Consumer Marketing

What’s driving innovation in consumer packaged goods these days?

Phillip Nones Branding, Business, Marketing, Sales , , , , , , ,

Consumer packaged goodsWith the steady rise in the number (and variety) of consumer packaged goods offerings, one might wonder if the factors that drive CPG innovation are the same today as they’ve been in the past.

There’s no dearth of research to help give us clues to the answer.  In the first half of this year alone, major CPG research results have been published by the likes of Accenture, Deloitte, Forrester, IRI and Kantar – and that just covers the first half of the alphabet!

The broad takeaway from these reports is that there are six major trends driving innovation in the industry.  Three of them are just as important as they’ve ever been, and three additional ones are becoming more significant as time goes on.

The three “classic” trends that drive CPG innovation as much as ever are convenience, value, and specialization.

They’re fundamental, they’re significant, and they haven’t lost their importance based on what’s happening in the larger marketplace or the economy:

Convenience is a major driver because consumers are always looking to get what they need faster and with less effort than before.  If a product saves time and delivers multi-benefit solutions, consumers will respond.

Value is always perennially important.  When the perceived value of a product goes down because of price pressures or a lack of differentiating benefits, brand loyalty is adversely affected.

Specialization – Product formulation and packaging can affect the way consumers feel about products.  The more that can be provided in the way of a “just-for-me” solution as opposed to “one-size-fits all,” the better.

If they concentrate on these three trends, most CPG brands do pretty well.  But there are three additional trends that appear to be gaining momentum.  Add them to the repertoire, and an additional competitive edge can be established:

Portability – As consumers’ lives have become more mobile than ever, a premium is placed on brand that can deliver on-the-go offerings.

Environmental Impact – It’s been a long time coming, but this trend finally appears to be reaching some semblance of critical mass. More consumers are considering environmental factors — not just as attributes for products that are “nice to possess,” but actually necessary for making a responsible choice. It’s more than the product itself; it’s also sourcing, manufacturing, distribution and disposal.

Health Impact – The days of CPG products being big on convenience but bad on health are numbered. Thanks to better education and more out-of-pocket medical-related cost responsibilities, health awareness among consumers has never been higher. It may not be translating yet into improved health metrics like lower obesity rates, but there’s pretty clear evidence that more people understand health risks and are taking more responsibility for their own personal health and that of their family members.  Products that can credibly claim to “healthy” benefits stand to gain in the competitive landscape.

Do you feel that there are other trends besides these six that that are influencing the development of consumer packaged goods today?  Perhaps ones associated with cultural diversity … or something else?  If so, please share your thoughts with other readers here.

Online user reviews: People trust their own motives for posting … but not others’.

Phillip Nones Advertising, Branding, Business, Content Creation and Content Management, Marketing Communications, Marketing Research, Sales, Social Media , , , , , , , , , , ,

user reviewsOne of the most important uses of the web today is for people to seek out user reviews of products and services before they buy.

Research shows that people place a high value on these user reviews, and they are more likely to influence purchase decisions than brand advertising and other forms of promotion.

The famous 90-9-1 rule — of every 100 people, 1 creates content, 9 respond to created content and 90 simply are just lurkers — may no longer be accurate.  But even if the rule still holds, that still means quite a few people are engaging in the practice of posting customer reviews and comments.

For most people who post reviews, their reasons for doing so are positive, if the results from a recent YouGov survey of U.S. consumers are any guide.  The research was conducted in November 2014 among American respondents age 18 or older.

When asked why they post consumer reviews online, the survey respondents cited the following reasons:

  • To help other people make better purchase decisions: ~62% cited as a reason why they post
  • It’s polite to leave feedback: ~35% of respondents cited
  • It’s a way to share a positive experience: ~27%
  • To make sure good vendors get more business: ~25%
  • To warn others about a bad experience: ~13%
  • To expose bad vendors: ~12%

Interestingly, the older the age of reviewers, the more likely it is that they upload reviews for the reasons listed above:  Respondents age 55 or older cited all but one of the six reasons in greater percentages than the average for all age groups.

