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Recipe for a Better Brand Strategy: 5 Ways Brand Image Research Helped a Brand of Cooking Appliances

Dominique Romanowski — Tue, 11 Aug 2015 20:50:46 +0000

How do you keep your brand strategy relevant as the market evolves? Here are 5 ways brand image research helped an Italian brand of cooking appliances that is more than 130 years old. Ten years ago, Bertazzoni Inc. introduced its brand of ranges and cooktops in the U.S. market, and results have been excellent. Planning for the future, management wanted to understand how to evolve the brand strategy for continued growth.

To do so, MMR Strategy Group conducted two types of brand image research. First, we conducted focus groups for qualitative exploration of consumer attitudes. Then, we conducted an online survey with customers to provide the quantitative data that drives decisions. Together, both types of research answered key questions such as which brand values connect with consumers, which brand and product characteristics drive purchase, and how brand performance varies across different steps in the purchase cycle.

Background on the Bertazzoni Brand Image

Bertazzoni is an Italian brand sold around the world with strong values. It is known as a category specialist, an innovator in cooking technology, and as having a strong family heritage. It is currently owned and managed by the 6th generation of family members. Their Italian designed products are distinctive, beautiful, and high quality. Made in Italy means family, style, and excellent culinary traditions. In the U.S. market, it is priced lower than other high end professional cooking appliance brands.

5 Ways Brand Image Research Can Help Your Brand Image

Using the Bertazzoni project as an example, here are 5 ways brand image research can help you improve your brand strategy. Brand image research can:

1. Explore the emotional connection consumers have with your brand

Brands offering both superior functional and emotional benefits usually have the strongest market position. In general, functional benefits can be more easily matched by competitors, while emotional benefits are harder to copy. A brand’s emotional connection with consumers can be an important, more defendable, way to distinguish the brand in the marketplace.

Focus groups are an excellent way to explore the emotional connection between consumer and brand. In the case of Bertazzoni, we held in-depth conversations with small groups of customers. In advance of the groups, some participants wrote stories about their experience with the brand, other participants made collages, and some even wrote poems. We also talked to non-customers and sent them to appliance retailers to shop so they could share their experiences during the groups.

The focus groups helped us explore the emotions around cooking appliances and key brands. Results provided insight into which of the many Bertazzoni brand values resonate emotionally with customers and non-customers and which to focus on in their brand strategy. Information about the sales experience revealed opportunities to establish stronger connections with potential customers.

2. Identify the brand values that drive purchase

Ideally, a brand strategy focuses on the brand values that drive purchase.

Focus groups can help identify a set of reasons why consumers buy your brand. However, effective brand strategies usually focus on just a few benefits. A quantitative brand image study can provide the data useful to identify which benefits have the highest impact on sales.

In the case of Bertazzoni, the brand is rich in values to choose from. But, which really drive sales, those related to Italian design, cooking heritage, product performance, price, or something else?

In quantitative studies, managing questionnaire length is a requirement to maintain the quality of responses. Conducting focus groups before a survey can help ensure valuable questionnaire time explores issues most important for the brand. For Bertazzoni, the focus group identified which values to ask about in the survey, and the survey results helped identify which values are most closely linked to sales.

3. Identify the brand or product characteristics that inhibit growth

Focus groups among customers and non-customers allow in-depth probing about topics such as the product experience and likelihood to purchase or re-purchase. Quantitative brand image studies help identify which factors most impact trial, loyalty, and re-purchase. In the case of Bertazzoni, both research studies provided useful input for setting priorities in areas such as customer service and product development.

4. Map the sales process and identify a brand’s strengths and weaknesses

Focus groups can explore how a brand performs in key stages of the customer purchase process, from awareness to consideration to purchase. In the case of Bertazzoni, for the focus groups, non-customers spent several hours shopping at an appliance store for two brands assigned to them in advance. During the focus groups, we listened to their feedback and identified areas in the sales process that could be improved. We also received input that helped to focus the questions in the survey. Quantitative input helped management identify which areas at retail were most critical to address in the short term.

5. Collect data helpful for communicating the new strategy to sales and the trade

Making changes in a brand strategy requires effective communication to get key partners, such as the advertising agency, the salesforce, and the trade, on board. Presentations that include video clips from focus groups and data from a large sample of customers can be very convincing. In the case of Bertazzoni, both studies provided engaging first hand feedback from actual consumers, helping the whole organization believe in and focus on a similar set of priorities. A picture can really be worth a thousand words, and video from the focus groups proved very effective for Bertazzoni’s retail partners.

In Summary

The Bertazzoni case study shows how brand image research can generate important insights about a brand. This type of research measures how consumers perceive a brand, whether they are loyal, why they are loyal, and how the brand relates to the competition. Brand image research may help you improve your brand strategy by allowing you to:

Explore the emotional connection consumers have with your brand
Identify the brand values that drive purchase
Identify the brand and product characteristics that inhibit growth
Map the sales process and identify a brand’s strengths and weaknesses
Collect data helpful for communicating the new strategy to sales and the trade

Conducting focus groups as well as a survey requires a larger budget. However, the benefits from doing both often outweighs the extra cost. For Bertazzoni, both were key in cooking up a new strategy.

