Click the Integer Pulse tab under the Our Thinking section for a monthly update from our Midwest office. They explore some really interesting topics surrounding the shopping world. This months issue uncovers a trend/counter-trend they call "Get Real|Unreal World" which dives into the mindset of today's consumers. Getting real about spending habits while at the same time longing to escape to an unreal world.
After two quarters of declining sales and executive-level scrutiny on brand health following reports that the company is straying too far from their brand roots, Starbucks is introducing five new initiatives to realign the company with their true identity. Interestingly, the most attention is being placed on CRM (customer relationship management) approaches to reward their most loyal customers and better understand their needs and desires. One of these initiatives is a standard customer loyalty-rewards program at retail, and another is a new style of website for customers and employees to share thoughts with the people who run the company.
It appears Starbucks is practicing these concentrated CRM tactics to reclaim their position of being the customer's "Third Place" with home and work being number one and two. Third places are social environments generally revolving around beverages. Starbucks is fulfilling on this mission as having become a nationally accepted "Third Place" where consumers spend lots of money, time and collaboration. With their now declining sales, Starbucks recognizes that they must take consumer interaction and entertainment to a more subtle but effective level without being too obvious. Who wants a "Third Place" that feels uncomfortable, forced or inauthentic? But that doesn't mean you have to be home-grown and primitive in your communication or approach.
Consumers will soon be seeing something new in Starbucks retail environment with a loyalty-rewards program starting in mid-April. These "on the house" perks are for anyone who buys a Starbucks card and registers the card online, because Starbucks knows they can convert them to loyal users once they get to know them better. Participants will get free refills on coffee, a free cup of coffee when they buy a bag of whole bean coffee, hours of free Wi-Fi a day and "on the house" upgrades including syrups, soy milk, and extra whipped cream on all lattes. The in-person experience will also integrate online through monitoring and MyStarbucksIdea.com.
MyStarbucksIdea.com will initially include about a dozen categories. People can post, discuss and vote for ideas in categories such as coffee, atmosphere, food, music and social responsibility. Forty-eight Starbucks employees will respond to the posts then channel suggestions back to management. "Their job is to show up every day and engage with customers about their ideas," says CTO Chris Bruzzo.
We see two important aspects of CRM at work.
Better understanding core customers. Starbucks is embracing a highly streamlined approach in communicating to and understanding their customer with this online initiative maximizing on a CRM tool which is a smart way to "get to know" your customer, communicate directly with the customer, increase their purchases and monitor and enhance their overall brand experience (Starbucks is using Salesforce which is a top CRM/Sales tool with over 800 applications like these.)
Creating a customer-feedback protocol. Starbucks is getting great ideas directly from their customers creating a sense of involvement in the experience and overall ownership and participation by the customer. They actually show when the consumer's suggestions are "under review" or "coming soon". Each suggestion is acted on; people can view results by participating in this forum. While the suggestions are a form of user-generated content that others enjoy to read, vote on and celebrate successes when Starbucks adopts the new ideas, these comments are also indicative of Starbuck's general business model. The comments imply that Starbucks moves fast and get things done.
Other companies like Dell have joined Starbucks in implementing these innovative tools. Visit www.dellideastorm.com to see the Dell CRPM application taking hold.
We suggest more brands step outside of the comfort zone and taste-test CRM and digital technologies to understand how simple and straightforward they can be. Cost-effective technology is at your fingertips where consumers literally "tell you" what they want, and the tools allow easy customization of direct communication to niche audiences. These techniques could make a venti difference in your sales.
- Contributed by Tracy Kollker
Retailers offering sustainable products and habits continue to grow and gain momentum – and more and more retailers are thinking of innovative ways to engage consumers on becoming Green.
Sam’s Club, like so many other retailers, is focusing their retail efforts around sustainability and Saving Green. They offer great eco-friendly products and tips both in-store and through their catalogue – but are now taking their sustainability efforts to a whole new level, by offering a “for purchase” Eco Home Makeover. For just $44,000 all of your eco-dreams can come true. The package includes solar panels, a wind turbine, high efficiency appliances for your kitchen and laundry, and energy efficient lighting. All of this aside, you also get put up in a luxury eco-lodge in Maine during installation, and you come home to a house-warming party to celebrate your eco-wonderfullness! Now that's what I call a package deal!
