26 September 2007

Tightwads and spendthrifts

Marketers are a restless lot. They’re never happy with the amount of buying that consumers do. To them, consumers never buy what marketers want them to. And, even if consumers do buy the marketer’s brand, consumers never seem to buy enough of it. On the contrary, consumers switch their brand preferences the moment a new brand enters their (mental) shopping space.

What’s worse, competitors, like sharks, are always lurking around the corner, ready to take a bite out of the market and the marketer’s business. Often, new brands enter the market with distinctly better benefits, plus heavy marketing spends, creating havoc with the dynamics of the marketplace – and, once again, with the marketer’s business.

To most marketers, the problem lies with consumers. Consumers never seem to respond well enough, quickly enough or repeatedly enough, to the marketer’s messages – created by great advertising minds – or the pricing and the placement that great strategists recommend. Even if consumers do respond to these messages, they never seem to keep their promise of buying more and more of the marketer’s brand, in tandem with the marketer’s brand investments.

Often, marketers feel consumers are a disloyal lot.

But, really, how should consumers behave? Is there a formula or a pattern that consumers should follow to please marketers for all the effort that marketers put in to create brands – and build demand for them? Why should consumers even provide information about their brand preferences and buying behaviour to marketers? And, even if they do, why should consumers stick to their preferences and buying behaviour when the moment to decide on a purchase actually arrives?

In reality, consumers behave in any way they wish. And, good marketers know this well. Predicting consumer behaviour is really what marketing is all about and marketers simply will not rest until they find some magic formula to make this happen. That’s why I was not surprised to read an article from The Wharton School last week about a research – and a hypothesis under test – on the consumer’s acceptance of pain when paying for a purchase.

It’s an interesting angle to the consumer behaviour discussion… and I’m sure neuromarketing will have something to say about it sometime soon. For the moment, the research – conducted by Scott I Rick from Wharton, and Cynthia E Cryder and George Loewenstein, both from Carnegie Mellon – proposes to test a measure of individual differences in the pain of paying on a ‘Spendthrift-Tightwad’ scale.

The Wharton article, titled Are You a Tightwad or a Spendthrift? And What Does This Mean for Retailers?, says, “while ‘tightwad’ and ‘spendthrift’ are not exactly labels that most people would welcome in a discussion of their spending habits, they are valuable as predictors of consumer behavior.” The researchers seem to believe that “an anticipatory pain of paying drives tightwads to spend less than they would ideally like to spend. Spendthrifts, by contrast, experience too little pain of paying and typically spend more than they would ideally like to spend.”

“According to the researchers,” explains the Wharton article, “tightwads are defined as people ‘who feel intense pain at the prospect of spending money, and therefore tend to spend less than they would ideally like to spend’. Spendthrifts ‘feel insufficient amounts of pain at the prospect of spending and therefore tend to spend more than they would ideally like to spend’.”

Apparently, the “Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying.”

I wonder what the marketers have to say about this. And, would the consumers agree?

The Wharton article Are You a Tightwad or a Spendthrift? And What Does This Mean for Retailers? can be found here.

22 September 2007

Harvard’s Law

Everyday, billions of consumers across the globe buy and consume brands promoted by marketers through well-thought-out advertising and marketing campaigns. Advertisers and marketers claim that their campaigns work, and that their products and brands sell through this effort.

But, when we check on consumer behaviour through research, we find it difficult to correlate consumer preference and purchase for a brand matching brand campaigns and initial research leads. Why is this so? Why do consumers say one thing during research and do something else altogether in real life?

It’s tough to answer these questions logically, except, perhaps, to cite Harvard’s Law, as applied to human beings: “Under the most rigorously controlled conditions of pressure, temperature, volume, humidity and other variables, a human being will do as it damn well pleases.” So, where does that put marketing?

Marketing tries to determine precisely why consumers buy specific brands. To be able to do that, marketing needs to determine what and how consumers think. And then, influence that thinking to steer consumers into making a purchase in favour of the brand being marketed.

Two questions arise in my mind: One, how accurately can marketing read consumer minds and influence/control consumer thoughts? Two, can it be done at all?

From traditional consumer research using, say, focus group techniques or in-depth one-on-one interviews, marketing can – and does – determine generic consumer attitudes and feelings towards a brand. Then, it extrapolates these findings to project approximate buying behaviours. Based on this, advertising and marketing campaigns are developed.