Dominique Romanowski
Vice President
MMR Strategy Group

The post Recipe for a Better Brand Strategy: 5 Ways Brand Image Research Helped a Brand of Cooking Appliances appeared first on MMR Strategy Group.

Can You Measure a Longitudinal Variable in a Cross-Sectional Survey?

Justin Anderson — Tue, 07 Jul 2015 17:48:45 +0000

Survey research can be classified into two categories, according to the time period being studied. Cross-sectional surveys take measurements at a single point in time. Longitudinal surveys take measurements at multiple points in time. These two types of surveys are useful for different purposes, but can be misused if not properly understood. Consider the following example.

The head of Global Consumer and Market Intelligence for a global athletic shoe manufacturer once called me with a very specific request. She had developed the hypothesis that people develop emotional attachments with the first brand of athletic shoes they buy, making them loyal to that brand throughout their life. To test this, she wanted a survey to measure the first brand of athletic shoes a person bought and the number of pairs of each athletic shoe brand they purchased in later years.

Now, imagine you are a survey respondent who is asked to list the brand name of every pair of athletic shoes you purchased, by year, for every year of your life. Even if you were willing to invest the time and effort to complete this survey, would you be able to provide accurate information? Would you be able to correctly recall what brand of athletic shoes you purchased when you were 24 years old? And would you remember if you bought those when you were 24 instead of 23 or 25?

My client was trying to measure a longitudinal phenomenon with a cross-sectional survey. Rather than mixing these conflicting time periods, surveys should match the time period of the survey with the time period of the attitude or behavior being measured.

Cross-Sectional Surveys

Many market research surveys are cross-sectional surveys, capturing a “snapshot” at a single point in time. Cross-sectional surveys may measure consumer awareness, attitudes, or behaviors at that moment, or at least within recent memory. Cross-sectional surveys can be useful for measuring current or recent phenomena, but are not often the best way to measure very old events.

For example, my shoe client might have conducted a survey to ask consumers what brands of athletic shoes they currently own, and how many pairs of each brand. Or, perhaps she could have asked people to name the brand of athletic shoes they had purchased most recently. A cross-sectional survey would be appropriate to measure these questions.

Longitudinal Surveys

In contrast, longitudinal studies are designed to measure phenomena over time. Longitudinal surveys might ask respondents the same question at multiple points in time, to determine how something has changed over time. Longitudinal surveys might measure different, but related, phenomena over time, to examine delayed cause-and-effect relationships.

For example, my shoe client might have conducted a longitudinal study each year to ask the same consumers what brand of athletic shoes they wear most often. Or, if she wanted to know the effect of Super Bowl advertising on sales, she might have conducted a survey in February to ask respondents whether they recalled seeing her brand’s Super Bowl ad, and then followed-up with a survey in May to measure whether or not they had bought her brand in the intervening months.

Choosing a Cross-Sectional or Longitudinal Survey

Cross-sectional and longitudinal surveys each have their own merits and drawbacks. To determine whether to conduct a cross-sectional or longitudinal survey, consider the research question. If the research question has to do with measuring a phenomenon at a single point in time (e.g., what brand currently has the highest brand awareness in our category?), then a cross-sectional survey is probably the better method. However, if you need to understand how a phenomenon changes over time for the same individual (e.g., does buying my brand at a younger age make someone more likely to become brand loyal?), then a longitudinal survey might be the better choice.

A third option that companies often adopt is to conduct a tracking survey. Tracking studies are repeated cross-sectional surveys. Like longitudinal surveys, tracking studies repeatedly measure the same variable over time. Like cross-sectional surveys, tracking studies measure a different group of respondents in each wave. This is often easier than tracking the same respondents from wave to wave over a period of months or years, but still allows the researcher to analyze trended results.

Conducting Your Survey

For help with your next market research survey (cross-sectional, longitudinal, or tracking), contact the survey experts at MMR Strategy Group.

Dr. Justin Anderson
Vice President
MMR Strategy Group

The post Can You Measure a Longitudinal Variable in a Cross-Sectional Survey? appeared first on MMR Strategy Group.

Three Questions to Ask Before Introducing a Brand Extension

Justin Anderson — Tue, 06 Jan 2015 06:16:31 +0000

Many companies seek to capitalize on profitable brands and exploit their brand equity by introducing brand extensions, which are new products introduced under an existing brand name (known as the parent brand). Some brand extensions, called line extensions, are introduced into the same product or service category as the parent brand. For example, Mint Oreo cookies are a line extension of the Oreo cookies brand.