"Bundling" seems to be a relatively new concept, at least in its current context. Companies are bundling/packaging their services left and right. What began with vacations is now being offered by companies like Comcast, the largest cable company in the United States. It seems to make sense. As our lives get more and more complex, the more we want (and need) to simplify.
This offer is quite unique, however. Never before have I seen such a 360 degree approach. Comcast is certainly not sending you for a mani/pedi while they sync up your wireless to cable to tv to music. In fact, your schedule is at a disadvantage by opting for their services. Sam's Club, however, has pretty much covered every possible excuse you could think of to not do this. For example:
1. "I don't want their unsightly appliances in my kitchen."
With Sam's Club, you can choose the appliances yourself.
2. "Where are we going to go while they tear everything apart?"
Sam's club will not only put you up, but fly you so far away that the sound of wrecking balls is the furthest thing from your mind.
3. "How am I ever going to clean up the inches of dust they're going to leave in order to show off our new home?"
They're not only going to clean, they'll throw the whole darn thing for you! And bring PBS camera men!
It will be really interesting to see what kind of traction this gets in the marketplace. This is clearly not a "bundle and save" offer, nor is it a "go green, save green" initiative. This is pure convenience for the eco-minded shopper.
In this lies the potential to change the way we offer services. Is there a limit to what people will pay for this type of worry-free experience? Will brands/companies/services be forced to turn into experiencial machines to stay afloat? Time will tell. But it seems as though the gap between "do it yourself" and "have it done for you" is getting wider and wider.
Read more at http://www.samsclub.com/shopping/navigate.do?catg=11606
The Super Bowl is a tremendous opportunity for anyone in the retail business to capture momentum in sales volume early in the year. Though cash-strapped from the holidays, consumers spend an estimated $11.7 billion on Super Bowl parties, a month after the traditional holiday season is over. The event is bigger than the game, as we all head to Super Bowl parties to sample part of the $5 billion worth of goods the hosts bought, or the $6.7 billion worth of goods the rest of us guests threw in nationwide. Sales data shows us that its not just chips ($33.4 million), meat ($16.6 million), soda ($18.6 million), and beer ($20.7 million), being purchased incrementally, but nearly 4 million HD TVs (65 % bought at Wal-Mart or Best Buy) and 1.8 million pieces of furniture outfitting living rooms. This, and the fact that it is consistently the highest rated TV program of the year, makes the Super Bowl a boon for all the brands that stand to benefit from the occasion.
Brands market at retail for the Super Bowl in a variety of ways. Brands
like Coors Light, Pepsi, Doritos and others pay the NFL for official
sponsorship and rights to the marks for the Super Bowl. Non-sponsors
like Coke, Miller Lite, and Kellogg’s use generic terms like the “Big
Game” to try to capture the essence of the big game. The biggest
retailers “took back” the Super Bowl by creating their own programming
themes. But promotional programs that most brands execute offer fewer,
bigger prizes, don’t interact with the shopper beyond their experience
at the shelf. Despite their efforts, most promotions seem generic
because everyone is doing the same thing. Brands with the greatest
connection to football parties – especially food and beverage brands –
tout the “Ultimate Party” but don’t give us a compelling reason to
believe them.
It’s as if most Super Bowl brands are talking to themselves and not their audience – the fans. And the fans can tell the difference.
We the fans want to have the best experience possible. And, unless you
are a one of the few fans that has connections, your chance of getting
tickets to the game is nil. The biggest fans, the most loyal ones, are
watching at home because they simply can’t go to the live event. So
the game becomes a reason to get together with friends, consume copious
amounts of stuff and enjoy a pop-culture event with no equal. Outside
of the host stadium, the Super Bowl is 28 million parties with 154
million viewers, who are there for the game, the advertising, and to be
with friends, in that order. The host's success is measured on putting
out a great spread, showing off the home theater, or placing a friendly
bet on which quarterback will throw the first interception.
