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 November/december 2015
ama.org

Driving informed decisions

and business value through
analytics.

Is
Your
C u stom e r
A lway s
Ri ght?
How w e g ot t o
custo m e r ce n t ric ity
 A m e r i c a n m a r k e t i n g a s s o c i at i o n
November/december 2015
ama.org
Nov/Dec 2015
Driving informed decisions
and business value through
analytics. Volume 27
Is
Number 6
You r
C u st o m e r
A lway s
Driving informed decisions and business value through analytics. Ri g h t ?
AMA.org/MarketingInsights How w e g ot t o
cust om er cen t ricity

contents features

22
Trading Up
How to optimize
trade spending
using advanced
marketing analytics

Is Your Customer

16
cover story

Always Right?
How we got to customer centricity

03
By the

28
departments numbers
fast track Jennifer Davis 04
The art of conversion From Multicultural to Multifocal 06 The Problem With
Insights machine What is Your Campaign Missing? 08 Solutions
The big picture The Message Hasn’t Changed 10 To develop higher
quality consumer
PROBLEM SOLVERS Performance By Design 12 insights, focus less
on individual solutions
SOCIAL CUES Finding the Canary in the Data Coal Mine 14 and more on the
integration of marketing
Scholarly Insights How Kinetic Property Affects Consumer Novelty Perceptions 32
research and Big Data
 A m e r i c a n m a r k e t i n g a s s o c i at i o n

November/December 2015 | Vol. 27 | No. 6

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Welcome Back to Marketing Insights.
art Nary a marketing PowerPoint deck goes to the boardroom these days
Kristina Zapata Art Director | kzapata@ama.org without mention of “customer centricity,” or at least that’s how it seems to
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contributor Randy Brandt. But why are insights professionals so focused on
Advertising Staff making every aspect of a customer’s journey exactly
Sally Schmitz Production Manager | sschmitz@ama.org what they want, even if what they want isn’t what the
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Turn to page 16 for Brandt’s take on why and how
cchitester@yourmembership.com (727) 498-6521 customer centricity has become mainstream, and why
so many organizations are obsessed with making every
Editorial board
Greg Allenby, The Ohio State University’s Fisher College of Business
customer interaction a great one.
Lynd Bacon, Loma Buena Associates and Northwestern University Our remaining two features delve into the
Chris Chapman, Google Inc. optimization of trade spending using advanced
Jeffrey Hunter, Market Framework Inc.
Michele Kessler, thinkThin
marketing analytics (page 22) and the integration of Big
Data and marketing research (page 28).
Further, check out page 32 for our new department,
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2 marketing insights
November/December 2015
 Bits and bytes Edited by mary m. flory
bn
by the numbers

2/3 71%
48%
Two-thirds of market research clients do not expect Seventy-one percent of employers have
to be using passive data in two years, per new research employee engagement initiatives in place,
from GfK and the Institute for International Research. according to theEMPLOYEEapp’s 2015 Mobile
Trends in the Workplace Survey.

70%
Forty-eight percent
of marketing
respondents reported More than half
that they have no of top marketing

55%
Survey responses from roughly 700 consulting budget for translation executives don¹t
clients revealed that 70% of buyers identify thought outside of the U.S., have an omnichannel
leadership content as a significant factor when selecting according to a recent strategy, per new
a consulting firm, according to the Association of Smartling study. research from The
Management Consulting Firms’ 2015 Thought Leadership CMO Club and
Best Practices Report. Rakuten Marketing.

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marketing insights
November/December 2015 3
 FT
Fast Track
1994
BS, Business and History
Warner Pacific College
1994-1998
Marketing Manager/
Asst. Product Manager/
Channel Sales Manager
Pierian Spring Software
“I was the 10th employee at a
start-up and wore lots of hats,
ranging from communications,
channel marketing, product
ideation, direct mail and
demand generation, trade
shows and events. I realized the
opportunities that are created
when you work hard, add value
and are committed to learn.”
2000-2002
Market Development
Manager
Intel Corporation
“At this first role at Intel, I
learned to advocate myself in
my career, ask others for help
(only to find people incredibly
generous), and get curious about
what made others successful.
This was also the time that I
enrolled in my executive MBA,
so it was a huge period of
professional development.”
2000-2009
Director
Planar Systems Inc.
4 marketing insights
November/December 2015
Career highlights in 60 seconds by Eden Ames
Jennifer Davis
Vice President of Marketing and
Product Strategy at Planar Systems,
Inc. and Runco International
For Jennifer Davis, it’s important to remember
that a career choice is not a life sentence.
With her own career path beginning at a start-
up, Davis’ diversified responsibilities have
allowed her to excel at resource optimization,
marketing innovation and product strategy in
each of her various positions.
2001
MBA
Pepperdine University
2007-2008
On-Site Executive and
Integration Director
Runco International
2007-2009
President and CEO
Remarkable Tributes, Inc.
“In this part-time start-up, I
learned a lot about business
and myself. I learned that you
need to spend as much time and
money on marketing as you do on
development (or significantly more)
to build something sustainable.”
2009-Present
Vice President, Marketing
Runco International
2009-Present
Vice President, Marketing
and Product Strategy
Planar Systems, Inc.
“I have learned about demand
generation, brand strategy, team
leadership and organizational
design, and product strategies
[that] lead the transition of our
revenue and profits from embedded
and legacy products to digital
signage products.” mI
 THE ART
INNOVATOR
OF CONVERSION
From Multicultural
to Multifocal
Three next practices for cultural relativism
David Krajicek
 david.krajicek@gfk.com
I
n recent months, we have seen
many marketers shift gears in their
efforts to win over multicultural
consumers. Their latest move: A “Total
Market” approach, in which campaigns
for many ethnic groups are aligned
under a single strategy, assure some
level of consistency and efficiency.
To me, this trend reveals a continued
uncertainty about how best to shape
brands and marketing for multicultural
audiences: Hispanics, Asians, African-
Americans and others. Attempts to truly
customize every campaign to different
ethnic groups can get out of hand
quickly, so brands are now swinging back
to something more uniform. But are they
doing so out of certainty or desperation?
I see the need for a more fundamental
rethinking of how we market to Hispanics
and other multicultural populations: an
approach grounded not in “country of
origin” or “language spoken,” but more
basic facts about these consumers.
The truth is that, as second- or
third-generation millennials, Gen
Zers and others come to dominate
the consumer landscape, marketers’
perspectives on what it means to be
bi-cultural (or tri-cultural, or more)
will need to appreciate new subtleties.
Failure to recognize these nuances will
6 marketing insights
November/December 2015
S H O PPER DATA
M ult i c ult ura l Aud i en c e s
risk the loss of good will for customers
who represent billions of sales dollars,
and whose children—the brand’s
next next customers—may adopt the
same sensibilities. If a brand is seen
as turning a deaf ear toward different
market segments, ineffectiveness and
indifference to the brand would be the
best-case scenario, while the worst-case
outcome could be outright disdain and
long-term brand distrust.
I see a host of very different factors
colliding to up-end marketing’s well-
worn approaches to multicultural
consumers. Here are just a few:
Acculturation at one’s own pace: For
the grandparents or great-grandparents
of today’s millennials, assimilation was a
sink-or-swim proposition. To make it in
the “Promised Land,” they had to learn
English as quickly as possible, trade
their cultural traditions for Western
ones (or at least be sure to honor
both), sometimes even change their
names to be less “conspicuous” in their
differences. Today, while we still have
a long way to go in cultural tolerance,
the U.S. is much more accustomed to
a variety of traditions and lifestyles,
which means that younger consumers
from immigrant households can openly
maintain elements of their heritage with
less risk to their safety or livelihood.
The rise of DIY identities: On an
individual level, millennials, in general,
are much more comfortable “making
themselves up” as they go. The need to
choose a cookie-cutter personal style
has given way to a fluid, patchwork
approach: You can be a little hip-hop, a
little suburban, and a little Ecuadorian or
Chilean or whatever suits you. And the
imperative to be the same from month
to month or year to year seems almost
ancient. Millennials feel entitled to
reinvent themselves on a whim, picking
and choosing influences that work for
them today (but maybe not tomorrow).
The “always-connected” lifestyle
goes mainstream, sometimes, with
contradictory results: Increasingly
we see that, even when they choose
not to ante up for Wi-Fi or cable,
many multiculturals connect to the
digital world via their phones. For
some consumers, being in touch with
Facebook or Twitter now feels more
important than watching a favorite show.
This means that the characteristics
that bind people across ethnic lines are
becoming less about acculturation per
se and more about access to, and use of,
technology. Boomers of all backgrounds
hang out on Facebook; younger adults are
on Instagram. Influences from a variety
of cultures can be instantly accessed
in the same way that people keep in
touch with familiar friends and brands.
Want to know what’s going on in Latin
music? Follow @latinamas on Twitter.
The content is incidental; the platform is
shared, consistent and essential.
Yet, even as social media may be
harmonizing (even homogenizing?) the
world, platforms like Tumblr, Facebook
and others also provide havens for pure
ethnic influences, allowing them to
live and remain vital. Today’s third-
generation millennial with Colombian