This article addresses category extensions, which are brand extensions introduced into a different product category from the parent brand. Oreo Pie Crust, Oreo Thin Crisps crackers, and Oreo ice cream bars are all Oreo-branded products that broaden the brand’s presence into new product categories.

Because they have pre-existing brand awareness and (hopefully) favorable attitudes, brand extensions can reduce the risk that a new product will fail in the marketplace. Still, most new products are unsuccessful, and there are plenty of brand extensions among them on the ash heap of marketing history. Here are three questions to ask to help you decide if your next brand extension will profit or perish.

Question 1: Does the Brand Image Favor a Brand Extension?

One of the key success factors for a brand extension is the appeal of the parent brand. It should be obvious that a brand extension has a greater chance of success if customers have favorable attitudes toward the parent brand than if the parent brand is widely despised. That is why the movie Pirates of the Caribbean spawned three sequels, while the critically-panned comic book spinoff Daredevil generated none. However, even among well-liked and respected brands, some brand images are more likely to foster successful brand extensions than others. One key success factor is whether the brand’s image is concrete or abstract.

Concrete brand associations are very specific to a particular product category. Imagine a brand of car battery with the concrete brand image of “long-lasting car battery that starts my car every time.” As long as the brand image is tied to the car category or is associated with “starts my car,” the brand may have difficulty extending beyond the car battery category.

In contrast, abstract brand associations are broadly applicable to a variety of product categories. Imagine the same brand of car battery positioned itself as a “long-lasting power source.” That abstract brand image of a “power source” could make the brand much more extendible. It is easier to imagine a brand with this abstract brand image being extended into alkaline batteries, rechargeable batteries for mobile devices, generators, solar energy panels, and other product categories that involve the production or provision of electricity.

As another example, if the brand image of Honda was concretely described as “fuel-efficient automobiles,” the brand would only make cars and motorcycles. But, with the abstract brand image of “fuel-efficient gasoline engines,” it is easy to understand why Honda’s brand extensions into lawnmowers and power generators have succeeded.

Question 2: Does the Brand Extension “Fit” with the Parent Brand?

If the parent brand image is abstract enough to foster a brand extension, the next object is to determine how closely the brand extension “fits” with the parent brand. Fit is the similarity between the brand extension and its parent brand. Often, brand extensions with better fit have a greater chance of succeeding in the marketplace. (Exceptions do exist – who would have thought Richard Branson’s Virgin Group could both sell records and provide commercial space flight?)

There are four components of fit. Not all must be satisfied for a brand extension to be successful, but the more of these that fit, the better the odds of success.

Brand image: Is the image of the brand extension similar to that of the parent brand? For instance, Timex watches have the brand image of durability. If Timex introduced durable luggage, that could be considered to have a brand image fit. However, if it introduced luggage with extra storage compartments, there would be a mismatch of brand imagery.
Product features: Does the brand extension have similar physical features as the parent product? For example, if the control buttons on a Samsung television look and feel the same as those on a Samsung DVD player, there would be a strong product feature fit. However, if the TV and DVD player are designed by different teams and have different control buttons, there would be a mismatch of product features.
Consumer goals: Would consumers get the same type of benefit from using the brand extension as they do by using the parent? For example, some consumers may rinse with Listerine mouthwash to freshen their breath. If Listerine PocketPaks mints also provide clean-smelling, fresh breath, then consumers would fit a good fit between the two products. However, if consumers use Listerine for oral health, then the mints probably won’t satisfy the same consumer need.
Usage context: Would customers use the brand extension as a complement to, or at the same time as, the parent? For example, Smucker’s is a well-known brand of jelly, jam, and fruit spreads. What else might you put on a sandwich with your strawberry jelly? That’s right – peanut butter! And that’s why Smucker’s peanut butter brand extension perfectly complements Smucker’s jelly.

Question 3: How Will the Brand Extension Impact the Parent Brand?

Finally, the brand extension itself might be profitable, but if it hurts the parent brand image, it might not be worth it. Therefore, the third question to ask is how the brand extension might impact the parent brand. There are four possible impacts that a brand extension might have on its parent: it could be direct or indirect, and either could be positive or negative.

Brand extensions can be appealing ways to introduce new products with less risk. Generally, brand extensions have a greater likelihood of success if the parent brand image is abstract enough to accommodate a brand extension, the brand extension fits well with the parent brand, and the brand extension helps – not harms – the parent brand.

Launch Your Brand Extension

For help with your next brand extension, contact the survey experts at MMR Strategy Group.

Dr. Justin Anderson
Vice President
MMR Strategy Group

The post Three Questions to Ask Before Introducing a Brand Extension appeared first on MMR Strategy Group.

Is Your Country Brand Name Expansionist or Isolationist?

Justin Anderson — Mon, 08 Dec 2014 06:16:15 +0000

Many companies identify their country of origin in their brand name. American Airlines, U.S. Steel, and Bank of America are just a few examples. But, does having the word “America” in a brand name help or hurt the brand’s global expansion strategy?

