Photo Credit: MistoAcrillico (Flickr.com) Used under Creative Commons license.

Things I’ll Never Understand is a feature where I examine marketing problems from a slightly different point of view. Some of the stories look at unusual customer behavior, and others look at services or products that seem pretty ridiculous to the casual observer. But all of them have one thing in common — they don’t make any sense to me.

I’ve got a friend who has been having a nonstop battle with the local cable company over her cable internet service. What’s amazed me through the process is not how inept the cable company has been (having experienced their particular brand of service myself in the past), but how unwilling she’s been to cancel her service and find a service provider that won’t aggravate her so much. My friend will complain about this cable company to anyone who will listen, and yet refuses to take the advice of anyone who suggests a superior alternative.

Let me start by providing some background. Here in St. Louis, we’ve got one choice for bona fide cable service (Charter Communications), but we’ve got several options for high-speed internet and digital cable services. To be perfectly frank, none of the options are really that great – they all have their ups and downs, and none of them are particularly good at customer service. All of them cost roughly the same, though the prices vary depending upon speed, quality and service areas. But if you were to place the alternatives on a line that ranged from “unacceptable service” to “acceptable service,” many of the alternatives would be closer to the acceptable end of the spectrum than the cable company would be.

In terms of switching home internet providers, the actual switching costs are pretty low – the primary investment involved is in the time you have to be available for the new service to be set up. Of course, if your service is down with your cable provider, you’re likely to invest a lot of time waiting on service calls, as my friend has already. This friend is also convinced she’ll incur an early termination fee if she cancels her service (my suspicion is that she’s mistaken), but as I pointed out to her, if her service isn’t working reliably in the first place, she’s probably better off in the long run paying the EFT and trying to get a signing discount from her new service provider to offset the switch.

And that’s where things just start to get maddening. My friend refuses to switch. She hates the cable company, says that they’ve wasted hours of her time, and complains that their service technicians are idiots. This is a classic situation where a disgruntled customer should move on. And yet my friend insists that she stay with this service provider, and even plans to try to haggle out a discount for continued service.

In the frustration of realizing that my friend wants to complain loudly, but refuses to accept the advice of anyone else, I’ve been thinking about other situations where customers tend to complain about lousy service, but keep coming back. Here are some others I’ve recognized:

Walmart. I don’t shop at Walmart, and it’s not for idealogical reasons; it’s because Walmart provides lousy service and is not a very nice place to go shopping. I’ve also found, by shopping around, that Walmart tends not to have the lowest prices on most items, and that it often has items that are of a lower quality simply because they’re specially made for Walmart. I’m not alone in thinking this; many people I know constantly complain about all of these aspects of shopping at Walmart. And yet they keep going back, primarily because they appreciate the convenience of the place, even if shopping there can be decidedly inconvenient when you need help, can’t find what you’re looking for, or are waiting to be checked out by one of the three checkers actually working the 30 lanes they’ve got available. (The convenience of inconvenience will be a theme… keep it in mind.)

McDonald’s: Once again, I really have nothing against McDonald’s; I worked for one in high school, and managed one in college. But I’d say that their food is fairly inferior to what you can find at some of their competitors, and while their prices are fairly low for many items, the value is not especially high when you compare similar items available at other fast food chains. (For example, around here, Denny’s has all-you-can-eat pancakes for $4; that’s much better than the $2.50 you pay for three McDonald’s hotcakes.) McDonald’s is great at serving food quickly when their processes are in place, but when an order gets messed up, it’s a real hassle to sit and wait for things to get corrected. I’ve been on both sides of the counter, and believe me — the system is most efficient when orders are simple and small.

So, why do people keep going back? Again, it’s an issue of convenience. McDonald’s is almost everywhere, has virtually the same menu wherever you go, and is associated with fast, cheap food. Even if it winds up being inconvenient (and almost everyone I know has a McDonald’s story that makes me shake my head in disgust), McDonald’s seems like the convenient choice.

Shopping Malls. Here in St. Louis, we’re starting to have a real mall crisis — most of our malls are losing stores due to complex corporate lease agreements and downturns in business, and there’s rarely one mall that has everything a person can want. Honestly, I feel like going to the mall is less about actually shopping and more about finding something to do when the weather’s not nice. Even then, it can be pretty dull; my local mall is almost exclusively clothing stores and food vendors now, with only a handful of stores that have anything different to offer.