What about the flip side of the equation?  Do those who post feel that others are posting reviews for the same reason?

thumbs up and downThat’s where the picture gets a bit murkier.  It appears that those who post do so for positive reasons … but they don’t necessarily think others are posting for similarly positive purposes.

In fact, about two-thirds of the survey respondents felt that some reviews are written by people who haven’t actually purchased the product or service.

A large portion — 80% — think that businesses write positive online review about themselves.

And nearly 70% believe that businesses post negative feedback about competitors’ products.

So it’s interesting:  People see themselves participating in online ratings and reviews for the right reasons, yet they suspect that other posters may not be playing fairly — or maybe even gaming the system.

It’s an indication that while user reviews are welcomed in practice, there are also nagging doubts about the veracity of what people are reading.

Still, surveys find that many consumers cast those doubts to the side, and continue to read user reviews and be influenced by them.

It’s Official: Cyber Monday 2014 was the Biggest e-Commerce Day in U.S. History

Phillip Nones Advertising, Business, Direct Marketing, Economics, Marketing Communications, Social Media , , , , , , , , , , , ,

Cyber Monday ShoppingIn the days following Black Friday this year, we heard reports that consumer purchase volumes at stores were down more than 10% compared to 2013.

A number of explanations for the decline were given, among them the notion that Black Friday sales are less of a draw this year, since merchandise sales now begin before Thanksgiving and tend to run the entire month of December.

But some observers speculated as to whether soft Black Friday revenue figures presage an equally soft holiday shopping season overall.

Well … now that we have sales figures from Cyber Monday (the Monday following Black Friday weekend), I think it’s safe to say that any concerns about a tepid holiday buying season are unfounded.

Custora E-Commerce Pulse, a customer relationship management firm which tracked more than 100 million online shoppers and over $40 billion in e-commerce revenue over the full Thanksgiving Holiday weekend, has just reported that Cyber Monday e-commerce revenues were up over 15% compared with Cyber Monday 2013.

That makes Cyber Monday 2014 the single biggest day in U.S. online shopping ever in history.

Other days of the Thanksgiving weekend also showed robust gains in online shopping:  Black Friday online sales were up ~21% over 2013, and online shopping on Thanksgiving Day itself were up nearly 18% over Thanksgiving Day in 2013.

The strong growth was fueled by mobile shopping, e-mail marketing, plus online product searches on Google and other search engines.

In particular, mobile shopping accounted for ~22% of orders on Cyber Monday, significantly higher than the ~16% of orders recorded last year.

On Black Friday itself, mobile shopping accounted for around 30% of all orders — yet another dramatic increase over 2013 when mobile shopping account for just shy of 23% of orders.

This year’s Cyber Monday stats put the lie to the notion that e-mail marketing is losing its luster.  In fact, e-mail marketing drove nearly one in four online shopping orders, outstripping natural search (at ~19% of all orders) and paid search (~16% of orders).

Much ado about (practically) nothing: Social media and Cyber Monday.
Much ado about (practically) nothing: Social media and Cyber Monday.

And guess which channels weren’t a meaningful part of the holiday shopping experience this year?

If you guessed social media … you’re absolutely correct.

Taken together, Facebook, Twitter, Pinterest and Instagram accounted for only about 1.5% of online e-commerce orders on Cyber Monday.  (For the weekend as a whole, it was only slightly better at ~1.7%.)

This year’s statistics just add more confirmation of several truisms about online consumer marketing:

  • Targeted e-mail still works the best.
  • Online search is important.
  • Social media is like Lucy and the football.

Consumers complain about marketing-oriented e-mails — yet they still read them.

Phillip Nones Advertising, Business, Direct Marketing, Marketing Communications , , , , , , , ,

e-mail ambivalenceFace it, there are always going to be complaints about marketing-oriented e-mails. Just as in the “bad-old-days” of junk postal mail, consumers are conditioned to pass negative judgment on the volume of promotional-oriented e-mails that flood their inboxes.

True to form, according to a new study by global business, technology and marketing advisory firm Forrester Research, consumer attitudes about e-mail marketing are pretty negative.