This is the question that a U.S. healthcare provider faces as it prepares to expand into Southeast Asia.

The company’s brand name includes the word “America,” and the firm enjoys high brand awareness and a favorable brand image among consumers in the U.S. It is also highly regarded among a wealthy elite of foreign patients who travel to the U.S. to receive treatment at one of the company’s facilities.

As the company prepares to expand into new countries, however, it is concerned that its global expansion efforts might be stymied by the inclusion of its country of origin in its brand name. Could the word that has helped the company develop a prominent brand presence in the U.S. also hinder its vision for global expansion? Here are several issues to consider when including a country of origin in a brand name.

How do customers in other countries perceive the home country and its brands?

How is America viewed around the world? In some Western European countries, a brand carrying the name “America” might fare pretty well. In North Africa or the Middle East, there are probably more negative feelings at the moment. However, it is not just customers’ attitudes toward the country in general that matter – it is also important to consider the country’s reputation in the brand’s industry.

In the healthcare industry, America has the best reputation in the world. There are some negative aspects, too: American physicians are perceived as cold and impersonal, and they treat patients like numbers. However, there is no doubt in the minds of Southeast Asian patients that American healthcare facilities offer the best medical care in the world. Therefore, having “America” in the brand name could be a benefit, even in foreign markets.

How do customers in other countries perceive their own country and its brands?

It may seem counter-intuitive, but many people around the world might harbor negative attitudes about the ability of their fellow countrymen to make valuable products or provide adequate services in some industries. Healthcare is one of those industries, at least in some countries. Many people in Southeast Asian are very unhappy with the medical care options available to them in their own country. In contrast, they view the U.S. as the gold-standard of medical care, with the highest-skilled physicians using the most advanced, cutting-edge techniques to cure disease. For these prospective patients, it is a no-brainer: they would prefer an American healthcare brand over any local-country provider.

How would entering a new country change the brand’s image?

It seems like the word “America” might help this company more than it might hinder it when expanding into Asia. However, the company should also consider how its brand image might change when it actually enters the new market. Sure, it has the word “America” in its name. But, will the new hospital be staffed by American physicians (which would be great!), local physicians trained by and conferring with American doctors (might be okay), or the same poor-quality physicians patients currently encounter in their local country? The benefits of the brand name’s promise may quickly be lost if the company doesn’t provide the quality of care that patients associate with American medical facilities. And such brand dilution could hinder the company’s subsequent expansion opportunities. Living up to its brand name’s promise can help the company increase its chances of successfully entering a new country, and also facilitate continued expansion in the future.

In this case, the company’s use of “America” in its brand name seems to be a net advantage for its global brand expansion efforts. But, not all brands would benefit from a similar country-name advantage. The success of such global expansion depends on the country identified in the brand name, attitudes toward that country in the local market, and the company’s ability to deliver on its brand promise over the long run.

Develop Your Global Brand Strategy

For help taking your brand into new markets, contact the survey experts at MMR Strategy Group.

Dr. Justin Anderson
Vice President
MMR Strategy Group

The post Is Your Country Brand Name Expansionist or Isolationist? appeared first on MMR Strategy Group.

Are In-Person Surveys Better Than Online Surveys?

Justin Anderson — Mon, 24 Nov 2014 06:15:57 +0000

Online surveys have become the default mode of data collection in the market research industry. They can be completed quickly and cheaply, and they allow researchers to display images, videos, and audio stimuli. However, online surveys may not always be the right data collection method for every survey. For some projects, an in-person survey is a better methodological choice. This article discusses the capabilities of in-person surveys, the limitations of in-person surveys, and how to combine online and in-person surveys to get the best of both worlds.

The Capabilities of In-Person Surveys

In-person surveys have several capabilities that online surveys may not be able to provide. In-person surveys:

Can be conducted anywhere: In-person surveys can be conducted anywhere qualified respondents may be found. This might include interviewing passersby in shopping malls with dedicated research facilities. Or, it could mean interviewing players on public basketball courts, or consumers in a downtown shopping or business district. If the research needs to be conducted in a retail store where products are purchased, in-person surveys can make that happen. Or, if interviews need to be conducted in consumers’ homes where products are consumed, in-person interviewing can make that work.
Use trained, professional interviewers: Conducting in-person surveys allows a trained interviewer to provide assistance, answer questions, and ensure respondents remain focused and engaged while completing the survey. And, if privacy is needed for the respondent to self-administer the survey, the interviewer can step away to provide privacy, but remain close by in case the respondent needs assistance.
Can stimulate all 5 senses: Other survey modes might be able to display audio and video stimuli, but in-person surveys can let respondents touch, taste, and smell products, too. If the survey needs to allow respondents to touch a soft fabric, taste a new food, or smell a new perfume, in-person surveys might be a better option than online.
Allow researchers to control the interviewing environment: In-person surveys can be conducted in mall facilities where simulated store shelves and signage can be displayed for respondents to respond to or interact with. And, if it is important for respondents to answer based on their own knowledge, Internet usage can be restricted to ensure that respondents can’t search for ideas or information online.
Can sample hard-to-reach respondents: In-person surveys can reach respondent groups with low Internet penetration. Senior citizens, non-English-speakers, and low-income respondents might be less likely to have Internet access or less likely to join online research panels. But, they might be found in malls, shopping districts, and other public places where in-person surveys can be conducted.