So, why do people go to malls, despite knowing that they’re going to pay full price for most items and have trouble finding what they’re actually looking for? In this day and age, it’s very easy to shop online, and if you have a good understanding of your size and how things look on you, it’s not difficult to order clothes. The only time my wife really needs to go to the mall is when she requires something a little more formal that requires fitting, like a dress or a suit. And, to be honest, we don’t even need to go to the mall for that; just a clothing retailer that carries the sorts of things she likes to wear.

Malls are, once again, about the convenience of inconvenience. They’re inefficient, they’re overpriced, and they’re often an ordeal to endure. And yet, people keep going back.

So, what’s going on here?

Based on these examples, and my friend’s cable company situation, I’m starting to wonder if there’s an aspect of consumer behavior where we are willing to put up with some amount of negative experience because we are convinced that convenience is our primary objective. This is a little different from the “Zone of Tolerance” concept, which regards the amount of tolerance we’re willing to show to a service provider before we switch. This is actually an effect where we can hate the choice we’ve made, complain about it, be visibly on edge when we’re dealing with service that’s below our expectations… and yet still return for more punishment down the road.

Unfortunately, this is not the sort of behavior I tend to engage in, so it’s going to have to be filed away as something I’ll never understand. But it is interesting, and it seems, by my thinking, to have some relation to the popular choice. (I don’t hear too many people suffering through continued bad experiences with, say, Burger King or Kmart. They just stop going there.)

What are your thoughts? Share them below!

And in the case of Drake University’s new logo, the marketing geniuses behind this idea assure us that yes, yes it did.

The concept is called “D+” — a logo that indicates that Drake University offers opportunities to students. The rationale for using this logo is because survey research found that this logo could be a great talking point, and that people would happily hop on Twitter, Facebook and so forth to discuss it.

My old college roommate used to tell me that D’s get degrees. It worked for him – he did get his degree. But it also limited his ability to get a great job when he was finished with school. My suspicion is that a “D+” student is going to find fewer opportunities than others.

Here’s a blurb from the newspaper article where I first saw this story, which sums up their research-based approach:

The college hired Stamats Communications, a firm specializing in higher education communications, to collaborate with Drake’s Office of Admission and Marketing and Communications Office in developing the campaign.

The school tested the campaign with high school students. More than three-quarters of the 921 survey respondents said the cover grabbed their attention either a little or a lot. Also, nearly 90 percent of the respondents felt the concept was unique from other college and university materials they had seen. Only three percent of participants said they were turned off by the logo.

It takes a special kind of cluelessness to make a decision like this one — you’ve really got to be out of touch with your brand and the purpose for marketing it to think that associating a “D+” (which indicates a grade just above failing in most peoples’ minds at first glance) with a higher education facility is somehow going to build brand equity. What these folks don’t seem to understand is that a college brand is supposed to provide equity to the students, and not vice versa.

Let me offer an example. Let’s say that I’m considering hiring one of two recent graduates: one is from Drake and the other is from the University of Iowa. Let’s also say that I’m not greatly familiar with either school, but that I have seen Drake’s “D+” campaign. Which education am I really going to value more– the one from the school with which I’m not familiar, or the one from the school with which I’ve made a negative association? All other things equal, I’m going to assume that the University of Iowa student worked harder and got a better education.

And that is why you must be careful when you’re conducting research, because it might lead you to a poor conclusion despite being good research. If you ask the wrong questions of the wrong people, you can get information that will support a decision that the majority of people will find foolish down the road. A good marketing researcher is also a marketing consultant, and he or she will offer advice on how to keep yourself from going off the rails creatively into territory that’s best not explored.

Now, don’t get me wrong. I get the appeal of this message, and it does make Drake stand out. But my suspicion is that this is going to be a short-term gain that causes long-term damage to the quality of a Drake education. So much of the value of a college degree is tied up around the perceived quality of the education. If Drake thinks that “D+” students are going to march out of their hallways and into jobs, they’re sadly mistaken.

Photo Credit: Sakurako Kitsa (Flickr.com) Used under Creative Commons License.

Our firm is located in an office building in St. Louis, and over the last few months, our office building has obtained a new karaoke bar and a sandwich shop. The bar seems to be doing all right – it opens at 4:00, and it had a following in its previous location down the road – but I don’t see too many people walking into the sandwich shop.

Here’s the thing: there are at least a hundred people working in our office building, and many of them go out for lunch. And yet this sandwich shop has done nothing to bring people in the building in through its doors. No one has gone up into the offices to hand out coupons; no one has slid menus into mail slots after hours. There doesn’t seem to be any sort of delivery service to run box lunches up to offices, nor does there seem to be any plan to catch people walking out to their cars on their lunch breaks to persuade them to give the sandwich shop a try.