At the moment, it’s an approximate science. Correlating consumer research to consumer insights to advertising and marketing campaigns in order to achieve desired (pre-determined) consumer behaviour is difficult. Modern tools like neuromarketing can perhaps help, but the efficacy of the campaigns must be questioned.

I believe, for marketers to claim that they know precisely what and how consumers think – and use this information to make consumers respond in a precise manner – is asking too much. All said and done, marketers have Harvard’s Law to contend with.

17 September 2007

Under the scanner

It’s common knowledge to advertisers and marketers that purchase decisions are made in the consumer’s mind. Whoever understands and controls the human mind is likely to own a fair share of the market – if not dominate the market entirely – with products and brands satisfying a plethora of human needs and wants. Not to mention increasing profitability in one’s business.

However, the human mind is complex. Understanding it is easily said than done. Traditional methods of consumer research using focus groups no longer seem to work as (and this, too, is common knowledge to advertisers and marketers) consumers are not always truthful in communicating their needs, wants and responses to advertising and marketing messages.

To complicate matters, consumers themselves are not always aware of their needs and wants – at least, to the extent of (not) being able to express themselves clearly. That’s because much of our desires are hidden in our subconscious mind.

With millions of brands competing with each other to capture consumer mind-space every day, exploring the consumer’s subconscious mind in order to seek out explicit brand preference and purchase triggers has now become critical to the advertising and marketing industries. The answer, many advertisers, marketers and social scientists feel, lies in understanding human emotional responses to advertising/marketing messages.

To this end, traditional techniques like focus groups don’t quite cut it; though in-depth one-on-one interviews, response latency measures, metaphor elicitation techniques, eye-movement tracking, or simply watching consumer behaviour through (hidden) video recorders have generated substantial information on consumers to advertisers and marketers. Unfortunately, behaviour studies of this nature are still unable to accurately identify consumer choice triggers.

That’s where neuromarketing comes in – with its promise of showing (i.e. capturing visual data in colourful graphics) how brands and their various components, including advertising messages, can have emotional impact in a consumer’s mind. Just how much impact the brand has is probably still difficult to measure, but neuromarketers are pretty confident of tracking emotional impact by showing ‘increased activity’ in the brain when the brain is under stimulation.

Apart from a compliant consumer who doesn’t mind being put under the scanner while lying prone without the freedom to move about and evaluate brands and options as a consumer does in real life, the technique relies heavily on expensive technology that scans the brain (or checks the body temperature and the pulse rate) at the instant the consumer is exposed to a specific advertising/marketing message.

Of course, it is difficult to assess if an ‘increased activity’ in the brain results in a consumer’s preference for a specific brand, and a brand purchase thereafter, but neuromarketers are certain that this, too, will be determined soon.

15 September 2007

Perhaps brand choices are emotional

Brands can make a difference in consumer preference and purchase. They can connect with consumers… in ways the marketing fraternity, today, is still not sure of. What marketing seems to be sure of is that the decision to buy happens in the consumer’s mind. Thereby, embarking on a relentless pursuit of the truth behind what makes consumers buy.

My career in sales, advertising and marketing has taken me through several points of view on a similar pursuit. From ‘man is a utility maximiser’ (and is, therefore, always expected to make logical choices) to regimental ‘awareness-interest-desire-action’ sales pitches to using ‘emotion in advertising’ in order to appeal to the consumer’s subconscious mind.

Some 20 years ago, I remember sitting through a Unilever presentation on emotional advertising. Audience reaction to TV commercials from across the globe was collected and matched against sales for each brand. Tragically, barring 2 cases out of the 30-odd commercials, audience reaction to emotional advertising didn’t match brand sales figures.

Something was wrong. There was uproar in the audience. How could this work? We were a group of Indians sitting in Mumbai, India, responding to advertising created in different countries for brands (some of which) we hadn’t even heard of. Surely, local culture, as well as prior exposure to these brands, had to influence our responses!

Yet, it was true, some of the commercials shown (and, thus, the brands advertised) appealed to our inner senses… perhaps within our subconscious mind. Some totally; some a great deal more than others. In fact, some of those commercials left us so cold that we, secretly, made promises never to buy those brands. And, for those commercials which enlightened us by sparking off positive feelings in the recesses of our minds, we wished we could own those brands.

Perhaps, brand choices are emotional.

10 September 2007

Deciphering the human mind

One of the biggest challenges in my line of business (which is strategic marketing) is to understand what makes people buy the things they buy and consume. My clients – i.e. advertisers and marketers of various sizes – are on my back every day to find that magic formula for making people buy their brands.