The Limitations of In-Person Surveys

Despite all of these potential advantages, in-person surveys are not a perfect research methodology for all projects. Depending on the researcher’s needs, it might be better to use a different survey mode. In-person surveys:

Can take longer: In contrast to some online surveys that can be completed in a matter of hours, in-person surveys can last for days or even weeks, depending on the incidence of the respondent qualifications and the sample size needed. Given the same incidence and desired sample size, in-person surveys may be a more time-consuming survey method than online or other survey methods.
Can cost more: In-person surveys require an interviewer to recruit, screen, and interview each respondent. And, they get turned down – a lot! Just paying for one interviewer’s time increases the cost per interview compared to an online survey. Multiply that by the number of interviewers in a given location, times the number of locations, times the number of days or interviewing shifts, and it’s easy to see why in-person surveys can be more expensive than online surveys. If you need to ship heavy, bulky items to interviewing locations, that adds to the cost. Finally, respondents might demand a higher incentive for in-person surveys than they do online, all of which can add to research costs.
Can be complex to manage: In-person surveys can require greater logistical coordination and supervision than online surveys. In-person surveys are often conducted by multiple interviewers in multiple locations. That means the research project manager needs to brief each interviewer on the respondent qualifications, recruiting and screening methods, and interviewing procedures. None of that is required for an online survey, because those are simply coded into the online program. And, if the interview requires respondents to react to physical stimuli (to touch, taste, or smell), then those stimulus items need to be shipped to each interviewer or interviewing team or location. All of this requires logistical coordination that you won’t find discussed in most marketing research courses.
Allow for interviewer error: No one is perfect, and there will always be room for interviewers to make mistakes. No matter how clear you make the instructions, some interviewers just aren’t going to understand what they need to do. And even those interviewers who understand perfectly may forget some instructions every now and then. As a result, in-person surveys should be validated to verify that they were completed properly. That means some of those expensive, time-consuming interviews might need to be discarded, if the interviewer didn’t properly following instructions.

Combining Online and In-Person Surveys

Of course, the market research world is not black-or-white, and researchers don’t need to choose between exclusively online or exclusively in-person surveys. These methodologies can be combined to offer the best advantages that both have to offer. Surveys can begin in person, with an interviewer handling recruiting and screening responsibilities. Then, respondents can be placed in front of a computer, or given a tablet or laptop, to complete the remainder of the survey online. This incorporates many of the benefits of in-person surveys, but reduces the potential for interviewer errors in survey administration. So, the next time you start writing that online survey questionnaire, give some thought to the needs of the project. It just might be the case that an in-person survey would be a better way to go.

Conducting Your Next Survey

For help with your next market research survey (in-person or online), contact the survey experts at MMR Strategy Group.

Dr. Justin Anderson
Vice President
MMR Strategy Group

The post Are In-Person Surveys Better Than Online Surveys? appeared first on MMR Strategy Group.

[Update] Comparing Online Survey Platforms: Survata vs Google Consumer Surveys

Dominique Romanowski — Fri, 06 Dec 2013 12:14:30 +0000

Way back in August 2012, I wrote about two online survey platforms: Survata and Google Consumer Surveys. At the time, Survata had just launched, and Google Consumer surveys had added additional functionality. I’ve caught up with executives at both survey platforms; this post brings you the latest updates on these two online survey solutions. Although it is never easy to compete with Google, we still believe both Survata and Google have interesting offerings. The market for online surveys is large enough that more than one company will likely survive. Depending on what your online survey involves, both of these companies may provide an interesting offering for programming and conducting interviews online. They both have limitations for their survey platforms, and any survey programmed on Survata or Google Consumer Surveys needs to fit within those limitations.

How they conduct online surveys

Survata and Google Consumer Surveys use similar models for research. Online consumers can access premium content on publisher sites in exchange for answering research questions. Companies pay Survata or Google to gather data, and Survata or Google pay publishers for the content.

A high-level comparison of survey platforms

Number of questions: Google now offers up to ten questions per respondent, while Survata can run up to six consecutive questions per respondent. They both can provide cross tab analysis.
Cost: The companies are on equal footing with price – next to nothing to get started. They have no minimum survey cost and depending on the scope of the project, prices can be upwards of $2,000.
Quality of data: Both companies stand behind the quality and reliability of their data. Google claims that it owns the data and has been using it for years to target advertising campaigns. To learn about Google’s pursuit of industry-leading quality data, click here. Survata buys data from multiple sources, yet age and gender are self reported. Survata says it is building its business on the quality of its data and does perpetual validation of data through techniques such as looking at response speed and adding trap questions.