Here’s what the sandwich shop does have: a front-facing position on a busy street, low visibility, a terrible parking situation, and an unfamiliar name. A banner that says “Grand Opening” is hanging up, but the actual sandwich board sign that explains what the business is isn’t visible from the street, and seems designed to catch pedestrian traffic on the side of the building where pedestrians rarely walk.

How could the restaurant owner be so clueless?

Starting a restaurant is a tough venture — you’re more likely to succeed than fail, and your location is heavily related to your success. Like most small businesses, you’re pretty much guaranteed to be in the red at the end of your first year due to the high startup costs and the low initial sales volume. The restaurants that do succeed don’t do so because they’ve got great food.

They succeed because they understand that restaurants are a service business, not a product business.

Service businesses live and die on word-of-mouth referrals. Rarely does a customer walk into a service business out of the blue and start up an account; he or she must first become aware of the business, and then have some sort of knowledge about what the business has to offer before coming inside. Word-of-mouth is the best motivator, of course, but advertising can work in its stead, particularly if the service offers something unique or desirable in its location.

The sandwich shop probably won’t last long. Perhaps they’ll figure out that they have a source of revenue working on the floors above them if they offer some sort of specialized service, but at the moment, they don’t seem to have a strategy for acquiring customers. At present, I’d guess they’re wondering why more people aren’t coming in for sandwiches.

But this brings me to my bigger point — how often do we, in business, look around us for opportunities?

Lately, I’ve been hearing from many professionals how tough things are out there. I’ve run into people who are between jobs, people who are barely holding on, and people who are working hard to keep what they’ve got. And yet, when I ask them what they’re doing to build their business, I’m often surprised to hear about how little they’re talking to the people around them, and how much they’re waiting for business to come to them. It’s as if many of these professionals got used to how things used to work, and would rather hold out for things to return to that state than to embrace the reality of the present: business does not seek you out so readily in 2010. If you want to succeed, you’ve got to seek out new business yourself.

Of course, I don’t want to oversimplify. Many professionals are working, but their businesses are suffering because they’re not working as much. I realize that spending for professional services is down, particularly while close to 20% of the working population is unemployed.

But at the same time, I can’t help but think about the sandwich shop. If the manager of the shop paid a visit to every office in our building, perhaps handing out free samples and menus, asking the various office workers what he or she could do to provide them with lunch, that manager would surely attract some business. If the sandwich shop did a great job, word would spread, and pretty soon, many of the offices in the building would be placing orders.

So much of sales and marketing is not about what you have to sell or where you’re located, but rather, how willing you are to make your services available. It helps to have great service (and evidence of it), of course, but if you’re not out there talking it up, you can’t expect the rest of the world – or even your closest neighbors – to beat a path to your door.

And so, let me encourage you to look around you, and think about how providing service to your next-door neighbor could be just as important as providing it to accounts around the world. It’s advice that I hope will be taken seriously when I share it with the sandwich shop downstairs… and advice I plan to practice on my own.

The plan? Blockbuster is going to eliminate 500-800 of its 3,245 stores within the next five months to get out of pricey leases for underperforming locations. Then, Blockbuster is going to pursue non-retail options, like kiosks and video streaming services. The film studios are behind them because they like Blockbuster (traditionally a big supporter of the home video market in which studios can recoup losses for low theatrical performers) and because they want a viable competitor to Netflix and Redbox — two companies that have burst on the scene successfully and that are starting to dictate new terms to the entertainment industry.

These post-bankruptcy plans are pretty idealistic. What we’re seeing is a dinosaur that hasn’t realized it’s going extinct. Blockbuster as a brand may stick around, but my suspicion is that we’re going to see the chain continue to become more and more irrelevant over the next five years, and probably shut down all of its stores in the end. The smaller they get, the less able they’re going to be to compete with discount rental chains like Family Video and services like Netflix and Redbox. It’s only because of their history of studio support than anyone can try to paint a happy face on this grim situation.

To the thousands of unskilled college-aged workers who are about to lose their retail jobs because of the stores shutting down… farewell, and good luck! I’d tell you to apply at Barnes & Noble, but they’re in danger of going bust as well.

Photo Credit: Sabrina Cestari (Flickr.com) Used under Creative Commons License.

We talk a lot about social media here on Marketing Musings — and actually, as a blog, Marketing Musings is a form of social media — but the one question that I feel like I’m always skirting is the question of necessity — why is social media such a rich and important topic? It’s a troubling question, because social media, for many marketers, represents a sort of pie in the sky ideal – the notion of delivering customized, individual interactions with customers while speaking to a mass audience.

