage with consumers and encourage a two-way dialogue with the brand. Research should reflect this too. Rather than ‘respondents’ we should talk about ‘participants’, which suggests a two-way interaction.

We should look to be more creative in engaging with participants. One idea is to invite participants to an event and expose them to issues presented by speakers, video and props. This helps them understand the issues, set the agenda and participate in a more considered and engaged way. Online blogs via the panel website can be used to encourage debate and discussion on a topic and to give our participants the opportunity to refine/define the topics from research. And we should look to make the survey interface a more interesting and enjoyable experience, not just in terms of closed questions with no visuals.

These measures will not be cheap or easy to implement in the short term, but by doing so, we will get better quality results and greater co-operation from the general public.

Modify your consumer research in a recession

I’ve just put down Dr Peter Steidel’s recently published book Survive, Exploit, Disrupt – Action Guidelines for Marketing in a Recession. It’s an excellent read and I highly recommend it to executives navigating their way across the stormy waters of the current economic downturn.

You know there is a theory out there in the land of academia (one, incidentally, to which I adhere to) that argues that recessions are part of the grand evolutionary process. A recession blows across a country or the world weeding out the inefficiencies and the excesses, the bad ideas and sheer human stupidity. This leaves room for the good stuff – good ideas and innovations - to develop and grow leading to the wealth of the future.

Steidel asks us as marketers, what can we do to ensure that we are one of those businesses that evolve, survive and continue to grow?

I’d like to pick out and elaborate on a particular element that Steidel highlights. It is an area that I believe is of particular relevance and importance in the current business environment and should occupy the business leader’s attention. It is this:

Sharpen your understanding of consumers and how they are affected.

There is one factor that is certain in a recession - consumers review and change their behaviour and buying habits. We do not know the scope, timing or scale of these changes and so it is essential we attempt a well-informed assessment.

This exercise should seek to establish the extent to which consumers will:

a) Drop out of the market because they cannot afford to buy
b) Modify the trade-off decisions they make leading to a change in their consumption patterns
c) Not change their purchase patterns significantly

This assessment falls into the category of understanding what consumers are doing. It should be made on a continuous basis so that as we come out of recession we are able to gauge the way the relationship between the brand and consumers has changed. For instance, some consumers may have switched to own-brand labels (like Woolworth’s ‘Home Brand’) and will stick with them following the recession as they have found the own-brand to be just as good as the brand bought before.

During a recession we need to know how consumption patterns evolve and the associated pressures that impact on purchasing behaviour. Having a better understanding of how such patterns evolve gives us a better understanding of the consumption patterns of tomorrow.

It therefore seems appropriate to have smaller, ‘dip’ surveys than one big one. Surveys that employ conjoint methodologies help us identify the trade-off consumers make. Many businesses have Data Warehouses that enable the wily Group Planning Manager or Product Manager to analyse shifts in purchase behaviour in terms of product categories, distribution channels, price brackets and so on. This analysis can be supplemented with an appropriate conjoint survey, that further enhances our understanding of consumer trade-off patterns.

We also need a better understanding of how consumers feel and why. In a recession, consumers’ modified purchase behaviour is underpinned by that most powerful of human emotions, fear. They will be fearful of losing their job. Will they be able to pay their mortgage/rent/bills? Will they have to sell their home?

Clearly, the feelings that we need explore are highly emotional and negative. It is highly unlikely that in a focus group, surrounded by strangers in a highly artificial environment, people will talk about their true feelings and motivations. New methods need to be employed such as a technique described by Gerald Zaltman in his book How Customers Think. The ‘Mind-of-the-market’ methodology relies on images to open pathways to emotions. Participants are asked to bring images to a one-on-one, in-depth interview and these are discussed. The images act as a metaphor that more accurately describes the participants’ emotions than a verbal and, invariably, rationalised and misleading response.

The point is that in a recession we need to modify the way we do consumer research. Conventional methodologies like focus groups are unlikely to deliver the insights into the emotions that modify the trade-offs consumers make and their purchasing behaviour. Immersion programs, where executives spend time with consumers, are increasingly seen of value, to observe how consumers shop, prepare meals, discuss bills etc. Proctor and Gamble have institutionalised such programs.


To conclude, recessions change markets. They change consumers’ purchase patterns, which in turn changes consumers’ perceptions, expectations and values. The marketing strategies of the pre-recession period will not wash going forward. Neither will consumer research. It should adapt to unearth the new consumer mindset brought about by the tough economic times. Businesses that invest in sharpening their understanding of how and why consumers alter their purchasing behaviour will be well placed to return to growth.

Consumer Types Rule

Marketing consultants and social watchers love devising new catchy monikers for consumer groups. It goes with the territory. There were the Yuppies, which, for those of you who were trapped under a rather large rock in the 1980s, stood for young urban professionals. And we had the Dinks – double income no kids – another 1980s marketing buzzword. Recent descriptors such as Glams (greying, leisured, affluent and middle-aged) and Nilkies (no income, lots of kids) didn’t have legs and died. The metrosexual burned brightly then faded away when marketers realised that the number of young, sensitive urban males interested in skin-care products had been exaggerated.

While such terms as yuppies and dinks have become part of the vernacular, most descriptors have struggled to gain widespread acceptance. Other recent efforts include Oinks (one income, no kids), Tinkies (two incomes, a nanny and kids), Rappies (retired affluent professionals), Sinbads (single income, no boyfriend, absolutely desperate), Sitcoms (single income, two children, outrageous mortgage) and Kippers (Kids in parents pockets eroding retirement savings).

But that hasn’t stopped marketers from coming up with new ways to describe consumers. The New York marketing firm Consumer Eyes, which works for companies such as P&G, Kellogg, PepsiCo, released a year or so ago a book entitled Karma Queens that identified nine consumer groups that companies should consider when they develop marketing strategies.

Three of the nine types relate to men: Denim Dads – the stay at home fathers focused on achieving a work-life balance; Middle Men – aged 21-35, who have a laid back lifestyle and are happy to be in jobs that are going no-where fast; and Geek Gods – aged 20-35 who have a lot of free time and disposable income.

Two of the consumer groups are women: Karma Queens, who in their 40s and 50s are often former hippies, are drawn to products and brands pitched directly at women and focus on mind, body and spirit; and Ms Independents, who have no children, no partner and a high disposable income.

The other four consumer types cover both sexes. E-litists are ‘light green’ consumers who worry about the environment, climate change and so on, buy organic food and cycle to work. Parentocrats have a different obsession: their children. They are happy to spend big bucks to get the best of everything for their kids and to push them along in what they see as a highly competitive world.

The final two types are Culture Crossers – people who are drawn to book, music, clothes, homewares etc from other cultures, and Innerpreneurs, who are constantly thinking about and working on their next business idea, how to improve both their lives and the world.

The descriptors are catchy and might become part of the vernacular. Maybe.

The important point to my mind about having descriptors is that it’s more useful to identify consumer ‘types’ than consumer trends.

Trends inform you about consumer behaviour without necessarily helping you understand the reasons behind it. Consumer types go further because they identify the consumers who set the trends. Types illuminate the consumer psyche, while trends merely articulate consumer behaviour.

For example, let’s suppose you market an upscale cosmetics line. Traditional segmentation might identify your core target as a working female, 25 to 45, urban dweller, with an income of $45k+. But what do you really know about her? Is she sports focused? Which sports? Confident about her looks? Likely to workout or visit a spa more frequently than the typical woman of her age? Could you pick her out at a cocktail party? That’s what consumer typing is really all about.