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.

The nuances of B2B research

I was recently having a chat with an old pal who'd just landed a vice-president of marketing job in the US working in the B2B sector. He'd got in touch, amongst other things, to ask me about how to approach B2B research. He knew I had worked for the global distribution company DHL as their European Market Research Manager working on both consumer and business research projects and so thought I might be able to give him some pointers. He was right because while working for DHL I found that many agencies failed to understand the nuances of B2B research.

I thought I'd share with you some of the points we discussed. Here are some of the factors you should consider when conducting B2B research.

1) The challenge of talking to the right person
The initial step is to determine to whom you want to speak to: it may be the decision-maker, influencer, or the person who does the day-to-day interaction with the organization. One should also consider whether the decision maker is in fact a group and, if so, who are the key stakeholders. Such complex decision making structures often means increased time and cost in conducting the study.
Interview briefing is also critical. Interviewers need to be aware of the barriers and difficulties they may face in reaching the target respondent and apply appropriate techniques to draw out accurate and relevant information from the interviewee.
Once you know who you want to speak to the next step is to think about the most effective method of reaching them, in terms of time and cost whilst maintaining a high probability of quality responses.

2) Increasingly sophisticated segmentation
Segmentation is a central pillar of marketing and a term used to describe a variety of different ways in which distinctive, differentiated groups can be identified and profiled within the marketplace. Methods vary and include demographic profiling, behaviour, attitudinal, psychographics, and needs (and/or a combination of these).
Historically, segmentation has been used more in the B2C sphere than in B2B. However, over recent years a sea change has begun. Increasingly, businesses competing in B2B markets are adopting a more sophisticated approach to segmenting their targets, realising that the single ‘one size fits all’ offering to customers - perhaps supplemented by special arrangements for key accounts - or segmentation based on estimated revenue potential, is just not adequate.

B2B organizations are looking to gain a more detailed understanding of customer needs with a view to introducing a range of services to match these needs with the goal of drive increased sales and profitability. In simple terms, this customer needs-based segmentation (categorising customers by the kinds of service they would like in future and price sensitivity) supports a customer-focussed culture, a culture which is increasingly seen as the best path to success.

At DHL, after receiving sign-off from senior management to proceed with the project, I opted for face-to face interviews and a trade off methodology for our customer-needs based research. We gathered detailed customer requirements on pre-defined service features with many different potential levels for each feature. A variety of statistical techniques such as factor and cluster analysis were then used to group customers into segments, each one of which required a distinct service offering. The data were then cross-matched against existing market size data to make sure that each of the segments was large enough to be worth targeting. Follow-up in-depth interviews gave additional information on each segment’s attitudes.
The final step in the process was to implement the needs based segmentation in the field. The data were further analysed and a short subset of questions to be asked of customers were developed to enable the salesforce to allocate customers to the correct segments.
The result of this extensive exercise was increased sales and more satisfied customers.

3) Ascertain who owns the customer data
Clearly, a key difference between consumer and business research is that businesses can supply the customer contacts for the survey. Its easy to get drawn into thinking that this will simplify the study. This tendency should be avoided as the process for the the client to access the data may be lengthy and complex as the clientside Market Research Manager speaks to and organises provision of the data to various departments and stakeholders. The researcher needs to be careful to assess the impact this may have on timelines and ask appropriate questions of the client upfront.
In addition, external data may be needed to make a comparison of the organizations performance against the competition. This possibility should also be taken into consideration when planning the project.

4) B2B is notoriously dry
A key difficulty of B2B research is that respondents invariably find it dull. The smart researcher should spend some time to enliven and add sparkle to the questionnaire to maximise engagement. Researchers need to think of ways to excite and ignite respondents.

5) The client’s customer
When you want to understand consumers’ beliefs, attitudes, perceptions etc you ask consumers. But B2B research differs in that it entails getting into the mindset of the client’s customer, seeing things from their perspective and not your clients. Again this adds complexity and difficulty and should be taken into consideration when planning B2B research.

6) Level of organization
Its important to ascertain the level of organization the study is to cover. It may be that a particular company site, the head office, regional or global is the required target. In each case, the design needs to be modified accordingly.

