It’s been predicted for some years that voice calls would steadily move towards mobile, while fixed lines would become the stuff of data. Now at least the first part of those predictions is becoming reality. According to Joel Rubinson of the US Advertising Research Foundation:

The most recent CDC NHIS survey found that 23% of all US households are cell phone only (that number doubles to 46% for households comprised of those aged 25-29) and another 15% have landlines but are cell phone primary. We are changing the way we connect. Landlines have become less important than cell phones and for many, talk is becoming a less important method of communication than text and social media updates.

The  Media Ratings Council has said that media research must have a solution for this, implying that landline-only research can no longer be equated with probability sampling.  Nielsen,  Arbitron, and Knowledge Networks have all switched to addressed-based sampling methods to restore probability sampling properties.

What are the implications, for other than researchers and telesales teams? One significant societal change is the evolution of the telephone into a one-person communication device rather than for the household, leading to a loss of status for those without mobile devices. And, since mobile phone numbers are typically not listed in directories, we’ll become harder to find as individuals and as families.

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Deloitte was quoted last week by South Africa’s BizCommunity.com as reporting that “an average of 9% of all radio ads booked [on South African radio] are not broadcast as scheduled. Based on an estimated spend of R3 billion on radio advertising in 2008, this error equates to R270 million [USD $35.6 million] erosion of ad spend per annum.”

“Through our research and market testing of this concept, it’s become apparent to us that there are significant operational inefficiencies in radio and television broadcast where advertising campaigns are flighted incorrectly. The scope of errors which we verified were not aired at all, broadcast in the wrong time channel or flighted as scheduled but the wrong material was used,” commented Audine Brooks, business leader for Deloitte’s Advertising Broadcast Certification service.

In the last month, some of the Deloitte findings show:

• Client’s radio campaign ran at a 24% error rate – resultant compensation claim was thirty fold the related certification fee
• Another major advertiser’s radio activity consistently results in an 8% error rate, damaging the reach and frequency intended by its marketing strategy
• Another TV campaign ran at 5% error rate, R149k in value booked but not broadcast accurately.

This report was quickly questioned by commenters on the BizCommunity website, suggesting that the results were not representative of the industry as a whole; and it’s perhaps fair to question Deloitte’s motives in releasing the data, given that they seem to be offering a broadcast monitoring and certification service that would address any such problems in a timely fashion.

Nonetheless the whole story is a useful reminder of the transient character of the broadcast medium, and the need for proof of broadcast in some form.

If a radio station broadcasts in the forest and there’s no-one there, can they charge advertisers for the airtime?

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Why do consumers buy the same brand of coffee and mayonnaise over and over again, but will often purchase different brands of cold cereal and chocolates? It’s hardly happenstance, according to a recent US study by The Nielsen Company. Nielsen’s study of shopper behaviour shows that consumers exhibit distinct shopping modes at the supermarket that dictate what ends up in their grocery bags.

“Shoppers don’t waste energy on everyday decisions,” said Manjima Khandelwal, senior vice president, Nielsen Customized Research. “To simplify their lives, shoppers are often in grab-and-go mode, reaching for the brands they usually buy without reading the label or checking the price.”

The key to reaching shoppers lies in understanding that auto-pilot mode can get disrupted by external stimuli such as advertising, buzz, new offers, price and promotions. When this happens, shoppers re-evaluate their decisions; they look at alternatives and consider new offers. Nielsen calls these disruptions Delta Moments and it is at these times that marketers have a brief window of opportunity.

Auto-pilot and Delta Moment dynamics vary significantly across Categories. A seemingly great strategy in one Category can fail to connect in other Categories. Marketers could be way off the mark by failing to read the ‘body language and mindset’ of shoppers.

Nielsen’s study, which reviewed consumer shopping behavior across 30 food categories, found that consumers adopt one of four different “shopping modes” as they cruise the supermarket aisles. Key characteristics of the shopping modes – auto-pilot, variety-seeking, buzz or bargain hunting – are:

Auto-pilot
In auto-pilot, or grab-and-go mode, shoppers are making everyday, habitual decisions driven by brand choices and they are usually not in the market to try anything new. Items such as coffee, cereal, cheese, margarine and mayonnaise are purchased in auto-pilot mode. For example, Nielsen’s research found that shoppers were quite particular about their coffee, choosing the same caffeine fix, flavor and coffee experience.

“The implication for marketers in auto-pilot categories is that if you are a leader, avoid radical changes to your brand message or packaging,” said Deepak Varma, senior vice president, Nielsen Customized Research. “Otherwise you may risk disrupting habitual behaviour driving brand choice in your favor.”

Variety-Seeking
In the variety-seeking mode, shoppers are browsing shelves actively and on the lookout for new tastes as well as interesting product innovations or products offering “surprise” in their role as household chef.

“Consumers seem to get bored with the same choices in certain categories,” said Varma. “We found shoppers on the lookout for a change of pace when shopping in the frozen food and cold cereal aisles, as well as for biscuits, salad dressings and chewing gum. In this context, customers’ decisions to purchase products were greatly influenced by informative and exciting packaging.”