Google’s obvious strength with this service is that it is Google. Google serves up a lot of content where their surveys can appear worldwide. Based on Google’s history with other products and services, we’d expect that their online survey platform will continue to improve over time. While we doubt Survata will ever be the 800 pound gorilla, it offers a significant alternative for those that want a more hands on service. Perhaps their most attractive selling point is that a trained survey analyst reviews every question and offers free advice. This “aided self-serve” approach is designed to allow clients to get the most of out the data. In addition, Survata now serves international English speakers in Canada, Australia, the UK, Germany, Italy, France, and Spain. Google Consumer Surveys or Survata? Why not try them both out and decide. To get you started, MMR Strategy readers can access a valuable coupon from Survata.

Dominique Romanowski
Vice President
MMR Strategy Group

The post [Update] Comparing Online Survey Platforms: Survata vs Google Consumer Surveys appeared first on MMR Strategy Group.

Don’t Miss! Dr. Bruce Isaacson to Speak on Improving Customer Experience with Customer Journey Maps at Corporate Researchers Conference

Elesia Kreinces — Wed, 28 Aug 2013 13:08:48 +0000

What does it take for an organization to offer outstanding customer experience? One element is that a company typically must act as a single seamless entity across the different touchpoints where customers are involved with the company.

This is not easy. To do so, a company must improve the touchpoints that most need improvement, and not waste resources improving those that are less important to customers, or that do not need as much improvement.

Dr. Bruce Isaacson, President of MMR Strategy Group, will be speaking at the 2013 Corporate Researchers Conference (CRC) on Wednesday, October 16th from 3:00 – 4:00 PM at The Fairmont Dallas hotel. His presentation titled, “How to Improve Your Customer’s Experience with Customer Journey Maps,” will describe customer journey maps, which are a powerful tool to help companies visualize and evaluate the customer experience from the customer’s point of view. Using customer journey maps can help companies identify areas that need improvement, and provide a common vision to improve the customer experience.

For more information about the conference or to register, click here.

CRC was designed to help move researchers and their organizations ahead of change. CRC sessions – presented largely by corporate researchers – show how insights are maximized through recent case studies and real life experiences covering key areas such as the value of marketing research, mixed mode research, social media and big data, customer intelligence, business intelligence, and more.

The Corporate Researchers Conference is co-sponsored by the Marketing Research Association, Quirk’s Marketing Research Media and the CEB Market Insights Leadership Council.

For more information about customer journey maps click here.

The post Don’t Miss! Dr. Bruce Isaacson to Speak on Improving Customer Experience with Customer Journey Maps at Corporate Researchers Conference appeared first on MMR Strategy Group.

Marketing Strategy Tips from the Master – Tom Peters

Bruce Isaacson — Wed, 12 Jun 2013 14:24:28 +0000

For many years, Tom Peters has been a great source of thought about management and marketing strategy. Since his days writing In Search of Excellence, as well as follow up materials, I haven’t always agreed with him, but he has always made his positions clear, and made me think about my own positions on the same issues. Sixteen books or so later, he’s still a widely recognized and widely quoted strategy guru.

In fact, Tom Peters was one of the original and early strategy gurus, paving the way for future management thinkers, such as Jim Collins.

Tom Peters has recently released some materials that, in language familiar to those who are familiar with him, he calls his MOAP (Mother of All Presentations).

Topics in the MOAP include:

Launching Excellence
MORAL Basis for Enterprise
First-line Supervisors Rule
XFX/Cross-Functional EXCELLENCE
Strategic Listening
Boomer-Geezer Bonanza
Meetings as Leadership Tool
EXECUTION
RELENTLESS
You ARE Your Calendar
Power of “Small Courtesies”
People! People! People!
Brand You! No Option!
Ready. Fire! Aim
We Are Who We Hang Out With
Things Gone RIGHT
Make Every EXPERIENCE Memorable
Design is EVERYTHING
MONOPOLY through EXCELLENCE
Women Buy! Women Roar! Women Rule!
From Customer Satisfaction to CUSTOMER SUCCESS!
WOW!
End Material

Tom encourages audiences to, “Use this material as you wish and please “steal” all you want!”

Rather than stealing, I am now sharing. Enjoy

Dr. Bruce Isaacson
President
MMR Strategy Group

The post Marketing Strategy Tips from the Master – Tom Peters appeared first on MMR Strategy Group.

