As a follow-up to our post earlier this week that focused on the critical role research plays in marketing decisions, it is equally important to understand that research should never be the only factor considered when making decisions. Why? Because, as we observe in our Marketing Research tutorial, there are risks associated with research. The risks can be considerable and exist with both secondary research and primary research.
For secondary research, which is accessing research that was previously conducted, a major risk involves not fully understanding whether the research is reliable. For example, marketers purchasing research reports need to be careful when interpreting results especially if the group producing the research is either not well known or does not describe in detail how the data was obtained.
For primary research, which marketers carry out for their own purposes by either doing it themselves or hiring a research firm, the issue is whether appropriate research methods are followed. For instance for survey research, it must be determined whether the right questions were asked and whether the right people were selected to participate.
To see how research can be risky, there are two stories this week that offer good examples. The first one deals with Tuesday's Republican primary campaign in Virginia where a long-shot candidate, David Brat, beat a high-ranking, incumbent candidate, Eric Cantor. According to this story, Cantor's campaign was decidedly optimistic of their election chances primarily because of polling research that was conducted for them. In fact, the story reports that research suggested Cantor had a significant lead going into Tuesday. While the reasons for the research mistake are somewhat cloudy, it would appear the voters who were polled were not fully representative of the overall population that eventually voted.
The other example discussed in this Los Angeles Times story, looks at how audience ratings of radio stations in Southern California may be way off due to poorly conducted research. The implications are significant as ratings are a key determent of what stations charge for advertising rates. The company conducting the research, Nielsen, claims it will need to recalculate the ratings, though it is not clear what exactly caused the problem. However, as with the Cantor polling error, it appears there may be an issue with the survey participants.
In our definition of marketing, we make it clear that marketing research is where all marketing decisions should begin. In fact, we consider research as being so critical that in our Marketing Research tutorial we state research is the "foundation of marketing." Unfortunately, many marketers, especially those in smaller firms, fail to devote enough effort to research. The main reasons they cite for not doing research primarily center on three issues: too costly, too time consuming, or too complicated.
However, there is one business segment that seems to be embracing research - online retailers. It is true that most companies with a web presence are doing some research, such as using a web analytics program to track where visitors go on a website. Yet, online sellers are going further by implementing experimentation techniques as a way to find out answers to such questions as: What is the ideal location for product placement on a website? What is the most effective wording to include with product information? What is the most attractive website design elements (e.g.colors) for displaying a product?
For online sellers, the preferred method for conducting research is through a technique called A/B testing. With A/B testing, two different versions of information are shown to different website visitors. For instance, if a retailer is testing to find out which picture of a product attracts more interest; half the visitors to a certain webpage will see the image of a product in one way (e.g., placed on the left) while the other half will see the image of the product in another way (e.g., placed in the middle). The option producing the best results (e.g., higher sales, higher click-thru rates, etc.) may then be chosen as the webpage layout to be presented to all visitors.
Additionally, this type of experimentation can extend well beyond just changing one variable in two ways. Using multivariate testing, research can be conducted where several different changes are tested at the same time (e.g., different font size, different background color, different customer support statements, etc.). Unlike A/B testing, where 50% of visitors are shown different content, with multivariate testing the breakdown will depend on how many variations are being tested. For instance, ten variations may mean only 10% of visitors are exposed to a certain testing page.
Good information on using experiments in online retailing can be found in this story from Internet Retailer. It provides insight on how several online sellers use A/B and multivariate testing. It also presents information on different firms offering these research services and the different rates they charge.
As we observe in our Public Relations tutorial, PR is probably the least understood form of marketing promotion and, because of this, many marketers do not consider it when crafting a promotional plan. The problem with PR is that there tends to be two very distinct tasks that are performed. One task is primarily concerned with providing corporate communication, such as talking with news reporters about a company's latest quarterly financial report or addressing an serious issue that is of interest (e.g., explaining a product recall). For many marketers, corporate media relations efforts are often what they believe PR people are best equipped to perform.