Truth be told, I’m still not sure that brand managers and large companies can make much use of social media, because many companies still have yet to master the basic concept of a Web site. When I go to social media gatherings and talk to mid-level marketing managers who desperately want to get their brand onto Facebook or Twitter, I’m often surprised at how little thought they’ve put into making their own Web page an attractive starting point for social media users. Often, these Web sites are just storage houses for press releases and basic product information; the designers have put little thought into making the Web site something more.

Of course, it’s easy to criticize, and I don’t want to be perceived as someone who thinks he’s got all the answers figured out. (In redesigning my own company’s Web site this year, I’ve had to think quite a bit about how important it is to limit some of the features we could put into our site in favor of making the new site easy to navigate and use.) But what I do want to suggest is that social media is the icing on the cake, and not the cake itself; that those who employ social media as a “strategy” are going to find that they may get some quick returns initially, but that they’re ultimately going to limit their reach by putting too much emphasis on a platform that isn’t designed to be a marketing communications channel.

Let’s focus today on the question of “why” — why should brand managers get involved with social media? The best answer to the question is, “because they want to do a better job of listening to their customers.” That’s it. That’s the whole point of social media — to facilitate communication from the individual to the masses. And yet, when I speak to marketers who are interested in getting involved in social media, they tend to think it works in the other direction — that they can broadcast a message to thousands or millions of people and find reception to it. It’s a nice idea, but that’s not actually how things tend to work.

For example, let’s say that I start a fan page on Facebook for Marketing Musings and that I attract 1,000 fans. I update this fan page every day with announcements about the articles that I’m putting up. These often receive comments from my fans, but I don’t really read them, and I certainly don’t respond to them. After all, there are a lot of comments, and I’m a busy guy. When I do descend from my lofty perch and respond to someone, all of the other users jump on the comment thread and try to get me to answer their questions as well. To me, in this hypothetical example, there’s little value in having two-way communication. I just want to have a community of loyal, zombie-like readers who hang on my every word.

Unfortunately, that sort of thinking is exactly what will lead to a rapid turnover of fans. I can tell you exactly how it will work — new people will come in, excited about this new community they’ve discovered, only to leave a few weeks later when they realize that they’re just talking to other fans, and not directly to me. They’ll depart, and new people may come in to replace them. But those people who have left? Chances are good they won’t be back– the special connection that I offered them will have lost its luster when they see that I’m not really interested in connecting with them, and they’ll think negatively (or, at least, less enthusiastically) of me as a result.

Of course, there’s another phenomenon at play on social network communities as well, and that’s the behavior of becoming a fan of something without having any desire to interact with it. I see this all the time on Facebook — my news feed will tell me that someone has become a fan of, say, Coca-Cola. A few other people who like Coca-Cola may also decide to become fans. That’s good, viral behavior, right? Actually, I tend to think it’s not, because for most of these folks, that’s where it ends. They’re not being active brand promoters, and they’re not joining a community where they can receive marketing messages. They’re just telling their friends they like Coca-Cola. It’s such a mundane thing on Facebook that it has very little impact on the community as a whole.

Both of these types of behavior make sense if you think of social media as being a platform for an individual to connect with the masses. But they don’t make sense from the perspective of a marketer trying to communicate to the masses. The problem is that a conversation needs to be taking place — there needs to be weight to the interaction. People who join an online social community need to feel like they’re a part of something, or they’ll leave.

Which brings us back to my original question — “why should brand managers get involved with social media?” Again, I would argue that the only correct answer is that they want to listen to what their customers have to say. That means wading through comments and answering questions. It means addressing problems when they arise. It means recognizing members of the community. It means conducting a strong and supportive PR campaign with enthusiast blogs and user-driven fan communities. It means doing all of the things that, ten years ago, companies would have done with people who set up Web pages, mailed in letters or sent in emails. It means listening in a way that’s real, and meaningful, and which takes customers seriously.

“But Sean,” you may be saying. “Take a look at Twitter. There are people on there who have millions of followers. They don’t talk to every one of them.”

Nope. But you’ll notice that the best and most popular Twitter users are the people who acknowledge their followers and respond to some of them. They don’t use Twitter solely as a marketing tool. They use it as a means of opening a limited dialogue with other human beings. There is, of course, a correlation between a Twitter user’s individual reach and his or her Twitter reach. But let’s face it — any sort of media that appeals to social behavior is always going to reward those who are good at socializing in real life. That’s just how things tend to work.

