Status and Target MarketsMany believe the holy grail of marketing is trying to figure out what the key factors are that affect customers' purchase decisions. The general idea is that, with this knowledge, marketers can directly target these factors with their marketing efforts. However, as we note in our Consumer Buying Behavior tutorial, it is practically impossible to isolate one factor as the primary reason someone makes a buying decision. Sure price is often a major influencer, but few people are making a buying decisions strictly on price or on any other marketing factor, as many other issues can impact what is purchased. For example, certain cultural and group characteristics that are ingrained in the consumer can affect what they buy. These characteristics, which are often considered outside of the control of purchasers, can weigh heavily on what is bought. Other external factors include the purchase situation and the economic conditions facing the buyer.

While marketing and external factors heavily affect customer purchasing, marketers almost always find that the most difficult factors influencing consumer behavior are those that exist inside a buyer's head. These internal factors include such things as how much knowledge a customer has about a purchase; the circumstances motivating a customer to make a purchase; how a customer views their self; and many more.

A good example of how internal factors can influence consumer behavior is found in this story from Knowledge@Wharton. The story discusses research that examined how perception of status affects the purchase of new products. While the subjects in this research are business buyers rather than consumers, the results are likely to apply to the consumer market. Essentially, the research shows that those who view their status within a group as being in the middle of the status scale are more likely to adopt new products with the hope the product will improve their status. Those at the top or bottom of the status scale are less likely to buy, primarily because those at the top feel they do not need to increase their status while those at the bottom feel they are so low that the purchase will not help them.

The research method used to gather this information is quite interesting as it involved over 6,000 scientists from around the world. The research also confirms how external "opinion leaders" (well-regarded external people or groups) can influence customers' decisions.

Pricing at Comedy ClubsFor many marketing organizations, determining price is the most challenging of all marketing decisions. The reasons are many, but often it comes down to the difficulty marketers experience in trying to determine what people are willing to pay for the value they derive from consuming a product. While the struggle with price vs. value is at the top of the list when marketers try to figure out what to charge, it is not the only issue they face. Another is whether to design a pricing strategy that is far different than what is customary in the industry and, if they do, how will it be accepted.

For example, for over 50 years, with the exception of music released as a single, most music was sold on an album pricing model rather than an individual song model. That is, if fans wanted an artist's music that was not a single, they had to purchase the full album whether or not they liked the other songs they were receiving. This model began to change when music publishers found Internet sites, such as Napster, uploading songs without publishers' permission. Once publishers researched customers' download preferences, they switched to a customer-friendly pricing model that allows for the purchase of individual songs.

While market forces drove the change in music pricing, other examples show that companies within an industry are the key drivers in changing how pricing is done. For example, airlines have figured out that all seats in a plane are not equal and they now charge more for seats that are located more forward or have slightly more leg room, such as seats in exit rows. While this model is used by nearly all airlines, customers are much less receptive to this pricing compared to music pricing.

Most changes in an industry pricing model, whether customers like or dislike the model, starts with one company trying something new and if successful others will adopt. What may be an example of a new pricing model, that if successful could be adopted by others in the industry, is discussed in this story from Time about an experiment at a comedy club in Spain. Nearly every comedy club in the world charges customers a single price to attend a show, though some may adjust this somewhat based on seat location. However, this club is experimenting with a method where they will charge based on how much a customer laughs. The number of laughs is calculated with facial recognition technology tracking customers' reactions. Thankfully, for customers who experience an excellent comic, there is a cap on what can be charged.  But for the poor comics, who struggle to please an audience, this could be a big problem, especially if their pay is tied to the number of laughs they produce.

Creativity is the hallmark of great video advertising with the best ads often becoming the gold standard by which future ads will be judged. Yet, the creative aspects of leading advertisements also tend to become heavily adopted or downright copied by others. For instance, television advertisers often produce copycat ads where the ad layout and execution are clearly influenced from ads presented by another company. Alternatively, these contain certain effects, such as music, which are included in other ads. (For other examples see this 2007 New York Times story.)