Here’s what a sampling of U.S. respondents age 18 or older reported on the “minus” side of the ledger:

  • I delete most e-mail advertising without reading it: ~42% of respondents reported
  • I receive too many e-mail offers and promotions: ~39%
  • There’s nothing of interest: ~38%
  • I have unsubscribe from unsolicited lists: ~37%
  • I wonder how companies get my e-mail address: ~29%
  • It’s difficult to unsubscribe from e-lists: ~24%

There’s far less to show on the “plus” side:

  • It’s a great way to discover new products and promotions: ~24% of respondents reported
  • I read e-mails “just in case”: ~19%
  • I forward marketing e-mails to friends sometimes: ~12%
  • I purchase items advertised through e-mail: ~7%

I wasn’t surprised at all by these finds.

What’s interesting, however, is that the attitudes of consumers are actually trending a bit better than they were in previous Forrester field studies.

Specifically, respondents exhibited improved attitudes in the following areas:

  • Fewer respondents are deleting most marketing-oriented e-mail promos without reading them (~42% vs. ~44% in 2012 and ~59% in 2010).
  • Fewer respondents report that marketing e-mails offer “nothing of interest” (~38% vs. ~41% in 2012).

The percentages are also slightly better for the consumers today who consider e-mails as a good way to discover new products and promotions.  Additionally, the percentages are lower on complaints about receiving too many e-mail offers.

The bottom line on these results:  It looks as if consumers have come to terms with the pluses and minuses of e-mail marketing. As they once did with postal mail, they recognize the negative attributes as a fact of life — something that just “comes with the territory” for anyone who is online.

Click here to view summary highlights from the Forrester study, or here to purchase the full report.

Couponing Practices: Tradition Trumps Technology

Phillip Nones Advertising, Branding, Business, Marketing Communications, Media, Sales , , , , , , , , ,

couponingWith big changes happening every day in the way that consumers are interacting with brands and products, a big question is how quickly they’re changing their habits when it comes to the use of coupons.

Perhaps surprisingly, the results of a new 2014 Simmons National Consumer Study conducted by Experian show that “traditional” couponing activities remain far and away the most prevalent consumer activity.

First of all, the proportion of U.S. households that uses coupons of any sort is right around three-fourths (~74% according to the recent Simmons survey).

And we all know the single biggest reason why people use coupons:  to save money.  That rationale dwarfed any other among the survey respondents:

  • I use coupons to save money: ~64% of respondents mentioned
  • I use coupons to try new products: ~23%
  • Coupons incent me to try new stores: ~7%

But then the data points begin to deviate from where marketers may think their consumers’ minds are at (or where they might wish them to be).

Consider how many of the following popular couponing practices are distinctly “old school”:

  • I use coupons from in-store/on-shelf coupon machines: ~55% of respondents cited
  • I take advantage of rebates on products: ~50%
  • I use free-standing inserts from newspapers: ~46%
  • I use on-package coupons: ~37%

coupons on smartphoneCompare that to the far-lower engagement levels with “new school” couponing practices:

  • I use coupons delivered by Internet or e-mail: ~30% of respondents cited
  • I use my smartphone to redeem coupons at the store: ~17%
  • I have used a smartphone coupon app in the last 30 days: ~9%

These results show that if companies decide to embrace coupons as part of their marketing effort, they’ll need to pay as much attention (if not more) to traditional couponing methods than to newer practices.

Old habits die hard … at least in this arena.

“Surprise & Delight” vs. “Tried & True” Branding

Phillip Nones Advertising, Branding, Business, Content Creation and Content Management, Creative and Production, Marketing Communications , , , , , , , ,

All the emphasis on having consumer-facing brands “surprise and delight” their customers isn’t what many people are looking for at all.

surprise surpriseIn the interactive age, what we hear often is that companies and brands need to go beyond simply offering a high-quality product.

Many companies and brands have the notion that they should strive to engender a kind of “personal” relationship with customers – so that consumers will develop the same kinds of feelings for brands as they have with their close friends.