roots can be in touch with a host of
cultural institutions and thought leaders
through social feeds, creating a direct
connection to ideas and events that
keep her heritage active, even though
her favorite singer may be Taylor Swift.
Customization as a birthright:
Messaging to consumers via broad
cultural assumptions is in direct conflict
with one of the most powerful forces
in marketing today: targeting. Anyone
who accesses apps or the Internet or
streaming TV is used to having his or
her likes and dislikes closely monitored
and reflected in the content served up.
So today’s Hispanics do not want to be
spoken to as (for example) acculturated
second-generation Latinos—they want
to be spoken to as themselves! As much
as consumers may say they want their
privacy, many would find classical mass-
market messaging downright dumb.
And who wants to be a dumb brand?
So, in a world where all of our knee-
jerk assumptions and our comfiest
catch-alls about multicultural marketing
and research are becoming defunct,
how do we move forward? It would be
foolish to offer a new set of soon-to-
be-trite solutions; but here are a few
signposts that may point to a more
fruitful path to brand success.
1 Make mobile your baseline.
When so many ethnic consumers
experience the digital world solely or
primarily through three-inch screens,
mobile friendliness is equivalent to
real-world readiness. Transcending
mobile platforms, looking good on small
displays and perfecting the UX of your
smartphone interactions are brand basics.
2 Measure new people in new
ways. As a researcher, I know that
traditional methods of data collection
tend to capture traditional behaviors.
When you are looking for green Volvos,
you see more of them, but you miss all
the other cars. With consumers turning
to several media outlets every day—
maybe every hour—we need to use
many lenses and strategies to understand
them. Surveys still have their place, but
they can and should be combined with
passive data (point of sale, metered TV
and Internet), observational insights
(ethnographic and beyond), user
experience research and more.
3 Embrace a new cultural
relativism. In today’s market,
we need to recognize the obvious:
Being multicultural does not define
every decision you make. Immigrant
households may look very mainstream
in their tastes when it comes to cleaning
products or cars, but ethnic influences
may lead them to buy a certain brand
of bread, smartphone or refrigerator.
Multicultural consumers may be very
connected—through social media and
other venues—to their traditions on
certain topics, but perhaps not at all on
others. So do not look for Hispanic or
Asian consumers only in certain aisles
of the grocery store or on certain TV
networks; they are likely to be roaming
far and wide in their tastes.
The bottom line is simple:
Understanding any consumer through
reductionist labels and time-worn
assumptions will lead to a narrow focus
and missed opportunities. We cannot
call words like multicultural or Hispanic
or acculturated obsolete; but when we
let them dominate our view, we are
settling for less before we even have
launched a single product or created our
first ad. To go with multicultural, let’s
introduce the idea of multifocal: many
lenses, micro and macro. The result will
be a clearer picture of consumers in
every category. mI
✒ David Krajicek is CEO of GfK Consumer
Experiences North America.
marketing insights
November/December 2015 7
 INSIGHTS MACHINE
What is Your
Campaign Missing?
In a rush to be relevant, marketing favors
one-off moments rather than longitudinal
experiences. Here’s how to reverse the trend.
Don E. Schultz
 dschultz@northwestern.edu
H
aving lived well beyond
my actuarial expectancy, I
naturally favor forward-looking
longitudinal experiences. That is, living
and learning over time. Seeing situations
repeat themselves that others have not
experienced. In my opinion, longitudes
are so much better than latitudes.
Most of our marketing and
communication systems are
latitudinally—not longitudinally—
driven. Vertical business models.
Research snapshots taken at one point
in time. Evaluations of businesses,
economies, and yes, even people on
what they did yesterday rather than over
a period of weeks or months or years.
To me, a lifetime volume of work is
much more impressive than a one-time
heroic event. Consistency, continuity
and completeness are what really count.
Yet, in marketing and communication,
we tend to value the passing event while
ignoring the residual value it leaves
behind. Marketing and communication
seem to always be focused on the “here
and now.” And, once something has
occurred, the ball game is over. Let’s
move onto the next game or event or
8 marketing insights
November/December 2015
SOCI
N eurAom
L MEDIA
a r k et RESE
i n g A RCH
action. Today, everything is transitory.
That’s why “selfies” have taken over the
world. Snap it now. Forget it.
Yet, all of us are a bundle of memories.
Some unrelated thing can trigger an old
song you haven’t heard in years. And, it
runs through your head for days.
It is this longitudinal view of the
world that is missing in so much of
today’s marketing and communication
activities. In too many instances, it seems
marketers are grasping at straws with
their communication creativity rather
than connecting to the solid, proven,
relevant elements that remain in our
memory over time. That, more than
anything else is what I believe is missing
from today’s marketing and marketing
communication activities and why they
have such little value over time.
Today, every marketer wants to
“engage” or “connect” to create a
“relationship,” but they want it to occur
instantaneously, with little or no effort on
their part. Read some data. Have a couple
of synapses connect. Pop out a clever
ditty based on the au courant term of the
day. And, supposedly, a brand loyalist
emerges who will stay with you over
the years, in good times and in bad. As
the old canned tuna slogan goes “Sorry,
Charlie!” It just doesn’t work that way.
If you have read this far, you may be
saying: “Where is he going with this?”
Where is this sermonizing leading?
The answer is neural marketing.
The increasingly critical nature of
understanding how the human
brain actually works. How we make
decisions. Are we really rational
creatures as economists assume or are
we a bundle of short-term, satisficing,
intuition-driven organisms who rely
on moods and motions to make our
purchasing decisions?
The challenge I believe is that man can
think rationally; that is, organize, plan
and implement a study of “things” such
as thermodynamics, botany, biology and
like, but, when it comes to managing
one’s own life, we get totally confused.
We don’t follow the rules even we have
defined. We ignore insights that are
clearly evident and have been so for years.
Just look at cigarette smoking, obesity,
drunk driving and a host of other things
we know are bad, wrong or endanger
either us, our loved ones or complete
strangers. Yet, we continue to do them.
Why does the human mind act
and react the way it does? That is the
ultimate challenge still to be addressed
or understood or analyzed or whatever
is needed to unravel the mysteries of
how humans really operate in today’s
world. That to me, is the real challenge
marketing and communication
practitioners face today.
If we took that longitudinal
approach, we’d most likely start by
tossing out the mundane, irrelevant
rules-of-thumb based on half-
developed ideas of years gone by
on which we have based marketing
and communication and starting
with a fresh slate. We’d probably
start with multi-dimensional models
of how things work, not the two-
dimensional approaches that fit nicely
on a PowerPoint slide. Further, we
probably start looking for patterns of
behaviors, not one time instances that
we can quickly and easily identify but
probably will never happen again. We’d
also start to accept that most humans
operate on intuition, rules-of-thumb
and serendipitous behaviors that they
can’t identify in advance and can’t even
explain once they have occurred. Most
of all, however, we’d begin to accept the
fact that humans are creatures of habit.
Once we find something that works,
we repeat it. Most people are not really
explorers but farmers and growers who
rely on longitudinal data coming from
experiences and examples of activities
over time to run their lives.
The interesting things to me about
neuroscience and neuromarketing is that
the knowledge and value of the studies
come over time, longitudinally. Having
snapshots of the brain lighting up in
various areas and quadrants is interesting
and over the first few times, quite novel.
The real issue, however, is how those
same stimuli act and react over time. Do
they repeat or are they novel, one-time
events never to be repeated? If we are
learning anything from neuromarketing
(and I think we’re learning quite a lot),
it’s that the only way to understand the
human brain is over time.
So, that brings us back full circle.
Knowing and understanding human
behavior is a longitudinal process. One
thing builds on another. Networks
and patterns are the real keys to
understanding human behaviors, not
one-time flashes of inspiration.
We’re dealing with the most variable
of all elements: humans and what they
do longitudinally
The future is going to all be about
longitudinal data … studies over time.
That’s why us old guys are getting a new
lease on life. mI
✒ Don E. Schultz is a professor (emeritus-
in-service) of integrated marketing communications
at Northwestern University in Evanston, Ill.
marketing insights
November/December 2015 9
 THE BIG PICTURE
The Message Hasn’t
Changed
Will the next generation of insights tools
keep digital morale up?
Gordon Wyner
 gordon.wyner@gmail.com
M
arketers spend a lot of time
and energy communicating
with consumers. It’s a
crucial part of implementing strategy
for delivering value to consumers
and making money. In the digital era,
a lot of emphasis has shifted to the
selection of media channel, i.e., picking
from the vastly increased number of
message delivery platforms. While the
technology decision is important, it
doesn’t answer the ultimate question
of what should be communicated.
The questions of how and when to
communicate ought to be aligned
with messaging goals in order to meet
business objectives, invest resources
prudently and assess performance.
The increasing role of digital
technology in communication has
changed a lot of things. Word of
mouth can be transmitted more
rapidly digitally, as well as in person.
Direct digital links to the consumer
afford the opportunity to understand
communication at a more granular
level, e.g., at different points in time
in the consumer search and purchase
cycle. Does advertising contribute
more in early steps in the shopping
cycle or closer to the moment before
10 marketing insights
November/December 2015
D i g i ta l T ec h n ology
purchase? Technology should enable
marketers to understand more fully how
different types of ads work, e.g., ads that
immediately persuade versus those that
create longer term memorability. And
technology should facilitate use of more
types of relevant performance metrics
to make this assessment, e.g., search,
engagement and online purchase.
Have research insights into
communication effectiveness kept up
with the technological developments
in media and measurement? Yes, new
methodologies have proliferated, but
many challenges remain to realize the
potential that digital promises to provide.
Effective Communication
Basic principles of communication still
apply to media of all types, including
digital. At a minimum, marketing
communication to support strategy
ought to connect consumers with the
brand. Content that is weakly linked
to the brand is not going to help build
demand. An illustrative example is
the ad that barely mentions or doesn’t
mention the brand by name.
The communication ought to
create associations with the brand
that are consistent with the intended
positioning. Ultimately, the experience
with communication content ought to
increase the likelihood that a consumer
will respond positively to it, at a time
when a decision is going to be made.
Long before there were digital media
we knew that marketing communications
actually influenced consumers at different
points in time in the purchase and
usage cycle. In one scenario, advertising
might work during the exact time when
a consumer was using the media, e.g.,
watching TV or reading a magazine.
Content that is immediately relevant to
consumer action would have a better
chance of impacting a decision, compared
to unrelated content. For example, 20
years ago, before digital advertising,
direct response TV advertising would fit
into this category.
Content can also work during times
when a consumer is shopping, or
more broadly deciding what products
to check into, with the possibility of
purchasing at a later time. Digital media
and ecommerce tools create many new
situations in which a consumer can
interact with a brand. At those moments
in time, it would help if the consumer
had positive associations about the
brand to predispose her to the brand.
Predisposition would, of course,
have to be built up from prior media
interactions. In addition to prior
advertising, consumers build up their
predispositions to a brand through
product usage experience. Advertising
can play a role in this process by
helping establish particular associations
and memories of the brand that can
contribute to later purchases.
The impact of brand communication
is multifaceted, not limited to a single,
instantaneous stimulus-response
mechanism. Digital measurement ought
to provide more detailed understanding
of communication mechanisms.

