How Consumers Act and React / Consumer Behavior

1. How Consumers Act and React / Consumer Behavior

2. How Consumers Act and React / Consumer Behavior • How consumers really shop • 12 seconds at a product category • 85% picked up only one brand within a category • 90% only picked up one size • 58% paid attention to the price • point of purchase / in-store displays signal special price • Consumer Decision Making (John Howard) • Problem recognition • Information search • Alternative evaluation • Purchase • Post-purchase outcome / evaluation

3. How Consumers Act and React / Consumer Behavior • Influences on Consumer Behavior • Surroundings: Advertising, sales promotion, friends, family, salespeople, store, price, past experience, etc. • Outside Influences • Culture: • Nestle Cup of Noodles in France example - Convenience • McDonald’s German Drive Thru • Opinion Leaders • Internal Influences: within the individual. Learning style, memory, modeling.

4. How Consumers Act and React / Consumer Behavior • Maslow’s Hierarchy of Needs Place: Evian, Volvo, Just My Size pantyhose, Red Bull

5. How Consumers Act and React / Consumer Behavior • Consumer Behavior: understanding the psychology of what is going on in the consumer’s head.

6. Consumer Research: • Step One: define your question! • Otherwise you are simply going fishing and this ocean is too big. • Step Two: What kind of research do you need? • Quantitative • Qualitative • Secondary • Primary

7. Consumer Research • Use Secondary Sources • Company Records • Annual Reports, customer profiles, public relations files, technical reports (what brand is 99 44/100% pure?) • Trade Associations • Libraries • Sources of statistical Information (Government publishing offices responsible for Census, etc.) • Company Stock Reports • Market Guides • MediaMark Research (MRI) demographic & psychographic info on light, medium and heavy users of products. • Simmons (SMRB) similar to MRI • Survey of Buying Power: geographic breakdown of demographic splits of the US population • Computer based databases (e.g. InfoTrac) • Web sites: (e.g. Hoover’s online)

8. Consumer Research • Primary Research • Observation • Focus Groups • One - on - Ones • Survey • Psychographic research firms

9. Consumer Behavior • Culture: a distinctive way of life of a group of people – their complete design for living. • Typical American Cultural Traits: • Belief in the sovereignty of all people • Equality for all • Individualism • “Worship” of schooling • Love of size / bigness • Adaptability / open to change • Optimism • Humanitarianism • Mobility / “restlessness” • Practicality • Emphasis on making money • Self-protection and the sanctity of life.

10. Consumer Behavior • Does America have a class structure?

11. Consumer Behavior • A rich man is not just a poor man with more money. He has different ideals, different personality forces, different church membership and different notions of right and wrong all stemming from social class differentials. • Pierre Martineau Motivation in Advertising

12. Consumer Behavior • America’s Class System: • Upper-upper Class: (0.5%) locally prominent families, 2-3rd generation wealth, living graciously, upholding the family name, reflecting the excellence of one’s own breeding and displaying a sense of community responsibility.

13. Consumer Behavior • Upper-upper Class: (0.5%) • #21, Newhouse, Donald Edward73 , inherited and growing Source: Media/Entertainment, publishingNet Worth: $7.7 billion -Hometown: Somerset County , NJ Marital Status: married , 3 children Undergraduate: Syracuse University, Drop OutWith brother Samuel Irving Jr., two sons of Sam Newhouse, who took over failing Staten Island Advance 1922 and built what became the nation's largest newspaper chain. Sons inherited Advance Publications after father's death in 1979. Donald runs newspapers (Cleveland Plain Dealer, Newark's Star-Ledger), Si oversees glamorous Conde Nast magazine division (Vogue, Vanity Fair, the New Yorker). Also owns Sunday newspaper insert Parade, Fairchild Publications (Women's Wear Daily).

14. Consumer Behavior • Lower Upper Class: (1.5%) newly rich (nouveau riche). Newly arrived and never quite accepted wealthy. • Each city’s executive elite, founder’s of large businesses and newly well to do Doctors, Lawyers. • Their goals are a combination of gracious living and drive for success. • FYI: There are 2.2MM millionaires in the US (> 1%).