How true is this?

One marketing company decided to find out.  Toronto-based virtual agent technology firm IntelliResponse surveyed ~1,000 online consumers in the United States earlier this year.

When asked what sort of relationship they would prefer to have with the companies whose products and services they purchase, here’s how the percentages broke for these respondents:

  • Prefer a “friendship” where they get personalized service:  ~24% 
  • Prefer a “transactional” relationship where they receive efficient service and that’s all:  ~59% 
  • Prefer both equally:  ~17% 

Evidently, “boringly consistently good” beats “surprisingly delightful” far more often – assuming the company is minding its Ps and Qs when it comes to product quality.

Here’s what else consumers are seeking:  They want to be able to get the same information and answers from a company’s desktop or mobile website … online portal … or social media sites as they do from speaking with company representatives over the phone.

The IntelliResponse survey found that two-thirds of the respondents will go to a company’s website first when seeking out information regarding a product or service – so the answers better be there or the brand risks consumer disappointment.

The takeaway is this:  No matter how much breathless reporting there is about this “surprising” social media campaign or that “delightful” interactive contest … the majority of consumers continue to view companies and brands the way they have for 100 years:  Companies are merely the vehicle by which they can acquire the goods they need.

Puzzle piecesRather than spending undue energy trying to make the interactive world “fun” or “sticky” for customers, companies should focus on the basic work of delivering products, information and answers that are easy to find, easy to understand, and easy to act on.

And related to that — make sure support systems (and support people) are in place so that customers can get any problems or issues solved with a minimum of time or hassle.

Do those things well, and companies will naturally please the vast majority of their current and future customers.

Everything else is just window-dressing.

Social Branding: Reality-Check Time

Phillip Nones Advertising, Branding, Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , , , , , , , , ,

social brandingWith all of the attention marketers have been paying to social media, it’s always helpful to look and re-look at information that gives us clues as to how customers are actually interfacing with brands in the social sphere.

Statistics published in a just-released report titled Digital Brand Interactions Survey, based on research conducted by web content management company Kentico Software, gives us a reality check on just how [non-]essential social media actually is in the greater branding picture.

The Kentico research queried approximately 300 American consumers age 18 or older via an online survey administered in February 2014.  Let’s start with the most basic finding:  the degree to which consumers “like” or “follow” brands on social networks such as Twitter, Facebook and Instagram:

  • No brands followed on social media:  ~40%
  • 1 to 10 brands followed:  ~39%
  • 11 to 20 brands followed:  ~7%
  • 21 to 30 brands followed:  ~6%

Considering how many different brands the typical consumer encounters in his or her daily life (dozens? … hundreds?), following ten or fewer brands on social media represents only a very small proportion of them.

Yet that’s exactly where four in five consumers are when it comes to social branding.

So … how do companies get into that rarefied group of brands that are, in fact, followed by consumers?  Here’s what the Kentico survey discovered:

  • Already interested in the brand and wanted to stay informed:  ~40%
  • Followed on social media to receive special offers:  ~39%
  • Followed because of a recommendation from a friend or family member:  ~12%
  • Didn’t really know the brand before, but wanted to learn more about it:  ~8%

These results suggest that the notion that social branding is an easy way to attract new customers may be flawed.  Instead, social branding is better-suited to deepening brand engagement with existing customers.

Money talks as well (discounts or other special offers) – and be sure to offer them often.

kentico logoIn another piece of evidence that points to social branding’s relatively weak ability to drive incremental sales … Kentico found that ~72% of its survey respondents “never” or “hardly ever” purchase a product after hearing about it on a social network.

An equal percentage of respondents have “never” or “hardly ever” had brand encounters online that altered their already-existing perception of those brands.

So it would seem that much of the “heat” generated by social branding may be adding up to very little “light.”

On the other hand, there is also some good news for brands in the social realm:  The incidence of people “unliking” or “unfollowing” brands is quite low:  Only about 5% of the survey respondents reported such actions.

When that does happen, it’s often because a brand has been publishing too many social posts – or the content of the posts themselves is uninteresting.