Measuring Communications
Performance
Research and analytical tools have
advanced significantly as digital media
have continually developed. Important
developments include:
1 Passive observation of digital
media exposure and response
through Internet tracking. (No need
to ask a consumer about exposure to
advertising if it’s known in advance.)
2 Individual consumer level
linkage between advertising
stimulus and response, e.g.,
purchase and/or survey completion.
(Not limited to macro level shifts in
aggregate population behavior.)
3 Ability to measure the lift in
response due to ad exposure,
and deep dive into campaign
diagnostics. (Includes the ability to
integrate online media and offline
media for total picture.)
4 Relatively fast and low cost,
compared to other forms of
communication research.
The capabilities exist for measuring
how advertising influences consumers
in more detail than ever. To get at some
of these mechanisms requires Web
tracking systems to measure actual
behavior throughout the search and
buying process, and surveys designed to
measure associations, brand impressions
and offline shopping behavior at different
stages of the path to purchase.
Challenges
Several structural factors continue
to challenge researchers. One is
the methods to control for prior ad
exposure in order to get a clean read
on the impact of current exposures in
a cluttered environment. This has been
addressed via modeling of the baseline
exposure of consumers, based on their
past history of media consumption,
brand attitudes and behavior. It has also
been addressed via careful sampling
of consumers according to their
characteristics and exposure patterns,
in an attempt to approximate a true
experimental design that controls the
administration of the advertising stimuli
to consumers. Neither approach is
perfect but both manage error to make
the outputs sufficiently accurate and
practically useful.
An accompanying challenge to media
proliferation is the need to capture
and synthesize many different sources
of media-related data in great detail
so they can be used in analyses. The
broader issue is to have a sufficient
understanding of the whole media
process that leads to use of many
different messages and channels. The
importance of some type of integrated
media campaign planning is greater
than ever, to get a handle on the goals
of the whole endeavor, the strategic
intent of each individual message point
and media, and the appropriate criteria
for measuring successful performance,
including issuing feedback and making
improvements. What are we trying to
convey, to whom and why? If messaging
tactics are not coordinated there is
greater risk that they don’t support the
overall strategic goals, or even worse,
contain conflicting messages.
It’s easier to envision how the right
tools can be assembled than that the
necessary planning process will be
in place to use them. The industry
statistics show continued rapid
movement toward digital media as
a share of overall expenditure. In
order to sustain and continue this
rapid growth to digital, it’s going to
have to prove its worth in creating
business impact. Low adoption rates of
integrated effectiveness measurement
tools suggest this challenge hasn’t
yet been met across the industry
landscape. Perhaps the next generation
of insights tools that will exploit
some of the specific advantages of
digital measurement (e.g., much more
granular measurement by type of ad,
mechanism of response and consumer
life cycle) can demonstrate sufficient
benefits to keep the enthusiasm for
digital going strong. mI
✒ Gordon Wyner is partner at Millward Brown
Analytics and contributing editor of the Marketing
Management section of Marketing News.
marketing insights
November/December 2015 11
 Problem Solvers
Performance
By Design
Align campaigns with self-interest, risk
mitigation and a bias toward ease to
achieve success
Kieran Flanagan and Dan Gregory
 kieran@theimpossibleinstitute.com
 dan@theimpossibleinstitute.com
F
or years, our sense of motivation
has been characterized by how
we think about performance and
behavior change. The result of this has
been a bias toward solving performance
issues using a variety of strategies
that essentially boil down to a mix of
motivation and discipline.
This all seems fairly logical. The
problem is that these are both short-
term strategies. After all, no one is
motivated all of the time, and certainly
we are not disciplined in every sphere
of our lives.
12 marketing insights
November/December 2015
Con sum er B ehavi or
In other words, these twin strategies
are designed for a world of ideals and,
as a result, we end up with delusional
thinking about our own performance and
that of others. We either see ourselves
as logical and possessing excellent
judgment, or else we admit to an
emotional bias then assert this as an asset.
In truth, we are still very much driven
by our survival brain. The most primitive
part of our consciousness still calls dibs
on our decision-making. Consider three
separate experiments that were published
in the American Journal of Psychology:
During each of these experiments, drivers’
behavior was observed in a parking lot.
What the researchers discovered time
and time again was that when reversing
out of a parking space, drivers reversed
more slowly if they observed another car
waiting to take the spot. This occurred
even though this fought against their
primary objective of leaving the parking
lot and getting on with the rest of their
lives. A survival-driven defensiveness
caused them to “protect their territory.”
This kind of behavior is not atypical. We
consistently delude ourselves about the
nature of our own performance and the
nature of the environment we operate in.
For instance, when at speaking
engagements, we regularly ask the
audiences to look at those around
them and to raise their hands if they
consider themselves to be below
average competence when compared to
the rest of the group. If we’re lucky, we
might see a handful of hands go up. The
math just doesn’t add up, principally
because we overrate ourselves and, not
surprisingly, also overrate our teams.
After all, their performance is linked to
our own identity.
So what should marketers know
about behavior and performance in the
real world?
 What we now realize is that design
beats discipline in the long term. In
other words, designing systems and
3 There was a degree of
social conformity at play.
How would it look to not recycle when
we also need to realize how powerful this
can be when we align our systems and
activity with human nature. mI
processes aligned with human nature it was that easy? It would require an
is far more sustainable than trying to active intention to “hurt the planet.” ✒ Kieran Flanagan is chief creative officer and
change that nature using tools such as In other words, by aligning with the Dan Gregory is president and CEO at Sydney-based
discipline and motivation. survival brain’s values—self-interest, research and management consultancy The Impossible
For example, we were once asked risk mitigation and a bias toward ease— Institute, whose clients have included Coca-Cola, Uni-
to help create a strategy to encourage success was achieved. lever, News Corp. and the United Nations in Singapore.
recycling for Coca-Cola. On paper, We would do well to consider They are co-authors of Selfish, Scared & Stupid. This
it seemed quite simple. Research how our survival brains can hinder our column originally appeared on Elevate, the AMA’s blog. To
told us that people thought the idea performance and that of our teams, but read more expert-penned insights, visit Blog.AMA.org.
of recycling made logical sense and
was something they expected Coke
to engage in. They also responded
to emotional metrics such as doing
something good for the planet. They
even went so far as to say that they
thought recycling was a superior option
to simply adding to landfill waste. To
test the theory, recycling stations were
set up at the end of malls, signs were
posted directing our socially minded
shoppers to the recycling stations, and
the team waited for shoppers’ behavior
to change in alignment with their
beliefs and assertions. The problem was
that they didn’t change. The program
was a complete failure.
Time for a new strategy. The
recycling stations were moved to inside
the mall, virtually placing them in the
direct path of shoppers as they entered
and left the food hall, and they were
also painted in garish colors so that
they were impossible to miss.
Unlike the previous test, this was a
complete success. So what happened?

