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Consumer Psychology: Understand your Customer

“…the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.” ~ Peter Drucker

Introduction
Markets have influenced our acquiring/buying habits from the earliest days of our evolution, perhaps as early as bartering systems in pre-historic times. One tribe had an excess catch from hunting; another tribe had an excess of hides from last season’s catch and the market is born. The exchange of goods is motivated by need and its reptilian drive, “survival of the fittest”.

Fast forward to today’s modern marketing. As the science of marketing has developed, several concepts have gained wide-spread application. The primary focus today is that fully understanding and tapping into the consumer’s motivation, which can be deeply subconscious, results in brand loyalty in purchasing products and services. An example is Clotaire Rapaille’s approach that to understand the “collective unconscious” and thereby articulate the “code” opens the way to desired marketing success.

The foundation of marketing science is based on market research strategy, to know the customer and to fill needs that need filling. Understanding the customer can produce high-quality products, such as Apple has done. On the other hand, some marketing approaches have turned into manipulative endeavors to sculpt the customer to believe they need what’s being sold. This form of marketing is distorted and disturbing. This BLOG post reviews the history and development of marketing as a science, then explores the power of modern customer-centric marketing updated for the digital age, and then looks at the downside of manipulative marketing.

Background – Development of Marketing as a Science
Early development of marketing as a science included Louis Cheskin and Neil Borden. Cheskin contributed the “customer-centric” approach, rather than the top down approach that had been previously popular. The earlier approach to marketing was top-down, where a company would create a new product with the assumption that it would sell. A customer-centric approach is based on consumer feedback, often through customer focus groups and observation. This approach defines the needs of the customer thereby providing products and services that meet those needs. For example, through customer research, Cheskin helped engineer the success of margarine by changing it’s color from white to yellow, and advertising it’s similarity to butter (Cheskin, 1959).

Borden, in his seminal article, “The Concept of the Marketing Mix,” named the 4Ps: Product, Price, Place and Promotion (Borden, 1964). The evolution of technology has brought with it increasing speed as well as additional Ps: People and Performance. We have moved from a top down approach, where the consumer was thought to be one amongst many and easily influenced, to a customer centric approach, where individuality, instinctual desires and inner drives have become the focus of marketers.

Purpose of Marketing
I believe there is a true purpose to the original intent of marketing. Discovering human needs and providing the products or services that support those needs is the most effective formula for exchange in the marketplace.

In Making Meaning: How Successful Businesses Deliver Meaningful Customer Experiences, the authors state, “We envision a time when customers increasingly make their purchase decisions based on deeply valued meanings that companies evoke for them through their products and services – in other words, meaningful consumption – as opposed to simply responding based on features, price, brand identity, and emotional pitches” (Diller, Shedroff, & Rhea, 2008, p. 1).

For example, Apple captured the MP3 market with the iPod and iTunes. The iPod became an emotionally constructed appendage that represents much more than just a music device. It has become a cultural icon that people purchase not only for usefulness but also for a sense of belonging, an image of appearing “cool,” and much like a stylistic piece of jewelry, it comes in hip colors and unique styles.

The Evolution of Marketing Research
Concept Engineering, a market research approach developed by Gary Burchill at MIT, uses an ethnological immersion process called “Voice of the Customer.” Key people on a new product team visit customers, interviewing and observing them in order to discern what the true need is. They are especially trying to discover “latent needs,” needs or wants that the customer has but is not consciously aware of. They then target their new product or service to fill that need or want. This process of listening to the customer allows the new product developers to make meaning of the consumer’s direct experience. Innovation and customer satisfaction can follow (Burchill & Brodie, 1997).

Apple – A Case Example

Apple is a great example of the power of understanding customer needs and providing products and services to fill those needs. Apple has become a cultural icon for our technological era and this digital age. As I wrote in this week’s forum post, Steve Jobs announced Apple’s newest, latest, greatest and COOLest product this past January with global fan-fare: the iPad.

In typical Apple marketing fashion, Apple required customers to wait several months for the iPad’s release. During this time Apple launched a marketing blitz, including an iPad frenzy on Twitter. iTunes has just launched an update for interfacing with the iPad, just in time for the iPad’s release. There was a Netflix app available for the new iPad even before the iPad’s release. Many people tweeted that they were downloading it in preparation for getting their iPad. There were 240,000 pre-orders awaiting the iPad.

Apple has found the “code” for “cool,” at least for this digital generation. Apple is a cultural phenomenon, as the MacHead photo illustrates – “the cult of mac.” There are many who are fervently dedicated. The iPod is jewelry in addition to music, an emotional as well as pragmatic piece of “cool,” coming in different colors and styles to match each person’s individual uniqueness. Apple understands its customers and has successfully tapped into their latent needs, capturing the market by storm.