I hope this piece has been thought-provoking and interesting. If it has been, please take a moment to share your thoughts below. One of the reasons I write this blog is because I am interested in listening to what others have to say — and I’d love to hear from you!

Photo Credit: Evil Erin (Flickr.com) Used under the Creative Commons License.

In the world of marketing and marketing research, there’s an awful lot of confusion about what a sample really is, how it works and, most important of all, why it works. So, in the spirit of being a resource (as my friend and fellow marketing research blogger Merrill Dubrow encourages us all to be!), I thought I’d try to offer a clear explanation about the whole idea behind sampling.

First, let’s try to understand the reason for sampling. When we take a survey, we tend to draw a sample from a group of all possible people who can answer our questions (also known as a “population” or “universe”). When we’re conducting research, it’s important to get as close to the “whole story” as possible. So, why not just ask everyone? Simply put, it requires too many resources. You’ve either got to spend the time tracking down every potential respondent or you’ve got to pay other people to do it for you so you can get the results more quickly. In either event, it’s difficult; even the US Census Bureau, which makes every effort to include every US citizen in its research every decade, doesn’t reach everyone.

Of course, the only way to precisely and accurately know about what everyone in a population thinks about a topic is to ask everyone. Fortunately, we have a form of mathematics called statistics that allows us to get a pretty close estimate of what everyone thinks by asking a fraction of the people in the group. Unfortunately, statistics operates on some pretty specific assumptions that tend to be relaxed more often than they should be when conducting marketing research.

One of those assumptions is that a sample is selected at random. In order for a sample to be random, you have to first be able to identify every member of the population, and then you’ve got to have a process for randomly selecting members of that population to ensure that you get a sample that has a similar makeup. It’s harder than it sounds, because there’s not a register somewhere that has everyone’s name, address, phone number, email address, demographic variables, psychographic variables or personal preferences on file. If you’re conducting a study with your own customers and you meticulously keep this information on file, that’s one thing. But if you’re just trying to conduct a study with consumers, there’s simply no way to draw a purely random sample.

For example, one of the most commonly-used sampling techniques for national studies, random-digit telephone dialing, by its very nature excludes people who don’t own telephones, people who aren’t available when the calls are made, people who let calls go to voicemail, or people who don’t answer numbers they don’t know. Pollster organizations like Gallup and Pew have techniques to try to minimize these problems, but the simple truth is that there are always going to be people who will not participate in survey research. That means that the sample is always going to be skewed in favor of those who will.

One way around this is to first define the population a little more carefully — instead of saying, “let’s pick some random numbers!”, you suggest, “let’s pick some random integers between one and one million.” Obviously, this narrows things down quite a bit, but it could be with good reason. Integers, after all, are easy to deal with, and they are easy to track down since they’re not floating beyond a decimal point. But including only a range of integers in a numerical sample introduces a sort of arbitrary bias to the process that you’ve got to account for down the road. (And we’ll discuss that process, validating a sample, in just a moment.)

Assuming you can draw a random sample from a known population, the next question you’ve got to ask is, “will the sample be representative of the views of the population as a whole?” In other words, can one Nielsen family really represent the TV-viewing habits of millions of Americans? Can one consumer’s preferences for a new type of potato chip really indicate the preferences of other, like-minded individuals?

The problem, of course, is that a sample of one can’t reliably tell us anything more than the preferences of one person. But the opinions of a sample of around thirty or more will begin to take shape in what statisticians call a “normal distribution”, with a large clump of responses around the average and a handful either trending more highly above or below the average. In that pattern, we begin to move away from the opinions of individuals and into the collective consciousness of the population. We start to see that many people really do feel similarly about many topics, and that we can make generalizations about how the entire population feels based on averaging these responses together. The larger we make our sample, the clearer our picture becomes, but after a certain point, we get enough data that adding more provides us with less and less clarity. Eventually, we reach a point where we have a reasonably clear picture of what’s going on without needing to add more details to enhance things. For the 307 million people in the United States, for example, we can generate statistics that have a two percent margin of error at a 99% confidence level with just under 5,000 respondents (.002% of the total sample) – assuming, of course, that we are selecting these respondents through a purely random process and not just asking 5,000 of our closest friends.

But a 2% margin of error (that pesky little +/- number that indicates the mean plus associated error) and a 99% confidence level (the chance that we don’t have any false positives in our responses) is a pretty high level of sophistication. Even assuming a maximum level of variability in responses, we can actually shrink that sample size down a lot more if we’re willing to accept a little bit less certainty:

One example we often use in explaining sampling to our clients is that a doctor can tell a lot about your physical condition simply by examining a few drops of your blood. There are 1.5 gallons of blood in the average human body, and yet many diseases can offer telltale signs in a tiny fraction of that.