1 The second test didn’t ask

them to change to achieve the
desired outcome. It allowed for an
easy win that was in their interest.

2 It not only made success easy,

it made failure more difficult.
This was critical.

marketing insights
November/December 2015 13
 SOCIAL CUES
Finding the Canary in
the Data Coal Mine
Social media’s new role in
marketing research
Joan Mancuso & Karen Stuth
 jmancuso@5squaregroup.com
 kstuth@5squaregroup.com
W
ith an astounding number
of people engaging daily
in social media, there is a
logical impact on today’s marketing
research professional and the organized
science of marketing research. As of
March 2015, ranked by number of
active accounts, market leader Facebook
was the first social network to surpass
1 billion registered accounts, and 1
billion active users on a monthly basis,
according to Statista. Tenth-ranked
microblogging network Twitter had
more than 288 million monthly active
accounts. Meanwhile, blogging service
Tumblr had more than 230 million active
blog users on its site. That is a lot of
active participation in social media, and
those numbers suggest that social spaces
are a great place to monitor consumer
conversations for changes in tastes,
product preferences and needs, venting
against brands, or other areas that might
be of interest to marketers. But should all
the data, conversation and information
from social media be considered a
form of reliable marketing research,
and should social media data replace
mainstream primary research studies?
Unquestionably, social media
interaction provides a unique channel
14 marketing insights
November/December 2015
SOCIA L MEDIA DATA
for most companies into the thoughts,
values, priorities and primary “hot
buttons” for both customers and target
markets. Social media provides a
platform by which users of a product or
brand, using either words and/or digital
media, can praise their experience, lodge
their complaints or share their feelings.
Companies or brands can promote
conversation around the same things,
requesting feedback or proposing topics
meant to spur input on a specific subject.
The use of hashtags, in particular, can
point Twitter followers in a particular
direction very quickly. But can this
information, although voluminous, be
considered marketing research data of
the type upon which core business and
marketing decisions should be based?
Social media input or dialogue can
indeed provide business information
or marketing research of a sort, if
it is regarded in context. Let’s start
with what should be obvious to
seasoned marketing researchers: Social
media cohorts may or may not be
representative of a company’s customer
base, and there is currently no
reliable way to examine or profile the
demographics of social media users.
Granted, there are tools out there,
both paid and free, that can measure
the frequency of a mention, whether
it be a brand name, company name or
a topic. These tools can mine certain
types of information from social media
input and even track and trend over
time, but they cannot provide with
statistical reliability the information
that marketers really seek.
If there are thousands of people
posting, tweeting or just otherwise
participating, surely they must
represent mainstream thinking, if
not target market thinking. In fact,
some social media platforms, such as
Facebook, are not anonymous, and
lack the “arm’s length” and rather safe
relationship with an idea or topic that
a marketing research survey might
provide. It’s hard to know if sentiment
expressed is really “unearned,” or if it’s
driven by a paid campaign. Can you
believe every glowing or critical thing
you read? Are social media members
truly candid in their opinions, and if
so, do their comments truly represent
what others are thinking or feeling? Or
are their posts, tweets, pins or photos
those of a certain market segment who
are more verbal, and who have more
time for interaction or have a greater
need to engage in public discourse?
These are important questions that
researchers should consider as they
examine the content of social media
interaction and before it is adopted
wholesale as a form of primary data.
Social media data should likely be
weighed or regarded in much the same
way that we also regard qualitative data:
information not fully representative of or
able to be imputed to the larger market,
but possibly metering out the length
and breadth of issues that can then be
quantified through statistically valid
surveys. Social media can also provide
early warning signals of current or