Daniel and I picked up our iPads on Saturday, documenting and interviewing folks in line. On the whole, the Saturday crowd are early adopters who do respond to Apple’s advertising. There were 2 mechanical engineers and another student, among many others. The wait was short. The Mac Genius who waited on us was knowledgeable and responsive. We left with our questions answered, our iPads and leather cases in hand, and BIG SMILES.

The picture below shows four generations of Apple users: Stephanie, her Mom, her Grandmom, and her son. This was a family adventure for them. Their smiles and excitement might indicate a bit about their psychology. They said they considered this a bonding experience as they upgraded their technology together and supported one another. They were really enjoying playing with their “new toys.” 

Apple sold 300,000 iPads on Saturday according to reported figures. This first rush of purchases is the “early adopters” phase. Apple’s next marketing target is to reach more of the general population.

Downside of Manipulative Marketing
There is a downside to current day marketing. The episodes we watched from Frontline highlighted the hidden and manipulative side of marketing in our digital culture. For example, the use of “product placement.” Product placement is a form of embedded marketing.  Branded goods are placed, without explicit advertising, in the storyline of movies, TV shows, or other programming. This is often not disclosed at the time the product is being featured. (Wikipedia).

Consider that the star of this week’s episode of “Modern Family” is YES: The iPad.  On the eve of the iPad’s launch – Phil Dunphy, one of the main characters in this season’s runaway hit sitcom and touted to be the best new comedy of the year, celebrates his birthday. He is all encompassed in his desire for an iPad. His wife misses the early morning rush to stand in line at the Apple store, eventually getting there only to find they are “sold-out”. Message to audience: get there early, get there or you will miss out. Eventually, Phil’s son manages to get an iPad from one of Phil’s friends through social networking. Phil gets the iPad, everyone is happy, all is right with the world.

Advertising Age reports that this was just a very clever storyline; using Apple is like using a cultural icon, and not product placement. How it’s perceived is another thing though. Advertising Age states, “Even without Apple plunking down any cash, last night’s episode was tantamount to a huge wet kiss of approval for a product that has yet to be tested by actual consumer use (Steinberg, 2010).”

Whether it was product placement or not, it caused significant stirrings and fans perceived it as such reporting being furious. A typical post on IBDb forums stated, “Tuned in for comedy, sat through a 30 min iPad commercial (Bershad, 2010).” Consumers are becoming increasingly aware and critical of manipulative marketing, either actual or perceived.

Marketing’s Message: CONSUME

The message most marketing is driving home to the consumer is MORE IS BETTER. While this is a fallacy, the marketer’s job is to create more and more desire linking satisfaction or fulfillment to their product or service, to continuously consume.

In The Paradox of Choice: Why More Is Less, Barry Schwartz explores the world of excess and its impact on our daily lives. In a local supermarket, he found over 30,000 grocery items available, including 285 varieties of cookies. He concluded that having too many choices is bewildering, erodes our psychological well-being, and becomes restrictive rather than freeing (Schwartz, 2005).

So, in fact, this culture of consumerism is in a crisis of sorts. Product and service images come rushing towards us from every channel of media available, print, web, movies, tv, mail, email, and others. The message is clear and in many ways enticing. BUY! This onslaught has effected us and our culture. We have become a nation of consumers.

“If I were dictator of my own small island, it’s not capitalism that I would get rid of, it’s marketing. That ever-present force telling us we should be more beautiful, happier, drunker, skinnier, hipper, and whatever else it takes more money to attain.” ~ David “Oso” Sasaki

The Future of Consumerism

Internet marketing continues to develop forums for making the strong voice of consumers heard. Dee Dee Gordon, founder of Look-Look, an online trend tracker, focuses on the younger demographic, those 14 – 30. She is a key contributor to product development. She provides the voice for this younger digital generation by gathering data about their needs, wants, habits, and lifestyles, listening to them and describing their world.

Marketing will continue to be a major influence on our decisions. The more we understand our own motivations as well as the marketing techniques used by professionals, the more discerning we will become.

Source: catherineaseo.blogspot.com

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How the iPad Can Help Fashion Magazines

How many readers of fashion magazines treat them as catalogues? Magazine readers are known to seek out information from, and then buy products  featured in magazines. To accommodate, the modern magazine   has a catalogue-like structure:  it tells us  brand names and prices  and lists stockist details toward the back pages. New digital magazine formats could make this  system even more  user-friendly, by packaging magazines into iPad applications that not only allow us to find what we’re looking for but share what we’re into with our social networks.