But another side of PR is much more involved in promoting a company or its products among a marketer's target audience. To achieve this, PR professionals try to develop a unique plan that will capture the attention of both the target market and the news media. The typical approach is to directly contact members of the news media and convince them to write or broadcast a story about the company.
Another approach for capturing media attention is to bypass direct contact with the news media and instead direct attention at the target market. The idea is that if the target market gets excited about something offered by a company then the media will want to report on this. While this may seem like a sound approach that most companies could follow, in reality executing such a plan is quite challenging and often requires the plan be extremely creative. Such a creative PR plan can be seen in this story from USA Today. It discusses how the Breathe Right brand of nasal strips is using a creative PR idea to capture attention at the upcoming Belmont Stakes horse race. The PR people are hoping their plan, which includes distributing 50,000 nasal strips to attendees, will lead to news media coverage, particularly since Breathe Right is telling attendees to wear their strips while watching the race.
Some may wonder what exactly the connection is between Breathe Right nasal strips and horse racing. Many horses, including California Chrome, which is racing for the Triple Crown, use a version of nasal strips (though not ones made by Breathe Right) and Breath Right hopes that television, social media and other media will see the connection and actively pick up on this through videos, photo and messaging.
In the U.S., it is common to see a supermarket cover as much area as large commercial airplane hangars. In fact, one store located in Ohio, Jungle Jim's International Market, claims their selling space alone is over 200,000 square feet. That is more than four and half acres! It is so large the company offers guided tours. And this measurement does not even include the vast backroom and storage space.
The movement to construct bigger supermarkets started in the 1990s and, in some ways, was fueled by companies' desire to surpass their rivals. At the time, grocery firms usually saw promotional value in the increased size by stating larger stores carry more products (Jungle Jim's claims to sell over 150,000 products) as well as claiming that just being bigger must be better.
For many years, consumers bought into this. But now it appears the allure of bigger-is-better is beginning to wane. According to this story from Time, many grocery chains are shrinking the size of their new stores. It is believed the success of several smaller grocery chains, such as Trader Joe's, Aldi and Whole Foods, is forcing grocery companies to reevaluate store design. In some cases, the new smaller designs are needed in order to open stores in urban areas where real estate is limited and expensive. However, for stores located outside of big cities the smaller footprint appears to be in response to changing consumer shopping patterns. Specifically, shoppers seem to be tired of exerting the energy and time needed to shop in massive stores. They now are looking for shorter shopping trips that do not require extensive walking and hunting among thousands of products.
As would be expected, in order to squeeze into smaller spaces, grocery stores must reduce inventory. If the shift to smaller store layouts catches on, watch for a significant ripple effect up the supply chain. In particular, smaller space will make it more difficult for product suppliers to secure shelf space. It also may become particularly challenging for new, unproven suppliers to be accepted by grocery stores.
Over the last 40 years or so, environmental groups have taken marketers to task for their handling of product packaging. Environmentalist complaints have been well documented with most of their focus being on the negative impact packaging has on the environment. While early on many marketers ignored these criticisms, the need to understand packaging's impact on the environment has led nearly all companies to take into consideration these consequences when designing the materials that holds their products. Essentially this has led companies to consider three options for the material that surrounds their products: make it recyclable, make it returnable or make it biodegradable.
Marketers, not surprisingly, have turned these three options from a negative to a positive by turning these into promotional opportunities (e.g., highlight how their product is good for the environment). Well now there appears to be a fourth option that marketers should consider when making packaging decisions – make it repurposable. Using the repurpose option, marketers can suggest that once their product is consumed the packaging can be used in other ways. An excellent example is presented in this story from Advertising Age. It discusses how Coca-Cola is actively promoting ways its used plastic bottles can be turned into new products with the addition of add-on items. Coca-Cola is offering 16 screw-on tops that can be used to create such products as pencil sharpeners, water squirters and paintbrushes.
Currently, Coke is only promoting these repurposed products in Asian markets. Yet, if consumers in these markets buy the add-ons, expect Coke to expand the idea to other parts of the world. Also, expect to see more add-on options.