emerging trends of all types that market
researchers should frequently seek to
better understand or quantify. These
are, in fact, the true nuggets of gold that
social media information can provide to
market researchers.
Social media fodder can provide
market researchers with guidance for
crafting a research strategy that builds
upon current or reoccurring themes
brought forward in social media. It also
provides a place for building attribute or
“pick” lists to be included for particular
questions. For example, asking in social
media what tools or other forms of
input consumers most recently used
to purchase a category product can
then produce a list for inclusion or as
a supplement in a quantitative survey.
Social media input can also provide
some informal ethnography in the
form of photos or videos that provide
contextual information as a backdrop
to primary quantitative research, filling
in the “how,” “when,” and especially
the “why” questions that frequently
emerge when not included in large-scale
surveys and gathered through social
listening, and then coded for inclusion
in a primary research engagement as
adjunct information.
Social media can also be used to
invite members to engage in a research
initiative by posting or tweeting a
survey link. Research results can also
be parsed out in small sound bites to
social media for reaction from the
general public, which can provide
insight, at arm’s length, into why a
majority of people might have felt,
believed or acted in a particular way.
Social media information can also
provide answers to market researchers
looking for quick directional data.
Using key search terms or hashtags,
researchers can search to find the rough
size of an issue or conversation through
a raw number of mentions, as well as
read the dialogue around it to decide
whether it might merit mainstream
primary research while also observing
how fast an issue or social conversation
is growing. Researchers in real time
can also dialogue with social media
members to more fully demarcate the
edges and boundaries of a trending issue
or idea, and can react more quickly to
placing a piece of primary research in
the field. This ability to track and even
loosely engage in changing market
or customer behaviors can actually
be a market researcher’s best friend,
providing a rich environment for
listening, learning and observing during
a marketing cycle, and signaling issues
that warrant a deeper exploration.
Real-time market intelligence, prior
to social media, was one of marketing’s
holy grails. Today, through the use
of multiple social media channels
and the application of a strong social
media management program that
also engages members of a marketing
research team, social media can
provide important cues and clues for
marketing researchers. It arms them
with the ability to be proactive rather
than reactive, to supplement or even
drive primary market research data
collection, and to give companies in
general, and marketing researchers in
particular, a “canary in the coal mine”
early warning of emerging trends and
ideas that should be quickly quantified
or explored so that companies can
stay apace or even ahead of upcoming
media cycles on the same issues. mI
✒ Joan Mancuso and Karen Stuth are
founding partners of South Pasadena, Fla.-based
5 Square Group.
marketing insights
November/December 2015 15
16 marketing insights
November/December 2015
Is
You r
Custom er
Always
Rig h t?
How we g ot to
cu stomer c ent ricity
By Randy Brandt
marketing insights
November/December 2015 17
 Today’s marketplace is increasingly
customer-driven. More and more companies
are trying to align their people, processes
and products with customer wants, needs,
expectations and requirements. They appear
to have bought into the wisdom of the
late, great management consultant Peter
Drucker, who said, “The purpose of business
is to create and keep a customer.”
It wasn’t always this way. In the words of John
Naisbitt, author of Megatrends, there was a time
when ours was “a society of mass markets and mass
market advertising, where homogenized tastes were
satisfied with few product choices.”
So what changed? Why has customer
centricity become mainstream? Why are so many
organizations preoccupied with ensuring that the
total customer experience is always a good one?
Several developments over the past half-century
have led to a shift in the balance of power from
sellers to buyers, creating the customer-driven
milieu in which we find ourselves today.
Advances in Consumer Safety,
Fairness and Choice
The origins of the power that consumers wield
today can be traced to concerns over safety. Prior
to the 1960s, the Pure Food and Drug Act of 1906
was one of few major pieces of legislation designed
to protect consumers from dangerous products,
but that changed when Ralph Nader wrote and
published Unsafe at Any Speed. In this book, Nader
aggressively attacked automobile manufacturers and
the products that they sold. He exposed “designed-
in dangers” of many automobiles, along with
their “power to pollute.” He accused automotive
engineers of being preoccupied with style at the
expense of safety. Nader called on the government
to address these problems if the auto manufacturers
themselves would not. As a result, Nader and
18 marketing insights
November/December 2015
fellow consumer activists have been credited with
the eventual enactment of the National Traffic and
Motor Vehicle Safety Act, and the Clean Air Act.
Today, we routinely hear and read about
automobile manufacturer product recalls, and in
nearly every case, these are done in the interest
of consumer safety (and yes, also in the interest
of avoiding lawsuits for the more cynical among
you who are reading this). Today, such recalls are
commonplace. Not too long ago, however, they were
non-existent.
While champions of consumer rights used safety
as a platform to achieve initial goals during the
1960s, they didn’t stop there. In the next decade,
consumer advocates and activists began to explore
and pursue other areas in which consumer rights
and protections were lacking. This moved the
needle from safety to concerns about fairness and
equity, leading to new sources of power for buyers
and consumers. Enactment of legislation such as the
Consumer Product Safety Act and so-called “lemon
laws” helped promote the notion that consumers are
entitled to quality products and multiple purchase
options. In addition, these laws encouraged
manufacturers to get it right the first time, and if/
when they failed, to resolve customer complaints
promptly and fairly.
By the end of the 1980s, increased global
competition and advances in quality both gave
consumers even more and better options. Along
with rights and protections that had been achieved
in the ’60s and ’70s, the balance of power was
beginning to shift from sellers to consumers.
Management gurus like Phil Crosby and Tom Peters
were talking about the importance of quality and
customer focus. Furthermore, these experts and
evangelists weren’t just talking about goods: Karl
Albrecht and Ron Zemke were proclaiming that
customer service would be even more critical to the
future success of not only American businesses, but
businesses everywhere.
Customer Service and
Satisfaction Go Mainstream
By the 1990s, there was a growing belief in the
business community that product safety and quality
alone would not ensure success in the marketplace.
A product could be free of defects or in compliance
with the standards and specifications defined by the
seller, but that still might not be enough. There was a
growing realization that customer perceptions of and
satisfaction with product and service quality were
critical to success, and as a result, the “era of customer
service and satisfaction” really came into full bloom.
Regardless of whether they sold services or
goods, durables or non-durables, organizations
in both B-to-B and B-to-C markets were asking
the question, “How satisfied are our customers?”
By the end of the decade, customer satisfaction
data collection had become “the largest item of
firms’ annual expenditure on market intelligence,
and often the only systematic market intelligence
that those firms generate,” wrote Alan Wilson in
a 2002 International Journal of Market Research
article, “Attitudes Toward Customer Satisfaction
Measurement in the Retail Sector.”
Of course, once so many organizations had
embarked on their efforts to measure and manage
customer service and satisfaction, managers began
to ask questions about the measurement process
itself: What questions should I be asking in my
survey, and in what order? How many customers
should be surveyed? Should I use a five-point scale
or a 10-point scale? Should I be surveying current
customers only, or other groups, such as lost
customers or customers of competitors?
A need for guidance and support of efforts
to measure and manage customer service and
satisfaction created a huge opportunity for third-
party subject matter experts and service providers.
In particular, marketing research firms began to
shift attention to CSM services and capabilities.
Firms like J.D. Power and Associates and Tarp
Worldwide already had positioned themselves as
CSM specialists during the preceding decade, but by
the mid ’90s, nearly every major marketing research
firm—and many management consulting firms—
were touting their CSM expertise and services.
The net effect of these developments was to
bring customer service and satisfaction—and
listening to the voice of the customer—into the
mainstream of business thinking and practice.
Winning customers meant ensuring that their
wants, needs, expectations and requirements were
satisfied. Ensuring such satisfaction meant verifying
it directly with customers. It required organizations
to listen and learn from customers about what they
were doing well, and where they could and should
do things better.
Consumers Take Control of the
Brand Conversation
While all of the developments described above
played a major role in shifting the balance of power
from sellers to buyers, the biggest power shift was
still to come.
The turn of the century marked the advent
of what Michael Sifry refers to as an “age of
transparency.” Transparency is about access to
the truth, the reality and the “whole story.” It is
a defining principle of our current milieu. It has
reshaped political, social and personal boundaries
and practices. It has given buyers and consumers
more power—and has pressured businesses to be
more open and accountable—than ever before.
In his book, Satisfied Customers Tell Three
Friends, Angry Customers Tell 3,000, Pete Blackshaw
provides a wonderful description of what has
marketing insights
November/December 2015 19
 taken place during the first 15 years of the 21st
century: “Consumers have traditionally had little
information, limited access to one another, and few
outlets for feedback and communication. But the
Internet has changed all that. It’s given consumers
not only a collective voice, but also a platform and a
forum for those voices.”
Blackshaw goes on to say: “What companies say
to consumers about their products and services
through marketing and advertising channels is
rapidly losing ground to what consumers say about
those products and services to one another through
their network of Internet-enabled channels. In
today’s online world, consumer-generated media
is the true barometer of corporate and brand
credibility. And as a result, the success of a company
or brand rests on its ability to create and maintain
credibility with its increasingly vocal consumers
and customers on every front.”
Prior to the 21st century, if you had something
good or bad to say about your experience with
a brand or firm, you could (a) tell a manager
or employee of that firm; (b) write a letter to
the firm; and/or, (c) speak with a call center
representative of the firm. You might or might
not get a response. Depending on the response,
you might or might not tell friends and associates
about your experience.
Today, you can tell tens of thousands of people
at sites like PlanetFeedback, Yelp or TripAdvisor. transparency. Mobile technology, however, has
What a consumer chooses to share about a brand put this newfound source of consumer strength
or firm on such sites often encourages other on steroids. Think about what a consumer can
consumers to share their experiences with that do with a smartphone or tablet. He can create an
same brand. Collectively, these posts tell a story audio recording of an interaction with a customer
about the brand or firm that can play a major role service representative. She can take a photo of a
in shaping consumer purchase decisions. hotel room or airplane cabin. That consumer can
What does this mean for today’s businesses? In make a video recording of a cable installer asleep
Blackshaw’s view, “The longer companies refuse on the job. Any of these can be shared instantly via
to accept the influence of consumer-to-consumer YouTube, Facebook, Twitter or Instagram with tens
communication and perpetuate old ways of doing of thousands of people.
business, the more they will alienate and drive away Is it any wonder that so many companies today
their customers. ... To succeed in a world where are scrambling to understand and effectively manage
consumers now control the conversation, companies every moment-of-truth and critical incident in the
absolutely must achieve credibility on every front.” customer journey? Whether these companies like
It’s clear that the Internet has given consumers it or not, they are on stage pretty much 24/7. Every
a platform, while social media have given them performance is an audition. One poor performance
a forum for sharing information that promotes can mean being passed over by many consumers.