Interview Magazine was the first fashion magazine to launch an application for the iPad, and  they did it particularly well. The application is unquestionably useful for readers, and hints towards bigger benefits for brands seeking product placement and advertising. The  app allows the imagery and text within the magazine to be enhanced with additional video and audio content,  enables direct linking to e-commerce sites, and offers the ability to share products via Facebook and Twitter. You can watch a demo of the magazine’s app here.

This technology can benefit featured brands by increasing exposure to social media channels, as readers are given the capability to easily ‘like’ or ‘tweet’ an item, obtaining greater reach than through readership numbers alone.

Product placement and advertising also becomes more accountable. Brands can receive data not only on impressions, but on ‘likes’, ‘shares,’ ‘tweets’ and emailing. They can also track the actions of incoming traffic to their e-commerce sites, which means a direct evaluation of the number of readers interested in a product. The end result: fashion magazines investing in iPad applications may become even more powerful vehicles for product placement and advertisements.

Magazines have achieved a similar effect through other digital platforms such as the iPhone and the web. The fashion retailer ASOS’s branded magazine has capitalized on the digital  format, displaying products in an editorial style and linking those products back to their online catalogue. Yet Interview’s Scott Lambert rates the iPad as superior, stating it to be a magazine’s showcase in its ‘purest form, slick, sexy and portable.’

Launching digitally on the iPad also ensures that readers pay for content by purchasing the iPad app. Interview charges 99c for the app, the same price as their subscription rates.

The advantages for both readers and brands are clear, and magazines have the potential to become powerful social catalogues.

[Image: Interview Magazine]

Source: Socialmedianz.com

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Why Mobile Holds the Key to the Future

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Just like the e-commerce and blog sceptics before them, those who doubt the importance of m-commerce and mobile marketing will be exposed as short-sighted

Contrary to popular belief, mobile is not just a new medium that will win attention. Instead, it represents a continued trust in a brand and its values which translate to a new channel for marketing and commerce. And as more consumers transfer their online shopping habits to mobile devices, this means the biggest beneficiaries will be those luxury brands which consumers trust across all channels – mobile included.

“Affluent and wealthy consumers are embracing mobile functionality and mobile applications,” said Milton Pedraza, CEO of the Luxury Institute in New York. “Right now they’re doing it for things that are a little mundane, but also for important things like financial services and financial information, and they have downloaded luxury brands’ apps.”

“Younger consumers have downloaded more than older consumers, but as devices get easier to use and as more people buy mobile devices with better screens, I think you’ll see mobile becoming a far more important device – even more important than the PC in terms of interacting with consumers,” he said. “It’s going to become a mobile world and luxury brands need to be really prepared.”

Finding the fit

All indications point to more luxury brands starting to advertise on mobile ahead of a fully-fledged mobile commerce presence over the next couple of years.

Prestige players such as Polo Ralph Lauren and Toyota’s Lexus have made waves and moved the needle. Each has taken an early initiative in targeting consumers with mobile advertising and each by integrating interactive components.

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Neiman Marcus’s Christmas Book, Lexus advertising page on Esquire and R.L. Gang, the Ralph Lauren’s storybook for its children line

For example, Lexus placed a full-page rich-media ad in the launch edition of male lifestyle magazine __Esquire__’s iPad application. The unit prompted users to manipulate a digital graphic using their fingers to launch a 30-second video shot for the brand’s national “Drive Precision” campaign. Consumers could then find out more information about Lexus’ IS line of sedans and locate nearby dealerships to schedule an appointment.

Ralph Lauren, which was awarded 2010 Luxury Marketer of the Year, launched a shoppable storybook called “R.L. Gang” that promoted its children’s fashion line. The company placed a banner ad in The New York Times’ Editors Choice iPad application that drove awareness of, and traffic to, the initiative.

The storybook ran a plot narrated by entertainer Harry Connick Jr. that featured characters wearing Ralph Lauren items. Users could click the characters to shop the items online or on their iPads. The feature was viewed 131,000 times across channels, generating more than 100 million impressions worldwide, and drove a 250% increase in sales over the corresponding period in 2009.

Other luxury brands such as the automaker Bentley and watch manufacturer IWCShaffhausen have converted their branded magazines into interactive applications. Mercedes-Benz even integrated the iPad into its point-of-sale system, enabling dealers to conduct transactions on the showroom floor using the mobile technology.

Retail detail

Another example of a luxury brand looking to navigate the new marketing ecosystem by integrating mobile into its sales strategy is the storied US luxury department store chain Neiman Marcus.

