- Posted by: Paul Christ
As we post for the final time in 2014, we prepare for next year by looking back on several topics we tagged as Marketing Trends that are bound to become news again in 2015. Here are a few of our favorite trends and some of the comments we made about these.
- Apps Get Even Bigger – In February, the future of retailing was discussed when we looked at how big restaurants were testing the use of mobile device apps to allow customers to place orders. Based on a USA Today story, the focus was on Taco Bell's use of a new app and we noted: "While this app offers many customer-friendly options, such as menus that update depending on the time of day and maps displaying the closest store, this technology also provides a number of appealing features for Taco Bell, including the ability to suggest (i.e., upsell) customers on additional items and the use of GPS tracking that will alert the restaurant when the customer is getting close to the store."
- The Robot Invasion – Since the dawn of the modern economy, sometime after the Industrial Revolution, it has been a never-ending goal of marketers to wring costs out of product distribution. Technology and process innovation are continual and, as we noted in a December post, Amazon's use of warehouse robots is a terrific example: "As explained in this National Public Radio story, Amazon is using specialized robots programmed to bring products to employees who fill the orders. According to the story, Amazon uses over 15,000 robots in its warehouses."
- The Need for Salespeople to Adapt – While robots are changing retail distribution, changes in who makes the final buying decision is affecting somes sales professions. As we discussed in a September post, a Wall Street Journal story examined this issue in the health care industry. They found that fewer doctors now make the drug choice decision and instead that role has, in some cases, shifted to non-doctors: "Because more and more doctors are joining health care systems, such as large group practices and hospitals, decisions on drug choice is beginning to shift away from doctors and, instead, is being handled by someone in management, who may not even be a doctor. In these situations, sales reps may find that speaking with a non-doctor about a drug may be more important than speaking with a prescribing physician."
- The Business of Marijuana – Another retail issue that caught our attention in May was the developing market for legalized marijuana that was discussed in a National Public Radio story. While many people in the U.S. are against legalization, there is no question that it is generating big money for the states that permit it to be sold. It is also creating marketing challenges for companies in this business: "As the market grows, it will also be fascinating to see the retail strategies marketers use to broaden distribution. Currently, these products are sold within small independent retail stores, but some day we may see marijuana sold in large corporate chain stores and retail franchises."
- Watch Out for Generation Z – In a post we made last week, we talked about the growing importance of the Millennial generation. However, back in July we mentioned the emergence of another generation that will also have a significant impact, Generation Z. Yet, marketers need to beware that this group may be quite different then those they currently target: "The Gen Z group represents consumers born after the mid-1990s. According to this story in Shopper Marketing, this group possesses certain traits that set them apart from previous generations with the most notable being that they are the first generation to have always been exposed to the Internet."
- Managing Social Media – Finally, there is no doubt about the power social media brings to marketing. By now nearly every company that cares about marketing is using some form of social media. And more are going a lot farther than just tweeting or posting to Facebook. For instance, in September we reported on another National Public Radio story that captured the importance sports marketers are realizing about controlling social media: "Copying the strategies undertaken by leading consumer products firms, these sports organizations have created social media command centers, which are supported by advanced data analytics software and are outfitted with multiple computer screens that display what is happening in real-time on social media."
These are just a few issues that caught our attention this year and that we suspect will be heard from again in 2015.
From everyone at KnowThis.com - Happy New Year!
- Posted by: Paul Christ
As we reach the end of 2014, many publications and informational websites are offering stories that look back at what has happened during the year and also provide a glimpse into what may occur in the future. At KnowThis.com we are not immune to using this journalistic approach, so with this post we also look back and look forward to a critical marketing trend: the Millennial generation. Back in 2010, we first discussed this group, which are generally defined as those being born between the mid-1980s and the early 2000s, and we noted that a distinct characteristic of of Millennials is the impact technology has had on their lives and how that may shape their purchasing habits. Nearly five years later, two stories offer even more evidence of the impact of this demographic segment.
As discussed in this Entrepreneur Magazine story, a large number of Millennials are college students. In fact, in the U.S. there are 12.6 million college students between the ages of 18 and 24. Moreover, their purchasing power right now is significant. Besides what they spend on direct college expenses (e.g., tuition, room & board, books), they spend a whopping $163 billion on so-called "discretionary items" such as food, smartphones and clothing.
Of course, leading marketers are well aware of the buying power of this generational group, and they direct considerable marketing dollars to gain Millennials' attention. For example, another story in Advertising Age lists the top 10 most popular advertisements among Millennials for 2014. It is likely not too surprising that six of the ten spots are taken up by food establishments, including Wendy's (#1), IHOP (#2) and Papa John's (#5).
While Millennials represent a healthy spending group that currently attracts the attention of select marketers, it will not be for another five or ten years before many other marketers consider them to be part of their target market. This is the time when Millennials will become an even more powerful force as they move into stable careers and begin to have families, thus leading to increased purchasing power. It will be interesting to see if the companies, who are presently doing well among Millennials, will continue to retain their support as Millennials grow older.