20 marketing insights
November/December 2015
 What companies say to consumers is still very
important, but what they do has never been more
important. What companies actually do determines
what customers say and share with others, which
may be the most important thing of all.
The Era of Customer Centricity
In just a little more than 50 years, we have come to
live in an era of customer centricity. Companies that
properly sense and respond to this reality are likely
to thrive. Those that do not properly sense and
respond to this reality do so at their own peril.
As long as ours remains a capitalist economy, the
pressure on businesses to be efficient and profitable
will collide with pressures to be fair to buyers and
consumers. Company-centric organizations will
focus on the former, aiming for power and control
over both consumers and competitors. Customer-
centric organizations will seek balance; they will
aim to make money by doing what it takes to win
and keep customers.
I believe that consumer control of the brand
conversation, inevitable competition that produces
better consumer choices, and regulatory oversight
and action will maintain a balance of power between
buyers and sellers. There will be occasional power
shifts. However, in the end, customer-centric
companies will thrive because they aim for balance
between equity and efficiency, and because they aim
to ensure that both buyers and sellers benefit from
their transactions and relationships. mI
✒ Randy Brandt is founder and principal of Voice Crafter, a
Cincinnati-based research and consulting firm, and instructor for
AMA’s training series Interpreting the Voice of Your Customer: Listen,
Learn, Act. He may be reached at randy.brandt@thevoicecrafter.com.
marketing insights
November/December 2015 21
Trad
Up
How to optimize trade spending using
advanced marketing analytics
By Donald E. Schmidt, Ph.D.

22 marketing insights
November/December 2015
ing
T
rade spending is a major budget item
for most companies and can represent
nearly 14% of sales for the average
consumer packaged goods (CPG)
company, according to a 2012 report
by the Acosta Marketing Group.
Yet, based on several management
surveys, few feel that these funds are
being spent effectively. Within the
marketing insights community, there
has been various efforts to provide
direction. Yet, despite the clear need
for information-based solutions, help
has been elusive. This has been due
in large part to the utter complexity
of the issues involved, as well as
confusion about how to apply existing
marketing analytics to the problem.
Common Practices
First, let’s set the stage by discussing
some common retail practices. For
CPGs, the large majority of trade
funds are spent to either reduce the
retail shelf price of various products
or to run trade promotions. The
allocation of trade funds to each
of these activities varies by retailer,
largely determined by their pricing
philosophy. For retailers who depend
on everyday low prices, such as Wal-
Mart, the large majority of funding
would go to keep regular prices low.
For retailers that provide consumers
with discounted prices through
periodic trade promotions, a much
larger portion of their available trade
funds would be spent against trade
promotions. These retailers, often
referred to as “High/Low,” rely on
relatively high regular prices, but deep
promotional discounting to drive
sales. A given retailer may use trade
funds for both activities. However,
many retailers have a clear bias toward
one or the other.
Typically, these price and
promotion activities are funded by
the manufacturer. As a result, the
analytics are performed for their
benefit to help them better allocate and
spend these funds within their product
categories. Retailers obviously have
input into these decisions.
marketing insights
November/December 2015 23
 Analytical Logic
The underlying problem that creates
ineffective and inefficient spending
and poor financial returns is the
relative unresponsiveness of some
products to these activities. Some
products respond well while others
do not and you need to incorporate
this into your decision-making.
So, conceptually the key to trade
spending effectiveness would seem
simple: “Do more of what works and
less of what doesn’t.” This may seem
like a simple and logical directive.
However, we see a lot of spending on
price and promotion for products that
don’t respond well to these activities.
This is partly the result of the
limited tools that sales organizations
have available to them. As Abraham
Maslow, the famous psychologist
once noted, “If you only have a
hammer, you tend to see every
problem as a nail.” If price and
promotion are your hammers, you
tend to use them even when they are
ineffective. Hence, you can see the
basis of trade spending inefficiency.
Another way of saying this
is that if you understand and
incorporate price and promotion
elasticity information into your
trade spending decisions, much of
the inefficiency problem will have
been solved. This epiphany points us
directly to some powerful marketing
analytics and a potential solution to
trade spending inefficiencies.
We have two immediate tasks
necessary to improve the way that
trade funds are spent. First, we need
to improve the way that we spend
that portion of trade funds to lower
regular shelf pricing at retail. Second,
we need to improve the way we spend
that portion of trade funds used for
trade promotions. Note that the order
24 marketing insights
November/December 2015
of these analyses is important. Regular
pricing changes affect base sales and
incremental promoted sales are a lift
off of that base. So, if we can increase
base sales we would be well down
the path of increasing incremental
promoted sales.
To keep it manageable, these are
largely product focused analyses.
For the regular pricing portion of
spending, the primary question
is which products are responsive
to price reductions. This is pretty
straightforward. The first step is to
identify the right products for regular
price reductions.
However, for the trade promotions
this can be much more complex. To
truly improve the spending efficiency
against trade promotions, you need
to address three issues. The first is to
identify which products to support at
a higher level and on which to reduce
support. Next, we need to identify the
most responsive promotion vehicles
associated with those products.
Finally, we need to develop product-
by-product discounting guidelines.
This is based largely on an assessment
of promoted price elasticity.
The most important analytic to
improve promotion spending should
be focused on which products to
support more and which to support
less. Additional recommendations
concerning specific promotion
vehicles and discounting guidelines
constitute a secondary analysis that
dovetails well with our main purpose
of improving spending effectiveness.
Optimization
Methodologies
The enabling methodologies focused
on trade spending effectiveness are
price and promotion optimization.
Note that these optimization
procedures are a part of the planning
process. They are used to develop
initial retail price and promotion
recommendations. However, they are
not to be confused with post price or
promotion evaluation, which comes
after these tactics have been executed.
Let’s start with the pricing
component of trade spending
optimization. Price optimization has
been around since the 1990s. The
basic information underpinnings
are price elasticities, financial data,
and syndicated sales and pricing
information, all at the product-item
level. In addition, business rules that
define common marketplace policies
and practices should be included.
An example of this would be who
pays for long-term price reductions
at retail and how much. In a price
optimization analysis, information
is interlinked and optimization
mathematics are applied to develop
pricing recommendations across
a portfolio of product items. This
portfolio perspective is crucial for
making these analyses work.
The power of price optimization
is that it has a primary focus on
sales and financial objectives. The
important question is “how does
pricing need to change to achieve
the business objectives I am after.”
In the context of trade spending
optimization, the question changes
slightly to how to better deploy
trade funds against regular price to
achieve even better sales and financial
results on those key objectives you
have identified. Price optimization
requires that you start with the
objectives in mind and link them
directly to pricing recommendations.
The complexities involved in this
sort of analysis are mind boggling
and specialized software generally is
 Current and Optimized Trade
Spending Recommendations
Price Optimization Recommendations
Current Optimized
Regular Regular
Product Price Price
Product “A” $5.29 $4.99
Product “B” $3.75 $3.59
Product “C” $7.29 $7.29
• • • •
• • • •
Product “N” $9.99 $8.99
required. However, the analytic logic
is well established and fits very well
with the question of how to improve
the effectiveness of trade spending.
Promotion optimization has many
of the same elements. The important
information components are
promotion response coefficients and
promoted price elasticities, financial
data, and syndicated data focused on
promoted pricing, current promotion
levels and sales. The question with
promotion optimization is how to
change promotion levels, product-
by-product, to produce better results
across the portfolio. As with price
optimization, the focus is on changing
how you spend trade funds to produce
a better business result. Again, the
analytics are focused on selecting the
right products to promote.
While the primary focus of trade
spending analytics is to optimize
current spending against business
goals, it can also be used for other
similar management issues as well.
For example, if you are anticipating
cuts in trade funds, you could
use these analytic procedures to
Promotion Optimization Recommendations
Current Optimized
Percent Average Weeks Average Weeks Percent
Change Promoted Promoted
-5.7% 12.1 16.2
-4.3% 19.3 14.9
0.0% 9.0 7.4
• •
• •
-10.0% 4.8 6.5
determine how to maintain current
results with the fewer resources you
think will be available. Companies
are constantly looking for ways to
reduce the percent of sales spent
on trade, but are apprehensive
about the potential impact on
sales and share. The focus of the
optimization methodologies on
results helps alleviate these fears since
recommendations will be developed
with your business objectives in mind.
If trade spending effectiveness is the
result of “doing more of what works
and less of what doesn’t,” then the
obvious question is which is which.
Price and promotion optimization
are the methodologies you can use
to determine what will work based
on how individual products respond
to these activities and how tactical
changes contribute to the fulfillment
of specific business objectives.
Trade Spending
Optimization Outputs
The outputs from the trade spending
analytics have several parts. Let’s
walk through a hypothetical example
Retailer
Analyzed
Favorite Foods, Inc.
Change
Business
33.9% Goals to
Optimize
-22.8% · Improve Spending ROI
· Build Market Share
-17.8% · Increase Internal
Revenues
•
•
35.4%
of Favorite Foods, Inc., a fictitious
retailer in the Southeast. Favorite
Foods has a retail pricing philosophy
focused largely on everyday low
prices. For this retailer, 70% of trade
funds are spent to lower price and
30% are spent for trade promotions.
The above table illustrates
the product-by-product
recommendations that would come
from these spending optimization
analyses. Price and promotion
optimization are completed as
separate analytics, but can be brought
together into a consolidated view.
The above table lists the price and
promotion support recommendations
for each of a manufacturer’s product
items in Favorite Foods.
The next step in the trade spending
optimization analysis is to estimate the
improvements in sales and financial
results that we could expect if the
recommendations are implemented.
These results are rolled-up over all
of the products in the portfolio to
give you an aggregated total change
and are broken out by source. Note
that besides the fact that long-term
marketing insights
November/December 2015 25