“Even if you do have a great contact strategy, it doesn’t matter if your customer is disappointed with your lack of multichannel integration,” said Gerald Barnes, president and CEO of Neiman Marcus Direct, at the Luxury Interactive conference in New York in June. “Multichannel integration is key to prove that we’re customer-centric, 21st-century luxury retailers.”

“When you think about the customer, the customer just really expects you to get the merchandise from wherever the merchandise comes from,” he said. “You need to be able to move back and forth between your own channels.”

The retailer fully mobilized its entire product catalogue this summer, making it available on a mobile commerce site compatible with any web-enabled handheld device.

“Our strategy is to enable our customer to shop with us anywhere she wants to, any time she wants to, from any place she wants to,” said Ginger Reeder, vice president of corporate communications at Neiman Marcus. “To that end, NeimanMarcus.com is on a mobile-friendly site and we are seeing increased usage.”

“ Multichannel integration is key to prove that we’re customer-centric, 21st-century luxury retailers ”

Additionally, the brand has launched two mobile applications: NM Editions for the iPad and NM Gift for the iPhone. NM Editions creates a unified platform for viewing all of Neiman Marcus’ publications such as its annual Christmas Book that was released in early fall. Consumers can select and buy items from the catalogues within the application, which is available for free in Apple’s App Store.

The NM Gifts application lets consumers browse and buy from Neiman Marcus’ full selection of holiday gifts. It also integrates the iPhone’s accelerometer technology to create a more interactive shopping experience, letting consumers shake their devices to generate gift suggestions at random.

“When you look at the way [luxury retailers] reach and connect with consumers today, the old model where consumers are loyal to one channel of distribution has gone by the wayside,” said Pam Danziger, president of US-based firm Unity Marketing. “Marketers need to be reinforcing relationships across all channels, because that’s how consumers are shopping.”

“Neiman has done a whole lot of work in understanding this cross-channel mix and bringing the channels together into a unified marketing strategy,” she said.

Just check in

While success stories abound of luxury brands effectively tapping mobile’s potential for driving conversions, the actual development process can be tricky.

“I think the challenges are, specifically, when you first build a mobile site or application, it’s the first time you have done something,” said Christoph Oberli, vice president of e-commerce at the Mandarin Oriental. “You basically don’t know what you don’t know, and the learning experience can be a challenge.”

Mandarin Oriental had to address such concerns early in the development process for its slate of mobile properties, which includes a website and an iPhone app, as well as a forthcoming iPad app. One challenge the company faced was in understanding what its target consumers wanted out of a mobile offering.

“You really need to understand your customer if you want to build a mobile presence – and even more so because it’s such a small screen,” Oberli said. “When you’re in such close proximity to your customer, you need to really understand the customer and what it is they want to do on a mobile site and build around that. That’s a prerequisite more than a challenge.”

The Mandarin Oriental PC website has the most content and images, whereas the mobile site is a spare experience that focuses on maximizing utility and minimizing clutter by providing only relevant information for individual travellers. Meanwhile, the application includes information dedicated to bringing destinations surrounding the brand’s hotels and serves more as a travel guide than the other platforms, while also enabling bookings.

“Our mobile site was a big push first, and led to a lot of visits and a decent amount of bookings,” Oberli said. “The application was built in a later stage and was more of an engaging tool.”

“All three of our platforms – the website, the mobile site and the app – are trying to form online touch points for our customers, and have slightly different purposes,” he said. “In other words, there is some consistent content across all three platforms, then some very specific items for each platform.”

Another challenge is development.

“We’re a small company, so we don’t have in-house development teams,” Oberli said. “With virtually everything we do, we work with a third party. The beauty of that is, as a luxury brand, you need to build the absolute best. Whatever you do has to be top quality everywhere.”

“In our case, we have worked with solid partners who built apps and mobile sites before, so we could alleviate some of that danger [of inexperience],” he said.

What now?

The luxury industry, at large, faces a few challenges in terms of mobile engagement. The first is that many luxury brands are still working to understand how to execute e-commerce strategies. Marc Jacobs and Donna Karan have only launched e-commerce-enabled websites in 2010. For such brands, mobile will be a catch-up game.

What’s more, many other luxury brands are reticent to adopt mobile commerce strategies for fear that they might lose some of their prestige and mystique by making items available on a sales channel even further removed from the traditional showroom experience than e-commerce is. Consumers, however, are shopping across channels. And mobile is becoming a bigger piece of the equation.

“Mobile enables luxury brands to reach consumers at each step in the marketing funnel – awareness, trial, persuasion and loyalty,” said Mickey Alam Khan, editor in chief of Luxury Daily (1). “The consumer is already on mobile – don’t fall too far behind.”

Source: Luxurysociety.com

(1) Luxury Daily is a trade publication covering luxury marketing and retail

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