Reading the consumers mind.

supermarket2-300x198

Businesses spend many millions trying to understand the way consumers consider the choices confronting them in a supermarket. With up to 30,000 items on shelf, and some categories having hundreds of choices, it is a key consideration.

A mix of psychology, data science,  habitual behaviour, discretionary spending dollars available, and individual preferences all play a role.

A complicated mix.

However, there is a way to at least clarify part of the mix.

Consumers use decision trees, usually without thinking about them when they are in a supermarket making their purchases.

Some purchases are automatic, a habitual choice, others are made after a considered set of choices on a range of factors important to the individual are made, and there are, obviously, many shades of this continuum that apply to a highly personal process.

Imagine a consumer approaching the dairy case looking for fruited yoghurt. Some may just buy their usual brand, flavour and size irrespective of everything else. Others will make a series of choices that will vary for every person, and may look something like the decision tree below.

Decision tree It will differ for each individual, some will choose the brand first, others the flavour, or the size and price, and a whole range of variations on these factors, but based on the total sales, supermarkets will range products, and give them shelf positions and space based on sales, gross margins, delivered margins, and various promotional strategies. They also use a decision tree.

Retailers and suppliers spend huge amounts of effort, and resources.  on this category management exercise, trying to read the consumers mind, and anticipate their reactions to various combinations that are available to them.

It is a data intensive exercise, well suited to the “big data” techniques that are evolving around us. Combining checkout data with store loyalty cards is now becoming commonplace,  what is emerging currently is the integration of mobile and social media data into the mix.

As you walk into the store to buy something, there has already  been lots of effort gone into reading your mind, and there will be lots of effort and money expended in store in an effort to manage your purchase decisions.

Outside-in innovation

meadow lea

My early days of marketing were as a minor part of the team that created Meadow Lea, the brand that completely changed then dominated the margarine markets for the following 25 years. I was really just a young gopher, but the lessons that came with those successes, and the trials in  between, were scorched onto my brain.

10 years later I joined a major dairy company as marketing manager, and the first thing on my list was to do to ourselves in the milk business what Meadow Lea had done to the butter market.

Shock, horror, Sacrilege!!.

It was even illegal.

Pulling the dairy fat out of milk and replacing it with vegetable fat had been enshrined as illegal in legislation, which was  not about to change because some marketing bloke thought it was stupid, and could see a commercial opportunity.

Even the technical staff of the business thought I had gone stark mad, or at least drunk too much at lunch with the agency (it was the eighties after all) and refused point blank to do any development.

Farmers Best It took eight years, but eventually Farmers Best was launched, and whilst not becoming anything like the Meadow Lea blockbuster I had envisaged, certainly prevented anyone else having a go.

My point, not all the good ideas come from the domain you inhabit, from your people, or even your branch of technology.

Looking outside for ideas, technology, and innovation in all its forms, is not just sensible, but in these days of homogeneity and rapid dispersion of ideas and techniques, it is essential.

And the law? well, it was quietly changed as it had became obvious that consumers did not give a fig what sort of fat it was, they wanted  the benefit of lower cholesterol and resulting longer life.

Framework for a content StrategyAudit

Content 3

These days with the ubiquity of mobile and social, almost everyone is a media channel.

Recognising this simple fact changes the formula for media success. In the old days, the formula used so successfully by mass marketers was:

Money X mass media = Sales.

This used to work, no longer, now  that media has fragmented into thousands of pieces, and individuals have a personal menu of media consumption based on their interests, time, and competing priorities in their lives. The formula marketers now have to use is something like:

Time X tailored and personalised media = a chance for a sale.

Much more uncertain.

In this context, spending some time considering the productivity of the investment being made in social media, and you are making them, even if it is just the employee who spends some of your time checking their facebook timeline, would  be useful.

Following is a framework you might like to think about. The reality is that it is little different from a normal Marketing Audit, is it just that we are focussing on social and the content that fuels engagement.

Social media competitive analysis.

    1. What are we doing?
    2. What are direct competitors doing?
    3. What are the successful Social media attention grabbers doing?
    4. What kind of content are our competitors producing and distributing?
    5. How, where and when are they distributing?
    6. How are competitive strategies performing? A. In keeping their customers engaged, and, B. In attracting other customers, including ours
    7. Where do we have opportunities?
    8. Where are we under-performing?
    9. What can we do to restructure our activities within existing capabilities?
    10. What capabilities do we need/should be developed?

Content plan

    1. Determine the behavioural and “tone” of the intended audience
    2. Indentify what type of content should be developed
    3. Source and develop the content
    4. Create a content calendar
    5. Develop a set of performance metrics
    6. Build in the expectation of continuous A/B testing, tweaking testing, tweaking….
    7. Build a list of users, and track their use of and engagement with your content, being prepared to personalise
    8. Leverage the list, but ensure that the communication is always personal, and appropriate to the current situation of the prospect.

Repeat all above, again.

Content marketing has become all the rage, there are so called gurus out there selling new brands of snake-oil, and many are extraordinarily good at parting you with your money. However, the simple and fundamental truth of marketing remains: you must add value to your customers lives. Failure to do that results in just having a big bag of fancy hot air, not much use to anyone, no matter how fancy the plan.

Oh, and one last thing about plans that I bang on relentlessly to my clients: You get only 1 point out of 10 for the plan, the other 9 are reserved for implementation.

I would value your feedback on how you undertake a content audit, so let me know.