Retail Dollar Sales Comparisons (Favorite foods, inc.)
$35.0
$30.0
Retail Dollar Sales ($MM)
$25.0
$20.0
$15.0
$10.0
$5.0
$0.0
Spending
price reductions and promotions
are different trade tactics, they also
affect a different component of total
sales. Sales increments or decrements
resulting from regular pricing changes
affect base sales. Sales changes
resulting from promotions affect the
incremental portion of sales above
the base. So, when you examine the
percent changes in sales and financial
results, keep in mind the underlying
sales foundations of the calculation.
The results include sales and
financial results for the manufacturer,
profitability benefits for the retailer,
and a series of return-on-investment
calculations. We compare the results
estimated for the way that funds are
spent currently against the optimized
spending recommendations.
The aggregated results for Favorite
Foods are generally positive.
Optimization of the trade spend
increased both volume and dollars
sales within this retailer. Additionally,
we were able to improve gross
margins for Favorite Foods. The
financial results for the manufacturer
26 marketing insights
November/December 2015
Trade Spending Optimization
Results on Total Sales
Current VS. Optimized Spending
$31.1
$29.3
$3.2
$2.8
$4.5 $5.9
$22.0 $22.0
Current Optimized
Spending
were a little more mixed. We were
able to increase internal revenues.
However, gross margin for this
manufacturer dropped slightly.
Measures such as ROI are the most
direct indicators of whether we have
truly increased the efficiency of the
spending. Note that there are several
measures of financial return that are
available. ROI is calculated on gross
margin changes. However, it is also
possible to compute the return based
on manufacturer revenue and retail
dollar sales changes. The optimization
results for Favorite Foods are positive.
We witnessed a strong improvement in
the efficiency of the spending against
price. We also saw improvements in the
return against the promotion spend.
Note that promotion spending was still
slightly below breakeven (i.e., breakeven
is $1.00), but a substantial improvement
over what we are getting currently. For
the optimization work, it is generally
appropriate to view improved results in
the context of continuous improvement
rather than with a strict requirement
that results also be positive in the
■ Incremental $ Sales
Due to Spending
Against Promotion
■ Base $ Sales Due
to Spending Against
Regular Price
■ Base $ Sales
Independent of
the Trade Spend
absolute. With that lens, we did very
well within Favorite Foods (see the table
on page 27).
Finally, it is useful to bring the
separate price and promotion
optimization analyses together to see
the effects on total sales, as seen in the
above table.
In this example, the price and
promotion optimization increased
the retail dollar sales produced by
trade spending by 24.7% at Favorite
Foods, Inc. The current trade spending
approach produced an additional $7.3
million retail dollar over what you
would have had without the trade
funds. In contrast, the optimized
spending plan added a total of $9.1
million retail dollars (+24.7%). Total
retail dollar sales increased by 6.1%
with the optimized plan compared
to current spending ($31.1 million
optimized vs. $29.3 million currently).
Keep in mind that those gains were
solely the result of spending trade
dollars smarter. No incremental
spending was required. Also keep in
mind that your results may vary.
Implementation
of Trade Spending
Recommendations
Once recommendations
are developed they must be
implemented to reap the benefits.
Implementation poses three main
challenges. The first is that price
and promotion optimization are
advanced analytics that may look
very “black boxish” to a sales
organization. With that in mind,
getting champions within sales to
help you sell the recommendations
can be crucial. These champions
could include senior sales
management and leaders of specific
retail sales teams. Anyone who reaps
benefits from these analytics can
help sell the results to others in the
organization. It is absolutely critical
that the insights staff seek this completed, you need to review the “experiments” if necessary to make
assistance to be successful. recommendations to ensure tactical people feel more comfortable with
Second, optimizers make and strategic consistency and make what you are suggesting.
recommendations in a vacuum. adjustments as necessary to avoid a Price and promotion optimization
Unless specific rules are built into collision with marketplace realities. of trade spending are advanced
the software, the optimizer can’t Finally, for companies with a analytics that hold great promise.
always incorporate marketplace large portfolio of product items, In a retail environment where
realities. For example, some price it is folly to believe that managers competitive pressures quickly can
or promotion recommendations will immediately change pricing send spending out of control and
could threaten distribution of and promotion tactics across-the- where there is constant pressure for
slow moving items by further board. Expect adoption of the increased profitability and market
decelerating sales velocities. recommendations to take some time share, trade spending optimization
After the analytics have been and be ready to run marketplace may offer a powerful solution.
Certainly, over the long-term it could
provide a company a significant
competitive advantage because it
Return-On-Investment of moves them beyond the realm of
the Trade Spend gut-level reactions into a world of
fact-based sales management. mI
Current Optimized
✒ DONALD E. SCHMIDT is an independent
Spending Spending
marketing analytics consultant based in Pensac-
ola, Fla. He has worked in the area of advanced
Spending Against Price $0.89 $1.04
analytics for such companies as A.C. Nielsen, R. J.
Spending Against Promotion $0.72 $0.97 Reynolds and Nestle Purina PetCare. He may be
reached at datadoc2@live.com.

marketing insights
November/December 2015 27
28
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November/December 2015
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 Today, two trends are conspiring
against the quest for better
consumer insights.
First is the fight for attention and resources between
traditional marketing research and Big Data. Second is
the endless introduction of new “point solutions” for
insights. Each new solution produces yet another holy
grail of insights: from Web analytics, social media,
mobile apps to whatever is next.
Edward Deming famously said “In God we trust, and media consumption. These analysts are less
all others bring data.” Yes, but which data? With the concerned about the emotional and attitudinal “why,”
International Data Corporation predicting that overall as long as they can predict who will do what and when
data will grow by 50 times by 2020, what we don’t need they will do it. Along the way, they are much more
is more departmental infighting and confusion about comfortable using “black box” analytical methods that
disparate sources of information. Instead, we need to yield accurate predictions, but without the consumers’
combine multiple insight sources to better serve today’s intellectual and emotional drivers.
decision makers and their customers. The solution starts Both disciplines bring extremely valuable insights
with the integration of market research and Big Data. and recommendations to the table. Yet, they expose
risks when left in their silos. For example, marketing
Competing Forces research often lacks the ability to spot or predict
Typically, classically trained marketing research behavioral changes at the earliest stages. What’s more,
professionals and Big Data analytical gurus do not play recommendations from marketing research are not
well together. based on a comprehensive assessment of all customers
On the one hand, marketing research pros seek and all customer data. Instead, it relies on opinions
insights from “soft” data sources: aka consumers’ and stated behaviors from a sample of consumers.
attitudes and opinions. They probe for answers with Conversely, the obvious Achilles’ heel in the Big Data
quantitative research methods like Web surveys from silo is the lack of attitudinal data: You can see what
online consumer research panels. Or, they may lean on customers do, and perhaps predict what they will do,
qualitative research methods such as focus groups and but you do not know why.
online communities. Regardless of the method and To make matters worse, most companies house
mode, they want to learn how consumers think and these two factions in different physical locations
feel, why they acted the way that they did, and what and departments. They often don’t align them under a
(they say) they will do next. single executive. And, they don’t inspire them
On the other hand, Big Data turns first to “hard” with a single mandate to better understand and serve
data sources for answers, such as purchase behaviors the customer.