Another example would be a newspaper comic strip. If you look at a newspaper comic strip under a microscope, you’ll see that what appears to be a solid image to the naked eye is actually composed of lots of little dots with plenty of empty space in between. If you put the newspaper under a less sophisticated lens, such as a magnifying glass, you’ll see more dots, but you’ll begin to see how they form together to make a clear image. When you pull the paper back and look at it from a proper reading distance, you’ll see the entire cartoon with a fair amount of clarity. And even though you’ve looking at a sample of dots instead of pure solid lines, you’ll also be able to read the cartoon and understand the larger context — that the cartoon is telling a joke.

With all that said, there’s one more topic we need to address — the need for validating samples.

As I mentioned earlier, it’s nigh-impossible to take a purely random sample from a population, and this requires us to set the dimensions of samples and make some compromises in terms of who we wish to include. For example, it’s going to be difficult for a retailer that’s been in business for 50 years to take a survey of all of its customers. Even if that retailer has kept detailed records of every customer it has ever had, the people who have entered the store as potential customers and not bought anything, or the people who have used personal shopper services, or the people who have had their friends pay for their purchases and then paid their friends back later, or many other types of people are not going to be included in the population definition.

So, some compromises needs to be made:

It’s not really necessary to talk to people who have shopped at the store once within a 50 year period, because things have changed a lot during that time. It would be far more useful to talk to people who have shopped at the store within the last year.

It’s probably safe to assume that at least 50% of shoppers buy something, and 95% of customers buy something for themselves. (This assumption can be easily validated by observing customers leaving the store and noting if they made a purchase or not, and by having cashiers keep a tally of how many of those purchases were made on behalf of someone else.)

Retailers have cyclical business that spikes at the end of the year. Therefore, some distinction needs to be made between “regular” customers and “seasonal” customers.

Ultimately, the retailer is probably going to wind up either surveying a cross-sectional sample of shoppers within a certain period of time. But the findings can be improved by some of the following validation techniques:

Take bi-monthly cross-sections from roughly the same time in the month (e.g. the second Tuesday from 10 AM to 6 PM) and compare the results.

Interview customers who leave without buying anything and compare the results to the rest.

Interview former customers of the store who have stopped shopping there within the last year.

Interview non-customers to find out why they do not shop at the store.

All of this information can be used to help spot bias in the numbers by making comparisons. Though the process is laborious, it can be used to generate a really solid set of baseline statistics, and the process is still simpler than taking a census of all shoppers in the store.

I hope that this guide to sampling has been useful for you. But should you ever have any questions, please feel free to email me at sjordanATresearchplanDOTcom or to comment on this article.

When TiVo first came on the scene, it was a somewhat revolutionary device. TiVo allowed common consumers to do what hardcore mediaphiles had been doing for years — to record television digitally, keep shows on a hard drive, and to have complete control over the shows by being able to fast forward, pause and rewind, just like a VCR. To be fair, TiVo’s chief innovation wasn’t the ability to record shows at a certain time (since VCRs and advanced VCR systems like VCR Plus had been doing that for close to two decades) – TiVo’s innovation, rather, was the ability to make use of a program guide, downloaded through a phone line, to record shows by title and timeslot. The added benefit of being able to pause live television (due to the digital recorder being able to play back shows as they were being recorded) became a popular feature as well.

Unfortunately, TiVo had a few problems.

1) It required a phone line. As landlines in homes became increasingly more rare, this means that TiVo already had a barrier to its success. Cable and dish providers, meanwhile, set their services up to use existing cable, broadband or satellite connections. Though TiVo eventually added support for broadband service, it was too little, too late.

2) It required an initial investment. You couldn’t just subscribe to TiVo — you had to first buy the DVR unit that cost as much as a video game console. When cable and dish providers started giving these out for free, TiVo did not respond appropriately and priced itself out of many users’ consideration sets.

3) It required a subscription fee. TiVo’s subscription fee came on top of the cost of actually having cable or dish service. This might have been fine, if TiVo was the only option. But with cable and satellite providers offering DVRs as part of their digital television services, TiVo became an unnecessary expense.

How could TiVo have avoided its all-too-certain demise?

1) TiVo could have built its business around licensing and not consumer sales. This was, in my mind, TiVo’s biggest mistake. By licensing its product to cable providers and providing a listing service that subscribers could enroll in, TiVo could have created a long-lasting market for its brand and services. The cable providers would have all clamored to have TiVo on board, and they would have been reluctant to drop the service if they were getting a cut of the subscription fees.