The biggest takeaway notion from the Kentico research is to remind us to maintain a degree of skepticism about the impact of social branding – and to understand that in most cases, social media activities are going to remain the “ornaments” on the marketing tree rather than be the “tree” itself.

In fact, that’s probably the case even more now — as consumers become bombarded with ever-more marketing messages from ever-more brands with every passing day.

Getting Bunky with Retail Marketing

Phillip Nones Advertising, Branding, Business, Marketing Communications, Social Commentary, Uncategorized , , , , , , , , , , , , , , , ,

digital circularsAre the days of the lowly printed sales circular numbered?

Judging from the flurry of newfangled activity by key retail marketers, it would seem so.

This past week, CVS Pharmacy announced a complete makeover of its weekly circular.  The new digital version, dubbed myWeekly Ad, incorporates customized promotions focused on the products that are deemed of greatest interest to individual consumers.

The personalized sale items are determined from scanning the trove of customer buying behavior information housed in CVS’s ExtraCare Rewards database, which now numbers more than 70 million active users.

The myWeekly Ad circular determines which items to feature based on the products that each targeted consumer buys most frequently, along with showcasing deals on other products in related categories that may also be of interest based on the purchase history of each customer.

CVS’s digital circular provides other user-friendly options as well:

  • Consumers can scan the savings and rewards currently available to them, and print coupons or digitally send special offers to their card before visiting a CVS store. 
  • Shopping lists can be created, shared and sent to mobile devices. 
  • Shoppers can view their own purchase history showing all products bought at CVS previously going back 18 months.

And CVS is hardly alone in digitizing its MarComm materials.  Thanks to the continuing evolution of rewards cards and the voluminous customer data they can collect, new personalized circular announcements are coming with regularity now.

Here are some of the latest new developments:

  • Shoplocal is a Gannett-owned print and digital circular publisher.  It has gotten together with personalized video firm Eyeview to create a new digital ad promo piece known as V-circular.  This vehicle allows retailers and major brands to target customers on a local level based on geographic, demographic and behavioral data – along with factoring in “real-time” conditions like the weather.
  • National coupon clearinghouse Valpak has introduced a novel “augmented reality” feature for its digital circulars.  Simply pointing a smartphone toward the horizon will enable shoppers to see which nearby businesses are offering coupons.
  • Direct mail media and marketing services firm Valassis has unveiled Geo-Commerce Retail Zone, a new ad-targeting capability that applies transaction and behavior data from consumers to local store trading areas, enabling targeted advertising to be delivered cross-platform.

No one questions the fact that more and more information on individual consumers is being collected, archived and applied on an individualized basis.  Anonymity is fast becoming a quaint notion of the past.

Of course, this couldn’t happen without the cooperation and willing engagement of consumers. 

Considering the benefits – special discounts and even freebies on goods and services – is it any wonder that these programs have been able to grow in size and comprehensiveness over time?

What are your thoughts about the tradeoffs?  Feel free to add your thoughts to the discussion.

Experian Takes the Pulse of Hispanics in the United States

Phillip Nones Uncategorized , , , , , , , , , ,

Hispanic Market Report from ExperianIt’s no secret that the share of the American population identifying itself as Hispanic or Latino is growing.

The latest evidence of this is a report just released by Experian Marketing Services. It shows that ~16% of Americans age 6 and older fall into this category.

That’s an increase of two percentage points in just six years.

But here’s an even more eyebrow-raising statistic: Among Americans aged 6 to 34, nearly one in four are Hispanic or Latino.

What this means is that the geographic zones of the country usually associated with Hispanic population – California and the Southwest, Central and South Florida, Chicagoland, and New York City/Northern New Jersey – will surely expand to encompass other geographic clusters as well.

Experian’s research also shows that Hispanic households account for approximately 10% of all discretionary spending in the U.S.