Lessons in Pricing Strategy from JCPenney

Bruce Isaacson — Wed, 15 May 2013 14:58:31 +0000

J.C. Penney Company Inc., founded in 1902, is one of the best known brand names in American retailing. The chain, commonly known as JCPenney, has historically been heavily dependent on promotions, discounts and sales. JCPenney’s recent foray into and out of everyday low pricing provides important lessons for retailers and manufacturers evaluating pricing strategy.

If you are reading this post, then you probably know the basics about the chain’s struggles with pricing strategy. JCPenney has more than 1,000 mid-range department stores in all 50 states and Puerto Rico. The stores sell conventional merchandise, such as apparel and housewares. JCPenney stores often contain several leased departments such as Sephora, Seattle’s Best Coffee, optical centers, portrait studios, and jewelry repair.

JCPenney’s New Pricing Strategy

In 2012, JCPenney, under the leadership of new CEO Ron Johnson, who had run stores at Apple, undertook a significant change in its pricing strategy. The new pricing strategy eliminated promotions and focused on selling recognized brands. Under the prior promotions-based pricing strategy, prices were marked up so there would be room for promotional discounts. By contrast, the new “Everyday” pricing strategy set prices lower, eliminating or reducing the need for what used to be sale prices.

There were other changes as well. For example, prices no longer ended in 9 or 7 (such as $9.99); instead, whole figures were used when pricing items. Also, price tags now showed just one price and no longer listed the “manufacturer’s suggested retail price,” which had previously provided a higher comparison price illustrating how much the product could be sold for elsewhere.

The retailer also made significant changes in merchandise assortment. JCPenney focused on mini-stores within larger stores, such as those for Martha Stewart products. Note: JCPenney has been in a court battle with Macy’s over the right to sell the Martha Stewart “JCP Everyday” line of home goods. The trial underscores how competitive the middle-market home goods category is and how one brand like Martha Stewart can matter. Read more.

Back to the Future for Pricing Strategy

As you have no doubt read elsewhere, the new pricing strategy never gained traction with consumers. Sales declined steadily over time. The chain lost $3.3 billion in sales in the first year of Johnson’s turnaround plan. Its net loss in the quarter ended Feb 2, 2013, widened to $552 million from $87 million a year earlier. Annual revenue slid 25% to $13 billion, the lowest since at least 1987.

Under pressure, the CEO announced the company would move away from the “Everyday” pricing strategy and return to coupons and weekly advertised sales. The change came too late for Mr. Johnson, who left the company in early April 2013, at which time the prior CEO returned.

Lessons from JCPenney for Pricing Strategy

JCPenney’s experience with a non-promotional (or Everyday) pricing strategy has many lessons. In my opinion, these lessons include the following:

An Everyday pricing strategy is greatly helped by unique merchandise or very low prices.

Everyday pricing is particularly hard to execute well for JCPenney, a retailer that sells many products that are not unique or special. High-end brands with more unique merchandise may be able to operate with fewer sales and promotions, but JCPenney primarily sells products that consumers can find at other retailers either in identical or similar form. For example, a non-promotional pricing strategy is easier to execute at Apple Stores, which has the advantage of selling Apple products.

A pricing strategy built around everyday low pricing may work where a retailer is built from the ground up. For example, Walmart is built to offer low prices, and has engineered elements such as infrastructure, logistics, and merchandise to support these low prices. JCPenney does not have the service and merchandise of Nordstrom, nor does it have the low cost structure of Walmart. Instead, it is stuck somewhere in the middle, which provides a dangerous place for positioning, and a difficult place for everyday pricing strategies.

Over time, shoppers can be trained to expect sales events.

Consumers are very smart, and are very good at learning what to expect from a retailer or a manufacturer. During more than a century of history, JCPenney offered a high-low pricing policy, in effect training consumers to expect sales events and attracting consumers who love sales. By eliminating those sales events, JCPenney took away a reason for consumers to shop the store.

It is possible that over time a new group of consumers would become attracted to JCPenney, who were less promotionally oriented, but this can take a long time. It is also possible that the chain would re-train consumers to become less promotional, but this process is even more difficult for a chain that has spent a long history attracting consumers who expect promotional pricing policies.

The change eliminated reference pricing for consumers.

Yet another reason the “Everyday” pricing strategy encountered difficulty is because JCPenney eliminated the manufacturer’s suggested retail price from its price tags. This suggested retail price may have offered what marketers call a “reference price.” Some consumers use reference prices to judge quality and value; without reference prices, consumers may have had a hard time judging the value of JCPenney’s merchandise, which was often undifferentiated. (Also, by switching from prices that end in “9” to prices that end in”0”, could the chain have lost another signal that the prices are discounted?)

JCPenney has changed pricing strategy, but its future is unclear

JCPenney has now added back reference prices for their Arizona store brand items, so they will again show comparison prices from other retailers. In his first big move, the new CEO tapped $850 million from a credit line and announced the company was looking into other ways to strengthen JCPenney’s balance sheet, and provide breathing room to develop and execute a new plan.