2) TiVo could have positioned itself as the technology leader. The biggest problem with TiVo is that once the cable providers began offering their own DVRs, TiVo itself seemed a little behind the times, and it took the system awhile to catch up. The current TiVo (Premiere) is better than the cable DVR boxes, but  TiVo still doesn’t do anything drastically different from the free DVRs, as far as the average consumer is concerned.  That’s a problem.

3) TiVo could have struck deals with services like Netflix and Hulu early on. If TiVo had been the first to market with the ability to watch cloud-based entertainment services on your television, they probably would have made a killing if they’d positioned themselves correctly. Instead, they let game consoles and television manufacturers capture that market space. (TiVo offers those services now, but it’s once again, too little, too late.)

4) TiVo could have created a bundling system to make its boxes a free incentive for buying TVs. These sorts of deals are difficult to arrange, but eventually lucrative, since install base leads to subscription fees. TiVo should have aggressively positioned itself to have its boxes included with new TV purchases. This would have led TiVo to have a lot more power and to prevent the cable companies and satellite providers from coming in so quickly and devaluing its product.

In the end, TiVo lost because it didn’t make the right strategic moves to protect its big idea. It’s sad, but it’s reality — and it’s a valuable case study for the rest of us today.

What are your thoughts? Share them below!

Photo Credit: Pedro Guridi (Flickr.com) Used under Creative Commons License.

I’ve been catching up on Mad Men lately, and it’s really made me think back to the two famous marketing/advertising books by David Ogilvy, Confessions of an Advertising Man and Ogilvy on Advertising. Both books are classics in their own right, and really offer some insight into one of the great advertising minds of the 20th century.

One of Ogilvy’s most famous lines (and I think I heard it restated in Mad Men at some point as well) is that you can say something’s free, or you can say something’s new. You don’t get a chance to say free very often, so it’s best to stick with new.

Like much of what Ogilvy has to say, this is concise and pithy advice. But the problem is that it’s not exactly true — note even remotely. Unfortunately, it seems to be the advice that many advertisers (particularly on the local scale) seem to follow, because it makes sense. But what these advertisers don’t seem to consider is that Ogilvy got the examples right, but missed the underlying factors that make these concepts (as well as many others, which we’ll touch upon in a moment) actually work.

The first factor involves telling people what they want to hear. I would argue that “free” tends to fit under this category, though “new” can certainly fit in as well under the right circumstances. Telling people what they wanted to hear was the basis of a lot of the snake oil peddling that went on in the 19th and early 20th century — a wonderful product could cure all ailments and restore the user to a state of perfection.

Today, it’s the basis of a lot of targeted advertising. The messages have gotten far more subtle (pharmaceutical ads being one of the best examples), but most of the really persuasive ads you’ll hear or see today are not offering something that’s “free” so much as they’re affirming what people believe about themselves. To paraphrase the apostle Paul, the ads tell them what their itching ears long to hear.

The second factor involves excitement. This is where “new” comes in, though other ideas, such as “hope” or “change” or “revival” can all fall under this factor as well. The premise of this factor of excitement revolves around the state of something shifting. I’d argue that it’s the same factor we see at play when we’re following the news — if we keep hearing the same thing over and over, we tune out. But when there’s new information — a shift in something — we tune back in, because new knowledge is exciting.

Being a part of a moment is another area of excitement. This is precisely what drives viral behavior on the internet; people like to feel like they’re a part of something, and they like to be a part of the process of passing things on. I’ve always likened this phenomenon to being in a stadium and waiting for “the wave” to make its way to your section — you see it coming, you stand up and wave when it’s your turn, and you watch it pass you by, knowing that you’ve done your part to contribute.

There’s also excitement in having something to talk about. This entire idea is what drives Super Bowl advertising (which, you’ll notice, often goes for the excitement angle much more than the persuasive angle.) This is one of the reason that humor and storytelling can work so well in advertising – they can provide dialogue, laughter and controversy. These are all part of the excitement factor.

One final point I’d like to make is that these two factors are not mutually exclusive alternatives. Something can be persuasive and exciting — it’s just really hard to make both happen in the space of an ad. My suggestion is to focus on learning more about the target market first, and really seek out those desired messages. If those aren’t sufficient, that probably means people aren’t thinking enough about the product or service — which means it’s time to drum up some excitement.

What are your thoughts? Share them below!

Photo Credit: Sybren Stüvel (Flickr.com) Used under Creative Commons License.

A few weeks ago, I was administering a survey for a client, and I had a bit of an epiphany about why qualitative research can be such an important element of a quantitative study.