7) Don’t forget B2B respondents are people as well
There is a tendency to view B2B respondents as a different breed. People are people and B2B respondents do not turn into rational machines for a B2B survey. They are often motivated by the same needs, desires and interests as respondents in a B2C survey. For example, B2B respondents will often select suppliers on the basis of how it will make them look within the organization. I’ve had the experience of working on a project where B2B respondents said that they aim for the best in everything they do at work so they simply chose the best. Another finding was that some people chose to use a brand simply because they were widely regarded as the best in the business and that they would be open to criticism if they chose another supplier.

The dawning age of thrift

My partner and I are regular restaurant goers. We’ll often quite decadently travel a not insignificant distance to go to a great restaurant, like for instance Eschalot in Berrima (a one and a half hour drive south of Sydney). Recently we’ve started to pull our horns in a bit by spending less per head. I’ve also noticed a distinct reduction in the number of empty tables at restaurants. I take this as a clear sign that the global recession has arrived in Australia.

People who overconsumed during the past decade are rejecting extravagant lifestyles. Following 9/11 when, in particular in the US, it became patriotic to shop and spend, people are now spending less and more wisely. The penny pinching is showing up in the numbers with personal consumption falling, exacerbated by huge consumer debt ($2.6 trillion in the US).

Which brings us to what John Maynard Keynes called the paradox of thrift. What’s good for the individual, argued Keynes, can ignite or deepen a recession. But that won’t deter the newly thrifty. It isn’t hard to hear the millions of those in debt exclaim, “I can’t help the economy, I’ve got to help myself”. Thrift has gone in and out of style over the years often sparked by recessions. Indeed the Great Depression marked many and their siblings for life. In the 1930s, it was typical for son’s to see their fathers out of work for years, perpetually hungry, scraping together a living. Those sons today, many who are now in their 80s and wealthy, shop with coupons, drive a Ford and take the subway rather than throwing away money on a taxi. Their baby boomer children grew up without psychological scars from the Depression. And the boomers’ children have come of age in an era of abundance, easy credit and a taste for luxury. “We want to build a culture that’s more hospitable to thrift, so it’s not seen as odd but fostered and nudged along,” says Barbara Whitehead, co-author of For a New Thrift: Confronting the debt culture, a new report from The Institute for American Values, a think tank.

As joblessness creeps up, many more will receive their own crash course in thriftiness. Some will spend more up front to reap savings over the next few years, like installing expensive but energy sipping light bulbs or solar panels. Some will switch from shaving cream to shaving soap – a relatively small saving per year but a sizable psychological benefit. People are learning the difference between necessities and discretionary spending. Maslow’s hierarchy of needs is as applicable now as it ever was.

People are eating in more, buying more second hand clothes and turning the lights off when they leave the room. In late 2008, Booz & Co conducted a survey of nearly 100 households and found that 43% of respondents said they are eating at home more and 25% said they cutting spending on hobbies and sports activities. In both cases, most said they’d continue doing so even when the economy improves. Much the way the inexorable rise in petrol price have prompted many to forsake SUVs for smaller cars, the likely fall in home values and the size of consumer debt, will make consumers think twice about hitting the mall and lead, I fear to say, to a more lengthy contraction than some commentators would have us believe.

The 'Builders' embrace the power of the web

You know there was a time when my parents didn’t have a clue about computers or the web, let alone Skype or IM. Their generation, those born before 1946 (aka the Builders), were used to stuff in the physical world; purposeful machines you could see working, that could be taken apart, fixed and put back together again. The thought of a mysterious black box sitting in the corner with alien, magical powers that allowed you to get in touch with anyone in the world at any time sent shivers up Builders’ spines. The idea of online shopping was attractive because it removed the hassle of driving or calling around to get the best deal. But there was always the nagging security concern - what if someone intercepted my credit card details? What if I pushed the wrong button while entering my details for payment and ordered the wrong thing or paid too much?