While in many business situations imitation is the sincerest form of flattery (e.g., designing a sales force training program that uses the same key elements used by a leading firm), in reality, once a creative video advertising approach is copied by others it is only a matter of time before targeted customers become bored with it.

One creativity advertising approach that may be on the way to achieving highly-imitated status is the "What was that I heard?" advertisement. The idea with this ad is to create a message that motivates targeted customers to experience the ad again just to make sure they understand what they heard. A good example are ads where the phrasing of words makes it sound like it may be something else. Probably one of the best recent examples is the Kmart "ship-my-pants" ad from 2013.

Now, as described in this Adweek story, there is another example, this time from Verizon, where the words "half fast" are uttered in a way that likely will cause viewers to pay attention. If Verizon finds success with this, then more advertisers will be inclined to give this advertising approach a try as there are certainly an unlimited number of word combinations and phrasings that can give the same effect (the story even suggests one!). Yet, despite the effectiveness of this creative form, it can be argued we are reaching the half-life of the type of advertising.

Marketing researchers are always on the lookout for new sources of customer information. They are especially interested in designing new approaches for gathering information through the use of experiments. Often this involves creating a situation where one or more groups of respondents are exposed to different situations, and the reaction of customers to a particular situation is compared against customers who are exposed to something different. The information gathered can then be directed to marketing managers, who may see the results as evidence that a change in strategy should be considered.

While experiments can be done in many different venues, such as within stores or inside customers' homes, the Internet is where the majority of marketing experiments are now being conducted. The principal advantages of testing on the Internet include: the ease by which experiments can be created; the low cost of implementation; and the wealth of data that can be generated. The most obvious example of Internet experimentation is the test of advertising placement on websites. By exposing visitors to ads in different locations, ads of different sizes or ads with different messages, websites can get a better picture of what will generate higher revenue.

While Internet ad experiments are widely used, researchers are continually seeking other online experimental options. However, some of these ways may be more intrusive, especially when conducted on social media sites. This is leading many to question the ethics of the some experimental research design. For example, back in June information about an online experiment by Facebook was disclosed leading to ethical questions regarding how the research was conducted (see the actual study here). Even though the research method was not illegal, many complained the experiment was conducted without Facebook users' consent. While a researcher who was part of a group that conducted the study defended the methods used, the outcry was not lost among Facebook executives.

As discussed in this story New York Times story, Facebook has rethought how it will conduct online research. It has told its in-house researchers, and the world, that there will be limits on what and how data will be collected. It will certainly be interesting to watch whether other companies also open up about their online research methods.

Segmentation at Retail Outlet StoresIf you ask shoppers to describe outlet stores, it is pretty safe to conclude that most will say these stores sell products that are discontinued at the main retail store and are priced well off list price. They may also say that to visit such stores requires customers spend time traveling, often because outlets are located outside of major metropolitan areas.

Yet, there is more to outlets than what most people think.

As discussed in this story from Harvard Working Knowledge, outlets have been around since the 1930s. In most cases, the outlet was a single store located near a company's headquarters or factory. They started as a way for companies to sell slightly damaged or irregular products that were viewed as not sellable in regular retail stores. Most were, and are to this day, associated with product manufacturers and, more likely, retailers who offer their own brands (though these products are often manufactured by a third party).

In the last 30 or so years, the concept of outlets has changed with the growth of outlet malls.  Companies with outlets now support multiple locations and are not necessarily selling castoff products. As the story explains, research suggests outlet stores continue to serve an important role though not necessarily the role of being a bargain basement. Instead, outlets attract a certain segment of customers who want to own the brand but may not be the primary target market for more expensive and higher margin products sold in the regular retail stores.

Thus, what we see in this story is an excellent study in market segmentation. Companies now see that outlets are not just a place to dump old products, but a location for attracting a market that would probably not come to the regular retail store.