So, what can brands do more to enhance our experience before, during and after the pinnacle moment of kickoff? How can brands connect with the shopper at retail when there is so much clutter and noise in the context of a shopper wants to get in, get out and get to where they are going? At a time when everyone is sponsoring everything, how can a brand be authentic to an increasingly skeptical audience?
When there is so much opportunity to make a great impression for the Super Bowl, brands need to create programming that breaks through the clutter at retail and communicates a relevant message for the shopper. Brands must connect with the consumer in a meaningful way, understanding the insights of what the Super Bowl occasion is about. And perhaps most importantly, brands need to connect to their audience in a way that is authentic to the brand, while most of all remaining true to the fans.
- Contributed by Eric Anhold
Source: ACNielsen: average weekly sales for two weeks ending Feb. 10 2007; BigResearch: CIA survey, Jan 2007
Image credits: In-Store Marketer
Our Dallas office does a lot of work in the consumer electronics category and late last year undertook a study looking at what influences behaviour in this category. This generated a fair amount of interest in the media including an interview on Fox with Kim Menier, who heads up the strategy group in Dallas. Have a look at the interview here, and if this is your category let's start a conversation. We'd love to know your thoughts on the findings and comments Kim makes, so leave us a comment.
Each year billions of marketing dollars are spent in-store despite the lack of any significant industry metrics or standard gauge of effectiveness. The P.R.I.S.M. initiative, led by Nielsen and the In-Store Marketing Institute, aims to change that.
As we look back at the history of all major media today, we see that industry metrics have played a critical role in the adoption and maturation of every media vehicle.
So with this white paper, we take a look at the next frontier: in-store media and the impact of the development of the P.R.I.S.M. research approach. How will this marketplace evolve as we move ever closer to the standardization of language and measurement?
As a woman just over a month away from having her first child I am continually awed by the strategies marketers use to target new moms; continually taking advantage of their emotional highs and lows, their raging hormones, and their fear that they won’t have everything they need to care for their new arrival – it is no wonder that this is a booming industry. I receive non-stop ads in the mail for the myriad of things that new parents (allegedly) need. How did our parents ever do it without all of this stuff?
Having just completed a trip to Wal*Mart and Babies R’ Us, I was overwhelmed by the back wall of diaper options. From Huggies, to Pampers, to generic brands. Although I did not see any eco-friendly options the choice is amazing. Where does one begin? All of my “green” friends keep asking me if I am going to use cloth diapers, or find an eco-friendly route? As an overwhelmed pregnant women, the thought of cloth diapers is not very appealing at the moment. (Ironically none of my "green" friends have children). But in a time when sustainability and environmentally friendly are becoming everyday terms, what are my eco-friendly options and why am I not seeing them?
There is no doubt that we live in an era and a culture where convenience and time are extremely important. Cloth diapers might not be an option for me, but there have to be some choices out there for biodegradable, or green products that are still convenient and easily available to me. I started searching and found a couple options. My goal was to find things that were easily accessible and didn’t cause me a trip out of my way. Seventh Generation was the most readily available and is a disposable option. They market chlorine free / toxic free diapers. Obviously I have not tried them yet, but if they are anything like Seventh Generation toilet paper or paper towels, then I won’t want them touching my newborns sensitive skin! The price is slightly higher, and there are still conflicting reports on whether they are actually that much better for the environment than regular diapers. The other interesting option available is G-Diapers. The idea around this is that you purchase cloth velcro pants and then insert flushable refills into the pants - making the diaper. The flushables are plastic free and have no toxins. They are marketed around the convenience of flushing them down a normal toilet. The cost is approximately 35 – 40% more than regular Pampers or Huggies, and I can only purchase them online. It is here that the Diaper Dilemma begins!
In the baby category, filled with toys, clothing, swings and all the “must haves” for a newborn, the environmentally friendly diaper options are limited and the marketing for these products appears to be sparse (or, maybe it is just getting lost in the clutter of everything else). New moms are easily overwhelmed and are looking for convenience, cost savings and ease of use. It appears to me that there is a huge opportunity here, one that will make the Diaper Dilemma a little easier to solve.