- Posted by: Paul Christ
At KnowThis.com, we love the idea of neuromarketing research. For those unfamiliar, neuromarketing is when marketers use techniques associated with neuroscience to help obtain information that may affect marketing decisions. As the name implies, neuroscience is all about the study of the brain. Thus, neuromarketing research is about understanding what is happening in customers' brains and then using this to produce positive marketing results.
We talked about neuromarketing research a few years back when we discussed different research techniques that fall under the neuroscience category. We also have listed several stories dealing with neuromarketing and neuroscience.
Now we have another example of neuromarketing research. This one comes from Knowledge@Wharton, and it discusses how price can impact customers' decision making. The researchers in this story evaluated customers (i.e., subjects) while they laid on a table hooked to an MRI brain scanner. The subjects were then presented with a picture showing either a price with no other information or a product with no other information. This was then followed by an image of the product and price together. Results were evaluated in terms of brain activity and indicated that, depending on whether they saw the price first or the product first, subject's brain activity was quite different when shown pictures of both the product and price together.
Following these results, the researchers continued their study outside the MRI scanner, and the results are quite interesting. We will leave it to you to see what they found, though the implications for marketers when it comes to when to lead with price is quite intriquing.
- Posted by: Paul Christ
Marketing research often gets a bad rap for being too analytical, too time-consuming and too complicated for the non-researcher to understand. There is no doubt, for the untrained, research can be tough to fully grasp, especially research intended to help predict how something will happen (e.g., how many customers will purchase of a new product). But, as we note in our Marketing Research tutorial, if marketers want to feel comfortable relying on the results of information obtained from research, then research must be valid and reliable. Only then can the data gathered be useful for helping with marketing decisions. Yet, understanding the concepts needed for research results to pass the necessary tests of validity and reliablity is not easy. It often takes a highly trained and experienced researchers to make sure this happens. If the research is conducted by someone with less experience or education, then the results obtained from research may prove to be useless.
While many critical marketing decisions require research be obtained using strict rules, there are many other types of research that offer insight into what is happening in a market without being highly scientific. A good example are studies of market trends, which look at actual results of something that has already occurred, as opposed to predicting future results. Most of the time these studies are available to anyone (albeit sometimes for a fee), rather than being something the marketer must collect by doing their own research. What is nice about trend studies is that looking back at where things were some time ago may offer hints about what will happen in the future. For instance, when looking at trends of market competitors and how they have fared over a specified timeframe, two big questions come to mind: 1) why have the successful ones succeeded and 2) why have the unsuccessful ones failed.
A great example of this can be seen in this story from the Washington Post. It reports on an 18 year history of the top 20 Internet properties in the U.S. by year going back to 1996. While the results are only for traffic rankings in December of each year, the information is still fascinating. Only two properties out of the top 20 listed from 1996 are still in the top 20 now (can you name them?). A number of the 1996 properties were educational institutions, which is not surprising since that is where the Internet was born, while a few others are long gone (remember Prodigy, Infoseek or Webcrawler?).
The information is presented in a table showing how sites have evolved over time. Overall, this is not only a fun stroll down memory lane, but also a good example of how market segments have evolved. For instance, the 1999 list shows four Internet search sites, Lycos, Excite, About, and AltaVista, that would be dead within a few years thanks to Google's innovative search platform.
- Posted by: Paul Christ
Over the years, we have talked many times in this space about the Product Life Cycle (PLC) and its implications for marketing decision making. For instance, back in February of this year we discussed how a number of once popular beers were entering the Maturity stage of the PLC, while way back in 2010 we saw how the video rental business was quickly fading into the Decline stage.
While considering issues products face when they enter a certain stage of the PLC is quite useful, what may be even more interesting is examining the characteristic of customers who make purchases within each stage. We can do this by looking at buyer characteristics associated with the five Adopter Categories. When evaluating buyers in each of the Adopter Categories, many marketers find consumers classified as Laggards to be quite interesting. What distinguishes these consumers from those in other categories is that they are the last to adopt an innovative product because they are reluctant to change from what they are accustom to using. The reasons these buyers continue to purchase a product that has seen its best days are numerous. One reason is that Laggards view switching to something new as requiring too much effort on their part to learn about the new product.
Another reason Laggards resist changing is that newer products are just not readily available to them and getting access to these products would be very costly. A good example of this can be found with customers still using dial-up for Internet access, such as customers living in remote areas who continue to pay for dial-up through AOL. In August, we discussed AOL's financial situation still relies heavily on these dial-up customers. Four months later, this story from Time offers even more information on AOL's reliance on old customers. According to this story, AOL still has 2.3 million dial-up subscribers who, on average, have been customers for over 14 years. What is even more fascinating is that the AOL division responsible for dial-up is a true cash cow. In fact, the story states that nearly all of AOL's third quarter profits come from this division.
The story also suggests that the reason these customers cling to dial-up has more to do with access than to choice. Consequently, the story does not paint a particularly good picture of the service being offered, as customers interviewed for this story consider the service to be very slow. Yet, the complaints of customers should not be a surprise. As we note, one of the primary strategies for companies who still provide products in a declining market is to spend less on products while charging higher prices. This "milking strategy" can go on for some time, so expect AOL to rely on the financial support of dial-up customers for many years to come.