The new credit may lend JCPenney enough time to re-boot. However, the fates of Kmart, Sears and Circuit City are a reminder that the odds against JCPenney succeeding as an independent entity are low. Then again, retailing is fascinating in part because it is so unpredictable.

Dr. Bruce Isaacson
President
MMR Strategy Group

The post Lessons in Pricing Strategy from JCPenney appeared first on MMR Strategy Group.

Why You Should (Almost) Never Use the van Westendorp Pricing Model

Bruce Isaacson — Mon, 04 Mar 2013 04:39:40 +0000

Setting the pricing strategy for a product or service is one of the most important challenges any marketer faces. Compared with other elements of the marketing mix, pricing strategy has the most direct impact on bottom line profitability.

As you increase or decrease prices, the difference grows directly into or out of operating profits.

Pricing is also complex. When setting prices, marketers must consider:

How much customers are willing to pay
The cost of their products and services
Competitors’ pricing policies
Market changes that affect demand

This post takes a look at the van Westendorp Pricing Model, a widely-used pricing technique. I’ll explain why I almost never recommend van Westendorp for pricing analysis, except in conjunction with other methodologies. In an upcoming post, I’ll tell you what works better for pricing strategy.

What is the van Westendorp Pricing Model?

Conceived in 1976 by Dutch economist Peter van Westendorp, the van Westendorp Pricing Model is a method for gauging consumers’ perceptions of the value of a service or product. Sometimes known as the Price Sensitivity Meter (PSM), this technique evaluates a range of price points under consideration. Specifically, the technique seeks to identify the price consumer interest begins to fall off. It is also used when a marketer wants to evaluate the impact of pricing changes or to see how consumers view their prices versus the competition.

How is van Westendorp used for pricing strategy?

In a van Westendorp study, survey participants are asked four questions:

At what price do you think the product/service is priced so low that it makes you question its quality?
At what price do you think the product/service is a bargain?
At what price do you think the product/service begins to seem expensive?
At what price do you think the product/service is too expensive?

Marketers can either give participants a price scale representing both ends of the price spectrum or let participants provide open-ended answers. The responses to each question are plotted on a graph called a Price Map. See the Respondent’s Perception of Price-Value chart below.

The intersection of certain data points gives marketers information about the respondent’s perception of price-value through the Optimum Price Point (OPP) and the Indifference Price Point (IDP). The OPP is the intersection at which the same number of participants rate the price as either “too expensive” or “too cheap.” The IDP is the point where an equal number of participants rate the price as either “cheap” or “expensive.” (If this method for setting pricing strategy is beginning to sound complicated, it’s because it is complicated!)

The following Price Map, another part of van Westendorp analysis, shows the Range of Acceptable Prices. The range trades off the point at which sales volume is lost due to a perception of poor quality, versus the point at which volume is gained due to the product being considered a bargain (PMC) and the point where the same number of people perceive the product to be “too expensive” and “not expensive” (PME).

Why you should probably not use van Westendorp for pricing strategy

At first look, van Westendorp seems to have a lot going for it. Marketers use van Westendorp for pricing analysis because it is simple to execute, asks questions that are easy for respondents to answer, and provides tools that appear to be easy to understand. For example, the range of acceptable prices is intuitively very appealing because it indicates the price points that a product or service should be above or below.

Unfortunately, when you think about van Westendorp pricing analysis, it has many flaws and problems. One of these problems are the graphs you see in this post. They are filled with criss-crossing lines that are not that easy to explain or understand.

A bigger problem, however, is that this methodology lacks a sound methodological foundation. Is it true that every product has a price below which it is so cheap that you would question its quality? That might be true for some products or services, but for others, the lower the price the more we might buy.

I have never found a clear explanation of the theory explaining why van Westendorp analysis works. I believe the reason for this lack of explanation is that there is no clear foundation for the method. Much of the method relies on a black box that users must accept (or not accept).
There are other problems. For example, it might be possible that the way these questions are phrased, some respondents would low ball their estimates. Also, the technique does not maximize revenues or profits, or even consider them, for that matter.

A final issue I’ll mention is that van Westendorp does not consider competitive products or competitive responses. One possible response to criticism that the technique does not consider competitive responses is that it is only recommended for new products. However, it may not be reasonable to ask respondents to answer the van Westendorp pricing questions regarding a new product about which their knowledge is limited.

What else can be used for pricing strategy?

As I mentioned earlier, I plan to write a future post describing some alternatives to van Westendorp for pricing strategy. One technique I like is conjoint analysis, which is methodologically sound and works well with pricing. You can learn more about conjoint at the MMR Strategy Group Resource Center.

I also like using demand curve analysis where revenues and demand can be analyzed at different price points using purchase intent scores from surveys.

Dr. Bruce Isaacson
President
MMR Strategy Group

The post Why You Should (Almost) Never Use the van Westendorp Pricing Model appeared first on MMR Strategy Group.