Sunday, February 24, 2008

What kind of wine would birds prefer? The impact of volume on preference.

This graph, showing the accuracy with which birds noted differences in quantities, is described in Jacky Emmerton's article: Birds’ Judgments of Number and Quantity, which can be found here:

Link to article

The article covers several studies, which consistently show that birds consistently perceive differences in numerosity, with their ability to discern improving as the differences between two amounts is proportionally differnet. It also relates the extra effort needed to train birds to select lower quantities when shown a pair of values (volumes), as they appear to be drawn more to the larger one.

This ability has also been found in other animal species, and is increasingly believed to have deep evolutionary roots.

As consumers select products, how does this deeply ingrained tendency to compare numerical values -- both symbolically and spatially (in size or volume) -- impact purchase preference?

It would seem a great deal:

A Wine's High Price Adds to Its Pleasure, Study Finds

Mclatchy-Tribune News Service. - February 24, 2008
Article is here

The article reviews several recent blind tastse tests, where the presence of higher prices biased consumers' stated taste preferences. It would seem the higher prices (numbers), stimulated their sense of status or acquisition, and their subsequent report of preference.

Understanding this innate tendency for consumers to overstate demand for higher price or greater volume product, how should we structure research events to account for the counter impact of Prospect Theory (see prior blog entry), and produce accurate forecasts of real life sales?

Saturday, February 23, 2008

Segmentation research and the resulting advertising to target segments -- is it predestined to succeed?

Acquiescence (the propensity for survey respondents to answer positively to questions at abnormally high frequency) on the part of survey takers has been an issue that researchers have struggled with for as long as they've been analyzing surveys.

Research into this behavior has identified social status, age, unmotivated survey takers, ethnicity, and "impulsive and emotional extraverts with a desire for external stimulation" were "yea-sayers" (Couch and Keniston, 1960) as groups that exhibit this behavior from time-to-time. In response, researchers have altered questionnaire design to try identify respondents that are overly eager to respond positively to the subject matter be asked about -- to varying degrees of success.

Thinking about the research that advertising agencies often conduct in the process of developing positioning and creative concepts for a brand, as well as the tracking studies used to monitor and assess the resulting advertising, the issue of acquiescence could have a dramatic impact on the perceived success of advertising campaigns.

Consider this scenario: an ad agency running a segmentation study for a client, one who has helped develop the survey, and has focused on maximizing the subjects included in the segmentation survey -- a common occurrence.

Regardless of product, the segmentation survey will produce a segment (amongst several) that is positive, a group that "wants it all" -- in terms of the product/service features being considered. (This group, due to the prevalence of positive responses, contains a high frequency of "acquiescent" responders.)

This segment will most likely become a target in the positioning process, as they can easily be seen as "early adopters" because of their positive attitude (i.e. - they will influence the other segments).

The "acquiescent responders" -- because they are predisposed to frequently answering "yes" to survey questions -- will also be more likely to respond favorably at a later date to the positioning and advertising tracking studies made to assess the advertising that grew out of the segmentation work.

From the advertising agency's viewpoint -- what would be your motivation for excluding this group from either the segmentation or the following tracking studies? Regardless of product/service, or advertising execution, the "target" segment is more likely to report recall of seeing the ad, and having favorable recollections of it, due to the higher percentage of "acquiescent" respondents in the target segment.

Has anyone had experience with this phenomenon?

Tuesday, February 19, 2008

Memorability and advertising

The chart above can be found in this paper:

Link to paper here

It demonstrates the tendency of the mind to recall events and stories that contain unexpected ("counter-intuitive" in the chart) elements better than stories that are largely mundane -- without any surprising aspects to them. The key to maximizing memory recall appears to be optmizing the amount of unexected material in a story -- the more you add, the more memory degrades. Perhaps this because too much discord is created in the mind, as it seeks to follow a message or story.

As we think of advertising and messaging research, is the key to identifying an effective message the likeability or relevance of the message, general recall of the message against a norm, or the specific kinds of drivers for the recall?

How can messaging research be improved to better understand how and which drivers for recall are most effective at optimizing memory creation and retention?