 

 

8 ways to build a hypothesis testing mind set.

curiosity

The most successful people I have seen over 40 years of business share one crucial characteristic.

Curiosity.

The successful are insatiably  curious, it spans all aspects of their lives, not just the parts that are spent working at what pays the mortgage, but across all aspects of their private and social lives as well as their commercial ones.

Curiosity also in independent of the size of the enterprise, and often happens in clusters, as one curious person infect those around them. The Medici effect.

Supporting the curiosity are a number of specific behaviours I have observed, that to a greater of lesser extend are exhibited by all, they are in effect the enabling behaviours of their curiosity.

    1. They are always asking questions, some whilst knowing that the receiver has no idea of the answer, or even if one exists.
    2. The seek alternative views everywhere, encouraging others to play devils advocate
    3. The network relentlessly, seeking a diversity of views, not just on their areas of specific interest, but across the span of human activity
    4. They read widely, then test what they have read against their own experience
    5. They are curious about advances and ideas outside their area of immediate focus
    6. They observe, play “fly on the wall” looking for “jobs to be done” by all the products being used in the environment they are observing.
    7. They experiment relentlessly, often in very small ways, and explicitly set out to understand what worked, what did not, and why.
    8. They record everything, by making notes, using a Dictaphone, and more recently using the plethora of mobile devices to great benefit.

Perhaps you can add some more, but at least ask yourself how many of these you display, and are they displayed by those around you.

How to build a personal brand

personal brand

Personal branding seems to be a popular topic around the pub, even the brickie who lives a few streets away, and is not known for his new age sensitivities, has got a hold of it.

It is not new, Julius Caesar had a personal brand well before Bill Shakespeare wrote a play about him,  and they killed him for it.

Tom Peters, who was really “hot” in the nineties wrote a prescient Fast Company article  about personal branding, but missed the point, at least to my mind. This Roger Duncan e-book does it much better,  listing 8 behaviors that build a personal brand, and if you followed the list, no doubt you would make a mark.

However, I think it can be summarised better, in a few words.

“Always deliver greater value than is expected”. Simple, but complicated at the same time.

A mate of mine was offered a bundle, just to meet with someone he knew vaguely for a coffee. If asked nicely, he probably would have made the 20 minutes, but being offered money????. He did not have the coffee, and it turned out that the supplicant did want something from him, and had my friend taken the money, it would have set up an obligation to deliver something he may rather not have.

There is never something for nothing in business, when it seems too good to be true, it usually is.

Doing something unexpected for others, over delivering in the parlance, builds a bank of goodwill that at some point will be repaid.

Perhaps not today, or tomorrow, but it will come back to you. That is the way you build a persona brand, based on honesty, transparency, and over-delivery.

Renting your sales.

 

isle endWalking into chain retailers these days you are inevitably confronted by displays of product, usually at a discount.

Most people seem to think that it is the retailer doing the promotion as a means to attract added sales, which is true, but the reality is that the promotion is funded by the suppliers, and it is a competition for the retail space that is generally won by those suppliers  with the deepest pockets, and best information.

Retailers are in two businesses, selling stuff to consumers, and renting retail space to suppliers. Chain retailers business model relies on a formula that accommodates volume, revenue,  and total margin over the space allocated. This can get very complicated, as the number of variables is enormous.

For a supplier to a chain retailer, the challenge is to balance the complex and  competing demands of enterprise profitability and investment  in the future against the need to meet retailer margin  demands  necessary to retain access to the consumer via the distribution controlled by the retailer.

Of real significance is the difference between sales that would have been made irrespective of promotional activity the “base sales rate” and sales made in a period as a result of promotional activity, “incremental sales”.

The need to fund retailer margin via promotional allowances is universal, but the sales that occur as a result of the activity may not be there when there is no activity, and are therefore” rented” sales. The effectiveness of the activity has many measures, but to the supplier two measures only are of any real use.

    1. The real cost of the promotional activity including all discounts on deal volumes and associated co-operative advertising.
    2. The number of consumers who convert over time from being a rented consumer to one who becomes a part of the base sales volume.

If you are not making these calculations, and adjusting the mix of your expenditure programs accordingly, and are prepared to make some very tough choices on the basis of the information gathered, chances are you are going broke being successful, a very common complaint in the Australian FMCG market.

 

 

Category management steroids

strategyaudit:

This post goes back to mid 2012. A conversation yesterday with a colleague brought it to mind, as we were discussing the the opportunities to monetise Intellectual Capital of the sort represented by the 1200 odd StrategyAudit posts. “You know more about category management that almost anyone”, he said, “You almost invested what was then Trade marketing 30 years ago, there must be a bob here somewhere”.
Perhaps self indulgently, I agree.

Originally posted on StrategyAudit:

Data mining as it is evolving in retail is a fascinating exercise in identifying behavior characteristics that apply to very small percentages of the shopper population, and doing something with them. Progressively retailers are getting better at leveraging the data, and as the penetration of cards increases past a critical mass, so will the effectiveness of the marketing and promotional programs. Of course, consumers are well aware of this, and have well developed “relevance meters” built in.

Consider the category management of potatoes. Pretty dull stuff? no, fascinating stuff.  I am making these numbers up to illustrate the point, but consider, of 100 customers using their cards at the checkout,  perhaps 10% have potatoes in their trolleys, and 10% of that 10% have a particular variety, and of that 10% (now down to 0.1%), they also have sour cream and chives in their trolley.  Pretty reasonable guess that the potatoes…

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