Images courtesy of DailyClipArt.net
- Contributed by Tera Gill
If you've ever felt alone and without a friend, like nobody understands you and the world is out to get you, remind yourself: things could be worse. You could be a plastic bag.
Plastic bags suffer disdain rarely known outside dog catchers and tax collectors. Global consumption of non-degradable plastic bags is estimated between four and five trillion each year. The vast majority are never recycled and wind up in landfill, sewer systems, oceans, lakes and rivers. They are known jokingly as the National Flower of South Africa their ubiquitous discarded presence. The clog waterways, choke marine animals, and take 1,000 years to decompose. What's more, the thoughtless use of plastic bags deepens our reliance on foreign oil: to produce the global supply requires 17 billion gallons of oil annually. (Source: San Francisco Chronicle; Worldwatch Institute)
The problem is, plastic bags are such a common part of our lives that individuals have a hard time conceiving the ruinous effect on the environment. Using plastic bags is one of the few things nearly every human on earth has in common, young and old, rich and poor. Severe, large-scale cultural change seems to be the only way to reverse the trend of plastic bag abuse.
Several countries, including South Africa, Rwanda, Bhutan and Bangladesh have banned non-recyclable plastic bags outright. Individual cities like Paris, Mumbai and San Francisco have recently initiated bans. Progressive countries like Australia, Taiwan and Singapore are considering drastic bag reduction programs.
One of the most successful plastic bag reduction initiatives comes from Ireland, where in 2002 the government legislated a tax on plastic bags at the register. Within weeks, plastic bag use dropped by 94 percent, and people began adopting reusable cloth bags. But then something unexpected happened: carrying a plastic bag became a stigma akin to wearing a fur coat. Irish people became generally more mindful of the role of the individual in creating global change. England is considering a similar tax. (Source: New York Times)
In the United States there are no broad measures in the works, though individual cities have taken their own initiatives. Los Angeles, Boston and Phoenix are considering bag reduction proposals. New York City may soon require stores that distribute bags to recycle them, although this is a pale compromise to an outright ban. A national bag ban would be an excellent statement of environmental leadership but in our legislative system is almost certain to never see the light of day.
Unfortunately, paper bags aren't an environmentally friendly alternative: their production generates 70% more air pollutants and 50 times more water pollutants than plastic bags, and take up nine times as much landfill space. (Source: USA Today, Environmental Protection Agency)
What, then, are environmentally conscious Americans to do?
For Retailers, the options are many. Some are adopting biodegradable bags made from corn starch or other organic components, but these are relatively expensive and unreliable: a cardboard box corner can create a small tear that will cause the bag to fail and groceries to fall. Many stores offer a credit to customers who bring their own bags; Whole Foods is planning to raise the credit from 5 to 10 cents per bag and plans to stop distributing plastic bags completely by year's end, instead offering 99-cent reusable cloth bags at checkout. Other retailers offer heavy-duty plastic bags that shoppers are encouraged to reuse; still others promote recycling programs that transforms used bags into heavy-duty wood plank replacements for commercial decking and park benches.
For the Shopper, the best option is to choose neither paper nor plastic, but to bring your own bag, box or backpack to shop. Many retailers now offer durable, inexpensive reusable bags; in some places, these bags are even fashionable. Even the best of us will occasionally forget to bring our bags, and in such cases, use as few bags as necessary and make a promise to recycle the bags you bring home. Encourage your favorite retailers to make plastic recycling available. Above all, follow the green mantra: Reduce, Reuse, Recycle.
(reusable bag images, clockwise from left: King Soopers polyurethane bag; Lunds/Byerly's compact cloth sack; reusable plastic bag from The Coop Advantage, open and compacted)
As a relatively recent arrival to the USA, my family was put through some major changes to their lives, one of which was a change in how we undertake our weekly grocery shop. We came from a city where we had shopped on-line for most products, including weekly groceries, for the last 5 or so years. The convenience of having what we ordered delivered to our door within a two hour time slot is fabulous. However, we moved to an environment where that is no longer a viable option, having instead to drive to a supermarket and walk the aisles. (And as I am at work most of the time, I confess that my role in this activity is now non-existent!)