The following is a classic, though admittedly somewhat exaggerated example of my parent’s (actually my Dad’s) first effort to make an online purchase. I have no doubt it’s similar to those efforts of their neighbours and fellow Builders. I guess it’ll strike a chord with my fellow army of Gen Xers who’ve attempted with varying success to educate their ol’ folks of the ways of the web.

- So have you booked your holiday?

- Yes, Dad booked it last night.

- Did you manage to book it online, like we talked about?

- Yes, he booked it all himself online.

- Really, Dad? That’s brave; I thought he was still getting to grips with the computer.

- Well he sorted out the email; he sent you a message.

- Yes, 134 actually. Still it’s good he’s using it, we’ve all got to learn hey. Anyway, where you going on your hols?

- We’re flying to Milan.

- That’s fantastic, it’s a great city. Where are you staying?

- Well, the hotel is a little way outside Milan itself.

- Yes?

- It’s in Miami.

- Dad booked the hotel in Miami but the flights are for Milan?

- Yes, he’s a bit reckless with his mouse. We’re hiring a car so we’ll be able to drive there.

- From Milan?

- Oh no, not from Milan, we’ve got to pick the car up in Manchester.

- Mouse problems again?

- No, no, Dad dropped his bifocals on the keyboard. Still, it’ll be a nice long break. Dad spilt his cocoa on the keyboard and some of the number keys started to stick so he’s managed to book the hotel for 33 weeks…

- Oh no…

- For 222 people…


I am pleased to say that nowadays my Mum - and Dad – use the web successfully, to search for information, to buy various goods and services, to download files and software. They are also fully Skype literate. As I beam into their UK study all the way from Sydney, it is, amongst other things, a pleasure to see their faces filled wonder; the wonder of this technology and the magic it can perform.

Us marketers need to take note. Builders make up a not insignificant 17% of the Australian population (ABS) and therefore present a great business opportunity. Though still weary of the computer ‘thing’ in the study, Builders have embraced the web and are demanding more from us, the young upstarts that have upset their apple carts and brought them this pragmatic magic.

(Note: McCrindle Research have excellent papers on generational differences including internet usage trend variances.)

The Secret of Spin

Just finished reading Barack Obama’s ‘life story’ Dreams from my Father. As he does on the Telly, in his writing he comes across well. I was left with the distinct impression that he is a thoughtful, diligent and considerate person. Above all, he seems like a decent human being who plays with a straight bat.

But the sceptic in me kept asking, Am I being played, in a good way or bad? For goodness’ sake, he’s a lawyer and a politician (and we all know politicians don’t lie straight in bed). Was the entire book a brilliant piece of spin doctoring? Like a good spin doctor, had he worked out the questions to come, and the kind of replies he needed to make in his build up to be President of the United States.

Some years ago I was told a story by someone who was brilliant at working an angle:

A customs officer stopped a youg boy who was cycling from Mexico into California. Across the handlebars of his bicycle he had two great big sacks. And of course the customs officer threw up his arm – drugs being blatantly taken across the border! “What’s in the bags?” “Sand.” “Oh yeah?” “Yeah.” “All right, let’s empthy the bags out here.” So he emptied the bags out and it was sand.

The customs officer couldn’t see anything wrong, so he let the boy put the sand back in, searched him, and watched him pedal into California.

This happened every week. Every Monday, along came this boy on his bicycle, and the customs officer examined the bags and found nothing wrong.

Finally, the customs officer became so frustrated he said, “ Look, I know your putting something across me here. We examine these bags and search you every time you cross, now what are you taking across the border?”And the boy thought for a moment and said: “New bicycles”.

Now that was a great bit of spin. All the attention was directed onto something else. How do you put an angle on something?

Some of the best examples come in speeches. When Martin Luther King said: “I have a dream, my friends,” it was a great piece of spin doctoring. It was putting the right words in the right place to the right audience. Obama’s more recent “Yes we can” mantra is pure spin.

Spin has been around a long time. I think it was Goebbels who said: “Tell a lie often enough and everyone will believe it”. That’s not true anymore. Sooner or later people are going to start asking: “Is that right? Has the emperor got clothes on?” With greater access to information, people are more sophisticated today and it doesn’t work.