marketing insights
November/December 2015 29
 The negative impacts of this are predictable.
Critical decisions are made with just half the story.
Marketing research and Big Data departmental
infighting creates corporate fissures that impede
innovation, waste money and delay progress for the
customer. Senior executives become frustrated by
their organization’s failure to successfully compete on
insights. At best, this conflict is tolerated and business
moves forward with steady, but sub-optimal results.
At worst, the situation leads to dissatisfied customers
and market declines.
It doesn’t have to be this way.
Integration Lights the Way
Over the last several years, we see undisputed
evidence that superior insights are generated by
the integration of marketing research and Big Data.
Let’s start with our working definition of this type
of integration, which we call “Big Data Marketing
Research,” or BDMR.
BDMR is the art and science of combining
behavioral data, attitudinal data and advanced
analytics to produce better and faster decisions that
yield superior business results. It is the convergence
of two disciplines—Big Data’s behaviors, transactions
and orders, and market research’s attitudes, opinions
and ideas—that yields improved products, services,
solutions and customer experiences, which in turn
creates lasting competitive advantage.
To help clients more easily identify real and
practical Big Data MR opportunities, we suggest
two simple, yet powerful steps. First, always ask if
you can use attitudes, behaviors and customer data
(ABC) to enhance your discovery and decision-
making processes. Attitudes come from marketing
research, behaviors from Big Data and customer data
(demographics, etc.) from multiple sources.
Second, we encourage clients to look for
opportunities to use ABC data and/or advanced
analytics to enhance the implementation of their
decisions. This usually comes in the form of targeting
customers and customizing products, offers and
communications.
In the chart below are five examples of how BDMR
provides superior solutions for common challenges.
See if you can spot where ABC adds value.
BDMR Success Stories
To illustrate the power of BDMR to deliver unique
and valuable insights, we have summarized three
recent success stories. In all cases, the companies
were able to integrate information from both
disciplines to produce better insights, decisions
and results.

F i v e E x a m p l e s o f BDMR S o l u t i o n s t o C o m m o n B u s i n e ss C h a l l e n g e s
Business Need Big Data Market Research

1 Declining share of a core product in certain

geographies:
Use data mining and visualization to identify
customers with lower spend.
Use survey research to understand the attitudinal
drivers and how to remedy.

2 Developing new product features and benefits

to regrow market share:
Use predictive models to determine which products
customers want most.
Use conjoint to identify which features and prices
points maximize share.

3 Understanding/stopping the increased

abandonment of online shopping carts for
certain segments:
Use predictive models to determine which offers
customers want most.
Use survey research to understand the attitudinal
drivers and test offers to fix.

4 Improving the customer experience for a

service line:
Use data mining and visualization to map the
customer journey and risks.
Use online communities to understand and
improve the customer journey.

5 Customizing products, services and marketing

to unique segments:
Use ensemble models to accurately classify
customers into segments.
Use marketing research to identify the segments
and understand needs.

30 marketing insights
November/December 2015
Manufacturing
A global manufacturer of power tools wanted
to accelerate growth by finding new customer
segments and deploying newer, more targeted
marketing strategies. The company knew that
traditional segmentation research could uncover
the growth segments, but it would not be able to
accurately assign these segments to individual
consumers. Without that final piece of the puzzle,
the manufacturer would be unable to execute its
targeted marketing strategy.
The BDMR solution started with traditional
segmentation. K-means cluster analysis and
hierarchical cluster analysis (HCA) were combined
to identify the segments. One segment in particular
demonstrated the greatest potential for strong growth
if the new marketing communications were properly
targeted to their wants and needs. From the Big Data
world, machine learning was used to build a segment
classification model. Using hundreds of appended
variables from a third-party data source, the model
accurately assigned a million consumers into each of
the new segments. From there, the target marketing
strategies were easily executed.
Retail
A retailer wanted to launch a series of new digital
shopping tools to improve the customer experience
and increase spending among its most loyal and
affluent customers. To best address this challenge,
transactional shopping data was appended to the
retailer’s online customer panel. Once appended, the
targeted customers were invited to join a series of
crowd-sourcing/co-creation communities that focused
on digital habits, preferences, tools and apps. Separately,
the online panel was used to engage customers in
a quantitative study about their digital shopping
journeys, needs and preferences. The combination
of Big Data, qualitative community research,
and quantitative survey research gave the retailer
unprecedented new insights with which to design
winning digital shopping tools.
Energy
A power company wanted to learn how best to
communicate with customers who experience
significant spikes in power usage and monthly bills.
In the past, simple survey research would have
yielded limited and less-actionable insights and
recommendations. As with the retailer, the power
3 S t e ps t o E a r ly W i n s W i t h BDMR
How can you harvest some real benefits from Big
Data Marketing Research? Here are three steps to
help get you started:
1 Come Together: Bring representatives from
both disciplines together. This is not to suggest
that you must immediately create a formal merger
of the two; rather, that you at least get both
groups talking. The right leadership will create
an environment for collaboration.
2 Brainstorm Ideas: Once an alliance has
been formed, begin to brainstorm real
opportunities and practical, sustainable
applications. What are the major corporate
initiatives that both are trying to serve? What are
some specific projects that overlap?
3 Pilot Projects: Success breeds success. Pick
your best idea and launch a pilot project. Make
sure your internal client gets exactly what they
need to succeed. Then, socialize the early win
while building momentum for the next project.
Stay focused on high-impact BDMR projects.
If you think the deluge of data is hard to manage
now, wait until 2020. The sources, types and volume
of data are only going to increase. It’s time to start
intelligently integrating your data in order to harvest
real benefits. Implementing BDMR solutions is a great
place to start.
company started by integrating behavioral data with
its customer online panel. From there, targeted market
research was conducted among customers who
experienced very specific usage and bill spikes. Instead
of guessing what customers would do, the power
company learned exactly what customers did, and
why. These insights are allowing them to significantly
improve communications and the overall customer
experience in the future. mI
✒ David W. Wilson is the chief executive officer of FGI Research &
Analytics. He may be reached at dwilson@fgiresearch.com.
marketing insights
November/December 2015 31
 SI
Scholarly insights
How Kinetic Property Affects
Consumer Novelty Perceptions
By Eden Ames  eames@ama.org
Multimedia advertising
strategies commonly incorporate
animation and motion graphics to create
visually engaging effects, but some
evidence suggests that these advertising
strategies often miss the mark, and
can even be perceived as distracting or
annoying. A new study in the Journal of
Marketing has taken a deep dive into the
kinetic property of motion, “defined as
direction changes in the paths of moving
on-screen ad elements.”
Authors Junghan Kim and Arun
Lakshmanan conduct a series of
experiments that manipulate kinetic
motion (high, low and none) in
promotional content and assess
Scholarly Insights is the AMA’s digest of the latest findings from marketing’s top researchers. Visit www.ama.org to read more.
32 marketing insights
November/December 2015
consumers’ novelty perceptions toward
the featured product. The researchers
consistently find that “participants
exposed to [high kinetic property ads]
rated the product as more novel than
those exposed to the static ad.” The
authors reason that kinetic material
produces a lively atmosphere that
energizes consumers, which in turn
leads them to perceive the product as
new and exciting. Importantly, they
also show that consumers report higher
purchase intentions and willingness to
pay when the kinetic property is high.
While motion graphics and kinetic
elements evidently have their perks,
it is important not to overwhelm the
consumer. Therefore, the authors qualify
their findings with some important
boundary conditions. Specifically,
kinetic motion is most effective:
• When the product is an incremental
innovation rather than a radically
new product. This is critical,
given that “the lion’s share of new
product introductions are actually
[incrementally new products].”
• When product category
characteristics (e.g., perceived
market dynamism) match the
kinetic ad executions.
• When kinetic elements are easy to
distinguish. When they are difficult to
distinguish from their background, or
if the consumer is repeatedly exposed
to the same ad or ads with similar
visual design, the effect of increased
novelty judgement wears off.
The finding that the kinetic property
enhances novelty judgments, particularly
for incremental innovations, opens up
opportunities for nondominant firms
(e.g., low-budget brands) that adopt
a strategy of pursuing incremental
innovations. In addition, because
consumers quickly grow accustomed to
repetition, advertisers may have more
success by using the kinetic property in
single-appearance Web ads.
Because “advertisements embedded
with kinetic property offer an avenue to
communicate with consumers without
imposing significant visual or affective
load,” marketers and advertisers should
make use of this research to optimize
the potential of their promotional
power and compete more effectively.
With a design-oriented approach,
kinetic elements can shape Web-based
and broadcast commercials into strong
statements in advertising. mI
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