We were discussing this with friends the other week though and I was amazed at quite how quickly my wife had fallen into a pattern of behaviour that, when we thought about it, is driven purely by habit. Very quickly she fell into a new routine - she uses the same supermarkets, walks the aisles in the same order, buying the same brands, on the same day of the week at about the same time. It's clockwork. She doesn't even particularly like one of the supermarkets she uses - it is cluttered, cramped and not the nicest environment. Yet there is little incentive to change going there, and when I asked her about why if she is not that impressed, she doesn't go somewhere else, she hadn't really thought about it. It's just part of how she lives her life now.
So how much of our shopping behaviour is actually driven out of habit? How sedimented do we become with regular purchases like this? How much more difficult is it to change our shopping behaviour than to establish it? When was the last time you thought about and changed how you shop?
And what impact would a change in the store environment have on our shopping basket? I guess the impulse to act is not that great for my wife, but how much
better could shopping be (and how much more money a supermarket, in this case, might extract?) if they could break down this cycle of habit? What could the store and/or brands be doing to make this a better experience, to help her discover new things and make it interesting?
As I was running errands on Super Bowl Sunday I realized I didn't feel the usual rush to get home. This was not because I'm not a football fan, but rather because I knew if I missed the first couple of commercial breaks, I could see them online at any number of websites on Monday. Some of the spots that aired during the game even directed you to their web site. This got me (among others) thinking, what is the future of TV and TV advertising going to look like with the Web? Apple's iTunes has fundamentally changed the music business, will another application do the same to TV?
Fortunately, The Atlantic that arrived in my mailbox a few days later had a great article addressing this topic. Michael Hirschorn begins his article with Apple changing the way we buy music and he quickly transitions over to TV, noting he works in the industry. He raises some interesting points, primarily that TV should be around for the long run, but that it is up to the TV industry itself to change the definition of TV if they want to remain players in both content and distribution.
In the short term, bandwidth limitations will prevent satisfying web based video offering for anything but short form videos, such as TV spots. In the long term, TV networks need to bring more Web functionality to TV rather than invest in creating more bandwidth online. With the switch to digital and HD broadcasting herein the USA due in 2009, the next generation of TV's could begin to include Web applications in their hardware. The options are varied and appealing - from being able to click from an ad to a retail site to purchase a product (the next generation of shopping channels) to being able to access any movie or any show for a fee to watch at your leisure (the next generation of on-demand services).
I agree with Hirshorn in his wrap up ... will the future look like TV with more interactivity or the Internet with TV included? The debate will go on, but the future of a billion dollar industry is up for grabs and whoever figures out how to make it simple and intuitive for Joe and Jane Consumer is going to be the big winner.
- Contributed by Todd Cameron
Image courtesy of Jupiter Images
Reading a recent article in the Economist,I couldn't help but think of the implications on our work. There is a new study that provides scientific data backing up the effectiveness of brand building in marketing, an inherently difficult pursuit to quantify. Call-to-action oriented campaigns have specific measures to quantify their success. Branding campaigns are much more difficult to measure and often questioned by company executives especially when cuts need to be made. But thanks to Dr. Antonio Rangel of the California Institute of Technology we now have the first study that demonstrates the effectiveness of branding.
The article is a synopsis of research published in the Proceedings of the National Academy of Sciences. In it Dr. Rangel proves that a person's perception of a product directly affects his or her actual enjoyment of the product. One example stated is a wine tasting conducted with both normal wine drinkers and a wine club. In both instances when they tasted what was described as a $10 bottle of wine it rated less than half as good as when they tasted the same wine and were told it was a $90 bottle of wine. The interesting twist here is that it wasn't people simply saying they enjoyed the $90 bottle more, brain scans actually indicated that they did derive more enjoyment from the perceived pricier bottle. When the same test was conducted without price information, there was not the perceived difference.
The article focused on the why this happens in the brain and traces two possibilities back to survival and evolution. I on the other hand kept thinking about how great this news is for those of us lucky enough to work with retailers and manufacturers, and the author does give a nod to that very same observation in the last paragraph. Scientific evidence that reinforces the need for a thoughtful brand strategy is good news to all of us who have known it to be true since we started in this business.
- Contributed by Todd Cameron