An example of spin doctoring gone wrong was when Richard Nixon was advised to go on the Telly and say: “I am not a crook”. It was like, if you could fake sincerity then you’ve got it made. But Tricky Dicky looked like a sweaty crook and everybody could see it. It was bad advice.

So what are the characteristics of successful spin doctoring? To my mind, there are few points:

The first is, be genuine. Simple communication and absolute straight up integrity and honesty is key.

Two, it has to be a presentation, not a show. You can’t put on the falsity of a show. Abraham Lincoln said: “I couldn’t be two-faced, because if I had two faces I sure wouldn’t wear this one”. Straight up works best.

Third, you have to understand what your message is. Obama’s message was “Vote for Change”, a clear, simple message that made him different. People instantly knew what he stood for.

Fourth, you have to be able to see yourself as other people see you and be prepared to laugh at yourself. I remember reading a piece by the acerbic Alan Clark, the craggy old Tory MP, who described an official dinner in Peru. The host thought it would be nice to give Alan a British toast, so everyone took up their glasses and said: “Up your bottom.” Sir Alan took up his glass and replied: “Up yours”.

And finally, good spin doctoring is nearly always 90% positive. I remember reading a piece about “that woman” as I call her, Margaret Thatcher. Working on a speech, an advisor said: “I don’t like that bit”. “Don’t you, what would you put in its place?” “Well…” “Don’t waste my time. I’ve got a country to run. If you’ve got something better to suggest, fine, let’s have it. Otherwise, shut up.” Knocking all the time doesn’t attract people to you, doesn’t attract the attention that you’re looking for, doesn’t give the image you want.

Obama’s book meets my criteria. So it was an excellent piece of spin doctoring. Whatever, it felt good reading it. Perhaps, this is the most important thing for a spin doctor to do - make people feel good. Obama has certainly done that.

The Importance of Being Nice

In these tough economic times, I’ve been thinking about corporate reputations and I've come, I think, to a rather compelling theory: nasty companies will become extinct and nice companies will survive and thrive. The reason why nice companies will do well is that they establish attractive reputations. Companies that have reputations for being good employers find it easier to recruit and keep good people. Companies that have reputations for being good citizens are looked upon favourably by consumers. These days, companies that give to charity and are genuinely concerned about the environment tend to attract more customers. Companies that care about their customers as well as their suppliers give to their products and services an additional, and rather special kind of value. Business leaders are getting very interested in this ‘reputation’ value. They’re beginning to see it as an asset on their ‘invisible balance sheets’. Those are the balance sheets accountants can’t see, but which contain the really crucial things like brand values, intellectual property and know-how of employees.

If we agree that a company’s reputation is its most valuable asset, and if we recognise that reputation consists not of reality but of perceptions, then it is essential for a company to market a strategy. Reputation building and maintenance are going to be key management tasks going forward. It will become routine to acquire reputational assets at every opportunity. Until now, the big question for companies has been: ‘What shall we do?’ Henceforth the big question will be: ‘What am I?’

The theoretical part of the argument for how a nice company behaves is based on the theory of games. The game I think models nice businesses very well is ‘The Prisoners Dilemma’. Games theorist Robert Axelrod tried to discover the best strategy – the one that accumulated the highest score by inviting games theorists to enter their strategies in a computer tournament. To cut to the chase, the nice strategy did surprisingly well. (Axelrod defined the nice type of strategy as one that was never the first to make an aggressive move). It was a surprise because the conventional wisdom was to be first to defect (i.e. make an aggressive move). The reason why the conventional solution does badly in our game is that we are playing the repeated version. Players meet each other frequently, as they do in business, and soon establish reputations. A nasty player does well at first, but then gets a reputation for being nasty and finds that no-one wants to play with him any more.

The strategy that actually won Axlerod’s tournament he called ‘Tit for Tat’. It always cooperates on the first move and then always repeats what the other player does. Its simplicity is its strength. Other players recognise it; they know that if they’re aggressive it will be aggressive back. They also know that if they’re nice, it will be nice back, and that a long and mutually profitable relationship will begin.