But in select metropolitan areas, the share of spending by Hispanic households is greater — sometimes substantially so:

  • San Antonio Metro Area: ~60% Hispanic share of all HH discretionary spending
  • Miami: ~37%
  • Los Angeles: ~33%
  • Houston: ~17%
  • San Francisco: ~14%
  • Chicago: ~12%
  • New York: ~12%
  • Dallas: ~11%

While the country now has many second- and third-generation Hispanic individuals and families, the Experian research finds that even with these consumers, emotional ties to the Spanish language carry over to companies that advertise their brands in Spanish.

Not surprisingly, more than half of Spanish-dominant Hispanics agreed that when they hear a company advertise in Spanish, “it makes me feel like they respect my heritage and want my business.”

But among English-dominant Hispanics, ~30% feel the same way as well. And similar percentages feel a much greater sense of loyalty to such companies.

There’s another interesting takeaway from the Experian research, too. Hispanic consumers tend to be more optimistic about their personal financial situation – and that of America as a whole – than their non-Hispanic counterparts.

This sense of greater optimism has been a common thread among all Experian surveys of this type, where the research has shown a persistent positive margin with Hispanics of about five index points over the rest of the survey sample.

That level of optimism is refreshing to see!

The Bad News Just Keeps Coming at JCPenney

Phillip Nones Uncategorized , , , , , , , , , ,
JCP logo (JCPenney)
The name change from JCPenney to JCP was just one of many miscues made over the past 18 months during the tenure of CEO Ron Johnson — one of the most spectacular failures in recent retailing history.

The folks at JCPenney (JCP) just can’t seem to catch a break.

It turns out that the resignation of the company’s CEO in the wake of disastrous sales and profitability results caused by an ill-fated change in retail strategy was just the biggest clanger in a string of bad news.

Not only did the company’s sales plunge by $4.5 billion to around $13 billion, employment fell to only 116,000 workers — a huge drop from more than150,000 just a year earlier.

A centerpiece of the failed CEO’s retail strategy — opening boutique “stores within a store” — has been under constant fire, not least in the courts, where Macy’s has sued to prevent Martha Stewart-branded merchandise from being sold at JCPenney (citing a pre-existing exclusive sales agreement).

But there’s more.

We also have a report from STELLAService, an independent research company that gathers information on how well the nation’s Top 25 retailers are doing when it comes to delivering merchandise ordered online.

STELLAService has found that Staples, Zappos and Office Depot deliver merchandise the fastest.

And it’s fast all right:  these retailers achieve an average delivery time of one day.

On the other hand, who scored dead last? JCPenney. Its online division was the slowest of the 25 retailers, clocking in at an average delivery time of nine days.

That’s pretty miserable.

Is JCPenney filling the role that Montgomery Wards once played in U.S. retailing? Squeezed by big box discount stores on the one hand, and on the other by department store brands like Macys and Nordstroms the public considers far more exciting, JCPenney is trapped by its its own brand history.

No amount of “polishing the apple” in the mode of Apple’s fabulously successful retail branding can change the simple fact that the JCPenney brand name speaks to an older, middle-class demographic and psychographic audience.

Just-sacked CEO Ron Johnson has now experienced this brand reality first-hand.

One wonders how he could have missed it in the first place. Did his prior positions directing retail strategy at “go-go” brands Apple and Target blind him to the facts on the ground?

Can anyone who rubs elbows with real middle-class shoppers — even tangentially — seriously have thought that dropping store discount coupons would do anything other than turn off loyal customers?

There’s a reason coupon flyers continue to be so popular in the Sunday newspapers … and it has everything to do with millions upon millions of middle class and older consumers.

But unfortunately, JCPenney’s woes go much deeper than mere brand identity. Things appear to be seriously amiss on the operational side as well.

Any top retailer that can’t manage to deliver merchandise faster than an average of nine days deserves to have consumers snap their pocketbooks shut in response.

The next 18 months will tell us a good deal about where JCPenney is headed. Will the retailer end up regaining its brand strength … or will it die a slow death and ultimately be swept into the dustbin of retail history?

To me, the latter scenario seems more likely.  What makes it a particular shame is that the company has made so many unforced errors along the way.  Its own people, strategies and tactics have contributed as much as anything to its current plight.