The study I was conducting involved surveying over a hundred employees of a mid-sized company, and the survey instrument itself was mostly quantitative, with a few open-ended questions to solicit some opinions. We’ve done this study for this client in the past, and I know what the data looks like in its finished form — a lot of charts and graphs, with verbatim comments tucked neatly in the back of the appendix.

And yet, as I observed people taking the survey, I saw something in their faces that’s never occurred to me before: struggle. It appeared to me (and I confirmed it by chatting with a few of them) that these respondents were mentally weighing how honest they should be versus how seriously they felt their comments were going to be taken. A few of them even commented to me that they’d been honest, but brief, because they didn’t feel that their opinions really mattered. On the other hand, some took so long filling out the survey that it was clear they felt their opinions were important and needed to be heard.

What’s interesting about this dynamic is that it’s not captured at all in the survey itself. The data is treated as if everyone had that high level of interest in sharing opinions. What doesn’t show up in the results is the relative importance respondents assign to their views. There could be an important issue that’s not being addressed because the members of the sample who are afraid their voices aren’t going to be heard aren’t indicating what’s really wrong. Meanwhile, the people taking great pains to tell us their opinions could be blowhards who assign blame to everyone and everything.

So, what an a marketing researcher do in a situation like this? I’d argue that the best strategy is to conduct a little bit of qualitative research on the side. Here are three options for survey research that could help to shed some important context on those numbers.

1) Randomly select a few respondents for a more qualitative survey. During field work, administer an alternate survey that asks the same basic questions, but which is a little more open-ended in nature. In a self-administered survey, this should be distributed randomly; in an administered survey (such as a telephone survey or a mall intercept), the interviewer should select these respondents at random, either through an interval process or by randomly shuffling the two types of survey guides together. My recommendation would be to complete enough to be 10% of whatever the desired quantitative study entails. So, for example, if you need 100 completed quantitative responses, add on an additional 10 qualitative responses for context.

2) Conduct a qualitative pilot study. It’s often a good idea to try out quantitative guides in a more qualitative fashion to ensure that all of the categories you’ve chosen are comprehensive and questions you’re asking are clear. These pilot studies can serve the additional purpose of providing context to scaled questions and other responses.  The biggest drawback of this option is that it’s difficult to do if you’re in a time crunch for information. The biggest advantage, however, is that you’ll have the information you need to shape your survey correctly… and perhaps to even determine if you need to include the next option:

3) Ask respondents to explain their emotions. Sometimes, just asking respondents simple questions like “On a scale of 1 to 10, how frustrated would you say you are with this company?” provides a world of context. It would allow researchers to separate out those who are truly fuming from those who are a little more even in their responses. In a computer-assisted survey, this could further allow those who are very frustrated to get a different set of questions better geared at understanding their unique problems and their emotional responses. This is definitely the recommended course for any sort of diagnostic research.

So much of marketing research involves thinking about what the responses would sound like if they were being spoken  by individuals rather than being lumped together into charts and graphs. The wisdom of crowds can be a powerful thing to hear… but it’s good to know if those crowds are stringing up banners or nooses in the midst of their cheering.

What are your thoughts? Share them below!

This is me, keeping busy!

Business has been booming over at the Research & Planning Group, and I’ve been pretty busy lately working on data analysis and writing up reports.

Which is probably obvious if you’re a reader of this blog. Oops.

One of the cardinal sins of running a daily blog is to miss a day here and then. There are a few reasons for this:

1. It’s hard to build up a daily readership if you don’t have daily content.
2. You don’t give readers much of a chance to build a community if you’re not there to talk to them and give them new pieces to discuss.
3. When nothing new is happening, there’s no reason for first-time readers to consider coming back.

In other words, I’ve got to get daily content flowing again. And I shall!

In the meantime, I’ll fill you in on a few changes:

• I’m moving the daily statistics to their own blog. That way, I can put the RSS feed in the sidebar. I never really liked the way they fit on this blog.
• We’ve got a new banner, designed by intern Christian. Christian also designed the upcoming new Research & Planning Group Web site (which will be going live in September) and our research catalog, which I’ll share on this blog in the near future. It’s a pretty cool resource!
• I’m going to start augmenting this blog with some rich content, like videos and presentations. That should be pretty exciting!

Another goal I have is to keep the daily content a little shorter and to add a weekly feature piece that’s a little bit longer (and downloadable as a PDF).

Marketing Musings has been a fun experiment this year, and I’m always looking for ways to make it better. Feel free to chime in below with your own ideas!

-Sean