It is this kind of niceness I mean when I talk about the nice strategy. It’s a clear, deliberate and disciplined kind of niceness. It’s not woolly, soft, weak niceness. Axelrod attributes Tit for Tat’s success on four qualities: it’s nice, it’s retaliatory, it’s forgiving, and it’s clear. I think all these qualities are desirable in a business strategy.

I'm convinced that the dominant business strategy of the future will be nothing other than to behave as a nice company.

The Rise of the Machines

Just had my latest fix of sci-fi. Last night I finished the first season of Terminator: The Sarah Connor Chronicles, and despite the meaningful glances, clichéd dialogue, cheesy acting and the decidedly annoying voiceover, I enjoyed it. Following the themes set out by the Arnie movies, we see 15 year old John and his mother, Sarah, on the run from cyborg Terminators…

Pouty John’s sulky teenager moods and boyish rebellions grate at times - especially when you consider that we’re talking about the future leader of mankind. But we have to bear in mind that he’s been raised by a paranoid (doesn't mean they're not out to get you) control freak mother. He also lives with a kick-arse Terminator protector, Cameron, who's hotter than most real girls - no doubt the producers realised early on the need to appeal to the teenage boy demographic.

Watching Cameron adapt to the challenges of the mission is fascinating and bloody funny too. In Cameron’s time period (the future) everything is focused on defeating SKYNET, an artificially intelligent system that has developed a consciousness and is bent on exterminating its creator humankind. Protecting John at all costs means there are few social interactions that don’t involve a battle for survival. This puts her in awkward positions in the present day, not understanding how to relate in a human manner. She grows to understand by watching television and reading, and there is a defining scene where John tells her not to act like a nerd, and she quickly replies with a definition of nerd. John asks her how she knows that, and she tells him she has been reading the dictionary at night. She doesn’t sleep.

Ray Kurzweil has written a number of books on non-biological intelligence and biotechnology. His latest work, The Singularity is Near, When Humans Transcend Biology, is an awesome/terrifying text on life in the near future, when nanobots become self-designing and self-replicating members of our society and help us out with everything from hair loss to taking out the rubbish. ‘Within a quarter century, non-biological intelligence will match the range and subtly of human intelligence,’ says Kurzweil. ‘It will then soar past it because of the continuing acceleration of information-based technologies, as well as the ability of machines to instantly share their knowledge. Intelligent nanorobots will be deeply integrated in our bodies, our brains, our environment, overcoming pollution and poverty, providing vastly extended longevity, full-immersion virtual reality incorporating all of the senses (like The Matrix), “experience beaming” (like Being John Malkovich) and enhancing human intelligence. The result will be an intimate merger between the technology-creating species and the technological evolutionary process it spawned.’

If Kurzweil’s timeline is accurate, by the mid-2020s, we will be on the verge of a nanotechnology revolution. The soldiers of this revolution are the nanobots, blood cell sized robots that can travel through our bloodstream destroying pathogens, removing debris, correcting DNA errors and reversing the aging processes.

Plans are currently underway to create medical nanobots that will use our own metabolic energy as a source of power. That means these devices could remain operational as long as we are alive – or longer if they manage to get into human egg or sperm. Any nanobot that develops the ability to propagate in this or any other manner across even one human generation has fulfilled the definition of a non-biological lifeform. A true alien.

There is, of course, opposition from the Church and environmentalists. The virtual worlds of Second Life and World of Warcraft have been attacked multiple times by self-replicating worms called Grey Goo, which clutter the environments and in some cases destroy players’ avatars. The name Grey Goo is itself a reference to the threat of nanotechnology: hypothetically, a self-replicating nanobot could consume the Earth’s resources, transforming our planet into a giant blob of grey goo.

So will the future look like Terminator? The Matrix? Blade Runner? It’s inevitable that machines will become ever more powerful. Our interneural connections compute at about 200 transactions per second, at least a million times slower than electronics. With their ability to share their knowledge at lightening speed and ‘think’ in groups, machines will be able to leverage their collective intelligence at a far greater rate than humankind. Then the genie really will be out of the bottle - see http://www.theregister.co.uk/2007/05/11/skynet_takes_control/