15. Consumer Behavior • Upper Middle Class: (10%) Moderately successful. • Owners of medium sized businesses, management level executives and young people (25-30) that are “expected” to reach management level. • Goal is career success, tend to reflect that success in home décor, social & cultural participation. • They “want” to be part of the upper classes which is defined by greater net worth.

16. Consumer Behavior • Lower Middle Class: (30 – 35%). Small business owners & highly paid blue collar workers. • Major goal is “respectability” and being accepted. • Live in neatly furnished well maintained modest homes more or less on the “right side of town.” • Save for college education for their children.

17. Consumer Behavior • Upper Lower Class: (40%) Semi-skilled production-line workers and retail workers. • Goal is enjoying life and living well day to day. • They strive to be “up with the times,” fashionable with the goal of living more comfortably.

18. Consumer Behavior • Lower – lower Class: (15-20%) unskilled workers, unassimilated ethnic groups & the sporadically employed. • They have only 7-8% of the total purchasing power. • Apathetic, fatalistic, get their “kicks” while they can.

19. Consumer Behavior • Upper-Upper Class: Consume little, belongings are inherited. • Lower-Upper/Upper Middle: all possessions are new. Foreign cars, sailboats, prestige through acquisitions. Good schools, “the right” summer camps for the kids, music lessons, etc. Purchase more than any other single group. • Lower Middle: price shopping, tend not to “want to move” social groups so if they have extra money, they buy a better house in the same neighborhood, better clothes, etc. • Lower classes: future is uncertain so they buy heavily on impulse. Like to watch TV and go to the movies, not really “readers.” Credit!

20. Consumer Behavior • Family Life Cycle: • Bachelor stage: young single, no children • Newly married couple: young, no children • Full Nest 1: young married couple with youngest child under 6 • Full Nest 2: young married couples with youngest child over the age of 6 • Full Nest 3: older married couples with dependent children • Empty Nest: older married couples with no children living with them. • Solitary Survivors: Older single people.

21. Consumer Research • ACV: All Commodity Volume • A measurement of distribution in relation to sales. • gives the total amount of sales in a given category. • Example: a brand is said to have an 80% ACV if it is available for sale in stores which make up 80% of the category sales. • If Pantene has a 90% ACV, it means it is available in stores where 90% of all shampoo products are sold; not 90% of stores.

22. Consumer Research • CDI: Category Development Index • Way of comparing a local or regional sale of a product category vs. national (which is always 100) • Percentage of total sales that occur in each geographic region presented as an index. • Example: BBQ sauce may have a 200 CDI in Texas which means Texans consume twice as much BBQ sauce as the average American. • The higher the CDI, the stronger the category in that particular region. The lower the CDI the weaker the sales in that region.

23. Consumer Research • BDI: Brand Development Index • The comparison of brand sales indexed against total product sales calculated on a geographic or other basis. • Let’s you know how strong your sales are in a particular region vs. average sales in the US (index 100) • Example: Pantene is the largest shampoo in the US and has a 125 BDI in Chicago. This means that Chicago consumers use 25% more Pantene than the average American.

24. Consumer Research • Understanding how ACV, CDI and BDI are actually used. • ACV: marketers generally want a high ACV to guarantee their product is available in the places where consumers normally buy the category. New product introduction usually require a certain ACV level before they will begin promotional spending (why spend before consumers can find the product to buy?) • CDI: Many product categories are highly regional (e.g. sunscreen) and marketers will want to guarantee they are promoting their products in markets with the best potential. • BDI: Brands can develop regionally as well (e.g. NYC is a Coke town, LA is a Pepsi town). So not only is it important to promote your product in a market with strong category potential, but you then add your own brand potential on top of that.

25. Consumer Research • The Tricky Questions: • Will your product likely be more successful in a city with a CDI of 200 or a city with a CDI of 85? • Should you spend money supporting your brand in a market with a 200 BDI or a market with an 85 BDI? • Where would you rather spend your ad dollars? • Columbus, Ohio CDI 200 BDI 50 • Indianapolis, IN CDI 50 BDI 200

26. Consumer Research • Mistakes made in interpreting the data • Going overboard with research. • Chrysler “K-Car”

27. Consumer Research • Asking the wrong questions. • New Coke 1985

28. Consumer Research • Believing everything people tell you. People saying the “right thing.” • Following every trend: Healthy Jell-O! • Getting the answer you want to hear.