Prospect Theory and the proportion of generic sales in a category

The graph above, developed by Kahneman and Tversky in 1979, can be found at this site:

Link to paper here

It shows how consumers feel pain at a greater rate when losing money, then they feel pleasure by making profitable transactions.

A key element of Kahneman and Tversky's theory is the "reference point" that consumers use to determine at what point they are gaining of losing money. Establishing this reference point for a product or service category is essential in forecasting sales.

Given the distribution of sales by price point discussed in the previous blog entry, if this reference point is the average or median price of available alternatives, more consumers should opt for lower cost products to mitigate immediate pain ($ loss) by fogoing future possbile benefits of durability, aesthetic advantages, and brand image.

This tendency of consumers to value losses greater than they do gains ensures a large percentage of sales for almost all product categories will be available to generic/private label/store brand product that can be sold at competitive prices with a minimum of brand cachet.

When conducting research, how do integrate this insight into the forecasts we create? What is the best way to establish the reference point -- both overall, and by consumer segment? To what extent does this technique ease the challenges of pricing product?

Monday, February 18, 2008

The difficulty in conducting pricing research

The table above comes from the following study, done by Laurence Ashworth, Peter R. Darke and Mark Schaller:

Link to paper here

It shows the impact of the type of observer has on a person's display of attitudes towards spending money. Research resondents frequently exhibit similar behavior. While some more impersonal methods of research -- automated phone surveys, for instance -- may minimize this tendency, it remains a significant factor to be adjusted for once survey results have been

The root cause may the innate importance that status display has in defining our relationships and attractiveness to others.

How is the best way to account and adjust for this tendency?

Sunday, February 17, 2008

The growing role of psychology in marketing research

This chart -- "the emotional filter model", from Erik Du Plessis' book The Advertised Mind, shows the interaction between experience & advertising in creating brand memories. The chart accurately weighs the factors leading to the creation and retention of brand memories in the mind -- displaying the role of advertising in the process.

At the bottom of the chart, it displays how research has generally fit into the process of monitoring advertising & brand campaigns. Recent marketing research products have started to expand from this position, and place greater emphasis on the everyday experiences with products -- quality research, loyalty research, likelihood to recommend scores, etc..

With the recent advancements in, and popularization of, cognitive and evolutionary psychology, how should we expect marketing research to evolve as a discipline? Will the popularity of anthropological/ethnographical techniques and surveys of the 1990's be supplanted with an emphasis on psychology going forward? And if it does, will the nature of market research change from a focus on interaction between consumers and specific products, to how consumers react to product stimuli in general?

More about the book The Advertised Mind may be found here:

The distribution of sales units by price point

Why is it that the sales volume in units for a given product category (of functionally homogenous products) follows this chart? Year after year, the sales curve remains the same, regardless of changes to product styling, color or packaging.

It seems that a disproportionate amount of attention is paid by product managers on the shaded area -- where effort is made to differentiate by adding cost. Are they responding to their own career interests, or the interests of the consumer base represented in the distribution of the chart?

Wednesday, February 13, 2008

The essence of style

What is "style"? How do consumers know it when they see it? Do they see it, or do they feel it? Is it nothing more than the essence of attachment to those they admire, and find more attractive than themselves?

When it comes to products, how can they best be tested for "style"? Directly, through observation? Or, through association to the people consumers consider to be stylish?

In an July 30, 2007 article in Advertising Age, author Gregg Gilman noted:

"It's no secret that marketers often consider the appearance of an ad agency's employees to be one indicator of how their accounts will be handled. As a result, successful people in the industry have learned to be image-conscious.
These unwritten codes have led some agencies to question whether to apply them in a hiring situation. Can agencies really use appearance as a criterion in selecting employees? Yes. But they must walk a thin line........
The bottom line is this: While it may seem unfair for companies to base hiring decisions on preconceived notions of attractiveness, the law generally does not protect individuals from discrimination based on appearance. As long as attractiveness criteria are applied to different classes of people equally, the practice is generally lawful."

In businesses -- like advertising and design -- where the end deliverable is the application of "positive associations" to products, brands and services, the need to be attractiveness in the minds of their clients is paramount. In this sense, is the use of the word "stylish" just a euphemism for the basic feeling of attraction one feels towards those who are more innately attractive, and the objects associated with them?