So far, this magic formula has been elusive, ensuring that I have a tough time with my clients. Not because I’m bad at what I do, but alas, such is life in this business. No one can predict with any certainty that consumers will buy the products and brands that my clients – or any other marketers across the globe – produce and sell.

That’s because the decision to buy (anything) happens inside our minds – and neither creative directors in ad agencies nor marketing strategists have been able to decipher the human mind yet.

Research is conducted every day to assess consumer response to advertising messages and other stimuli (for instance colour, design, texture of materials, music), consumer habits and buying patterns, and consumer behaviour in general, but a look inside a consumer’s mind to determine a brand choice is giving the best of us the runaround.

So, advertisers and marketers abroad (to my knowledge, this hasn’t happened in India yet) have turned to medicine, science and technology for an answer. They have, specifically speaking, turned to ‘neuromarketing’ – a science which is supposed to look inside a consumer’s mind and check for responses to specific advertising messages and other marketing stimuli.

Neuromarketers (as that’s what they are called) rely on functional magnetic resonance imaging, or fMRI, which scans and maps the human brain when the (concerned) human is exposed to specific, or collective, stimuli created by advertisers and marketers. It is expected that a study of the brain’s internal behaviour will lead us to understand how the human being behaves as a consumer, preferring certain advertising messages, products and brands over others.

Apparently, organisations like Unilever, DaimlerChrysler and MTV Networks, among many others, have used neuromarketing in their research already, though it is reported that most organisations prefer to keep their neuromarketing initiatives a secret.

06 September 2007

A means to an end

Culture is not only a function of what happens inside our minds, but is also a function of our interactions with people and what we say to each other.

Since these interactions and messages are multidirectional – i.e. they happen up and down the social hierarchy, as well as across the social spectrum, and even obliquely cut through social orders and structures – and their assimilation in our minds is invisible to us, culture is never a smooth flow of various parts of our lives (past and present) coming together to make a flawless whole.

We get the feeling that something is happening gradually, almost invisibly, spreading through our populations, reaching a point which then becomes noticeably visible to us. Immediately, sociologists, trend-spotters, advertisers and marketers (myself included), and a few others (Malcolm Gladwell included) pounce on it as if great discoveries are made in human understanding.

Articles and books are written, the media steps in to popularise the concepts, and great advertising and marketing campaigns are created for brands. Human behaviour, which is at the centre of our culture, apparently, changes as people begin to realise that they can’t live without a certain idea, product or brand. New lifestyles emerge almost from nowhere, and are much discussed and written about. Now, our ‘new and improved’ life goes on...

This, in turn, gives economic consumption a shot in the arm – leading to the creation and marketing of more, and better, products and brands.

Sometimes, I feel, the whole idea of culture in our modern world is nothing more than an interpretation of the human mind to find ways of increasing consumption of economic goods and services. It is no longer perceived, nor studied, as something that plays a crucial role in human evolution – helping us to understand who we are, what makes us different from others, and why we do the things we do. Culture now serves a means to achieve a business end.

I wonder if this is what Claude Lévi-Strauss, famous social anthropologist, had in mind when he had said, “Culture uses and transforms life to realise a synthesis of a higher order.”

03 September 2007

A cumulative process

In evolution, one thing seems to be clear: genes are passed on from one generation to another. From parents to offspring. This means, genetic evolution is, necessarily, an inter-generational process.

However, if you’ve read my previous post on the discovery, and the subsequent application, of ‘linear perspective’ in art and geometry, you’d have noticed that learning and culture are not only passed on from one generation to the next, but they are also passed on from one person to another within the same generation.

A case in point is peer-to-peer social interaction where preferences and behaviours are adopted and modelled by people, typically, in the same age group. Examples would include use of language and mannerisms, choices in fashion and music, food habits, and lifestyles such as hanging out in coffee shops or blogging.

What I mean to say is, culture rubs off onto people. Not only for those who are in direct social contact, but also for those to whom culture is transmitted through media like books, TV and the Internet. And, in doing so, cultural transmission breaks both the age and the distance barrier.

This means, essentially, the transmission of culture is both inter- as well as intra-generational. From this perspective, cultural evolution is distinct from genetic evolution.

On the one hand, if there is no learning from the preceding generation (say, from parents to offspring), there can be no improvements from the past. On the other hand, when people learn from each other within the same generation (say, peer-to-peer), they cut short the learning process and become quick to adapt to new environments.

I guess, the best results come from a combination of both inter- and intra-generational processes. After all, evolution is a cumulative process.