29. Dissecting the Creative Brief The most important part of your plan

30. The Creative before the Creative • Strategy: “What” you plan to accomplish • Execution: “How” you plan to accomplish your strategy.

31. Purpose of a Creative Brief? • To guide the work • A Creative brief defines “what” needs to be created; it doe not tell the reader “how” to do it. • To inspire great work.

32. The Creative before the Creative • Some good industry thinking • Strategy: a carefully designed plan to murder the competition • Any premise lacking a killer instinct is not a strategy • Any premise that doesn’t cry a consumer need is not a strategy • Any premise that addresses the entire world is not a strategy • O’Toole: three most important things: competition, target audience, what do you want them to know or feel? • DDB Needham’s: What basic human need does your strategy hit (need to be popular, feel attractive, feel wanted, obtain material things, safety, enjoy life, create a happy family situation, etc. • McCann; write the strategy as the target would write the strategy

33. Dissecting the Creative Brief • What do we want the advertising to do? • Who is our target? • What do they currently think? • What would we like them to think? • What is the single most compelling promise we can make them? • How do we make it believable? • Is there anything else worth considering that may help us get to great creative work? • Are there any executional mandatories?

34. What do we want the advertising to do? • What is the specific job of the advertising? • Communication Objective: What do you want to accomplish as a result of running this advertising? • This is NOT a list of marketing objectives (e.g. increase sales +15%), or a media objective (e.g. create awareness) but the role advertising should play in helping you reach your marketing objectives.

35. Relationship Between Marketing, Advertising and Media Objectives

36. Dissecting the Creative Brief • Who is our target? • What is a woman 18-49? • Describe a single person. • Your goal is to have your team say “I know this person!” • Go beyond name and basic demographics / psychographics help your team understand who she is (or he), how they think, what they think of your category / brand currently, what motivates them, what you believe will make them change their mind, etc. • If your target has specific opinions about the competition, include that insofar as it gives insight to what is needed to change his/her mind.

37. Dissecting the Creative Brief • What do they currently think? • What does the target currently think about the category, the product, the cause being advertised? • What would we like them to think? • What do we need them to think in order to do what we want them to do? • What is the single most compelling promise we can make them? • This is a single idea you want your advertising to communicate which you believe will help your target to change his/her mind about your product and choose it over your competition. • How do we make it believable? • A clear, often rational fact which proves your promise to be true.

38. Creative Brief: example • What do we want the advertising to do? • Who is our target? • What do they currently think? • What would we like them to think? • What is the single most compelling promise we can make them? • How do we make it believable? • Is there anything else worth considering that may help us get to great creative work? • Are there any executional mandatories?

39. The Creative before the Creative • Types of Claims • Generic Superiority: “no one does a better job” • Preemptive Claim: not unique, but unclaimed by the competition: e.g.: Mountain grown coffee. • Unique Selling Proposition: true competitive advantage. • Brand Image: superiority through image portrayed e.g. Nieman Marcus • Positioning: using your claim as your positioning e.g. “Engineered like no other car in the world,” “the ultimate driving machine.” • Resonance: attaching your brand to fundamental human experiences (e.g. birthday, patriotism, marriage, love, etc.)

40. Dissecting the Creative Brief • Is there anything else worth considering that may help us get to great creative work? • Only if there really is some additional fact, story, item which will help “inspire” great work. • Are there any executional mandatories? • Often used to keep commercials within a certain “predetermined” campaign. Again, if there are none, leave it blank!

41. The Creative before the Creative • What is a Big Idea? • More than a selling proposition, more than a positioning, becomes a rallying cry for the brand • E.g. “Think Different” for Apple, “The relentless pursuit of perfection” for Lexus, Just do it! for Nike.

42. What is a Consumer Insight? • More than research, more than observation • the ability to see clearly and intuitively into the nature of a complex person, situation, or subject

43. The Creative before the Creative • James Webb Young’s Technique for Producing Ideas • Immersion • Digestion • Incubation • Illumination • Reality Testing