Buzz
Energy and sports drinks, chocolate, ready-to-drink teas and yogurt drinks fall in the buzz-activated category. “Shoppers are most likely to be influenced by catchy advertising, new product introductions and the original packaging that leaps off the shelves and grabs interest and attention,” said Khandelwal.

Bargain-Hunting
Bargain-hunted categories are driven purely by price comparison and promotions. “Consumers in this shopping mode are on a mission and the mission is savings,” said Varma. Canned Tuna, Canned Tomatoes, Canned Fruit and Pasta Sauce all languish in this category, according to the study.

Beware Over-Promotion
Nielsen’s research revealed that even though some product categories are not bargain-driven, manufacturers continually offer in-store deals and promotions, resulting in some categories to be over-promoted.

“Consumers choosing sports drinks aren’t looking for a bargain,” said Khandelwal. “In-store deals for these products go largely unnoticed. Marketers would be better off redirecting their wasted promo dollars to investing in advertising and new product introductions.”

Omega Rules OK

“I always buy brand X …unless guests are coming!”
“I buy the cheapest brand on special, as long as it’s not X!”
“Brand 2 works for my family, but if Y is on special, I buy that!”

Underlying repetitive purchase patterns are a set of cognitive decision rules – the ‘programme’ behind ‘auto-pilot’ purchasing.  Nielsen (quick to brand such things) call these Omega Rules – the mental check-lists that keep consumers on-track and help them decide between alternatives.

Often these rules are quite mundane (e.g., pack shape) or social (e.g., acceptable to friends) and don’t represent deep emotional commitment to the brand.  Brand leaders need to understand Omega Rules as they provide guidance on key marketing tactics that will reinforce the habits that give them leadership.

Recent advances in cognitive psychology have revealed that although consumers have 10,000 brands in their heads, they waste little time thinking about them.  Instead, they evolve simple rules to navigate through the world of brands.  These rules tend to be simple, few in number and rather hierarchical. They can be rational or emotion based, and once they have been developed the consumer is on ‘auto-pilot’ when placed in a buying situation. Auto-pilot mode remains in force until interrupted by an external stimulus, a Delta Moment.

Delta Moments are different for different segments and at different stages; they’re ‘moments of change’ when habits are most likely to be reviewed, and they vary in their impact depending on the disruptive nature of the causative event.

At Delta Moments, consumers re-evaluate their habitual decisions and either:

• Re-validate their rules
• Change their rules

Omega Rules and Delta Moments apply to online marketing as well. Auto-pilot mode is clearly in evidence when web users head to their regular destinations online, less likely to try out new websites unless disrupted by Delta Moments.

The challenge for emarketers trying to get noticed online:

• Understand how habits are formed in their particular category;
• Identify the key criteria underlying ‘auto-pilot’ habits; and
• Develop a range of Delta Moment triggers and motivators that will lead to change.

Easy, right?

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Inchcape Retail’s UK car buying website has released a detailed survey of how British motorists use the web to purchase their next motor vehicle.Autobytel, which has been selling cars online for six years, surveyed nearly 1,000 drivers who visited its website – both buyers and prospects.

The Inchcape survey revealed that:

• 78% of men and 22% of women now buy their cars online
• 73% said they use the web to read reviews or opinions on the latest model compared with 66% from Autobytel’s research in 2003.
• The biggest increase – from 18% to 2003 to 59% in 2005 – said they went online to research interior and exterior pictures of cars.

“Our survey shows the web complements the physical car buying experience provided by the dealer,” explained Spencer Lock, Inchcape Retail’s managing director, “but British car buyers are also becoming increasingly confident in buying cars online.”

Online selling is a key part of Inchcape Retail’s strategy as their research shows a growing number of motorists want to research as well as purchase their next car on the web.

According to US research, almost 70% of consumers use the Web at some point in their automotive purchases. These sorts of statistics help to explain why the automotive industry – the largest advertiser in the world – is drifting online. Online advertising accounted for only 2.5% of total ad spending by the top 10 auto manufacturers in 2005, but a surge is coming. Projections are that spending by US automotive advertisers, which totalled US$1.44 in 2005, will rise to US$2.67 billion in 2007.

Welcome online, Detroit. Just a little word of caution: don’t surf and drive.

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Twelve months ago the World Federation of Advertising - whose members collectively represent 700 billion dollars of advertising clout – offered a challenge: the Blueprint for Consumer Centric Holistic Measurement. Say what? Translated into realspeak, the WFA have called for a single source model with a single consumer-centric measurement tool which can be applied across all media. This holy grail goal represents acknowledgement of today’s reality that a single medium is seldom enough to reach consumers effectively.

Needless to say, research companies around the world have been quick to either (a) explain how their current offerings already fit the WFA blueprint; or (b) evolve their services accordingly and then make the claim.

In the first category, BigResearch, a market intelligence firm providing analysis of consumer behaviour in areas of retail, financial services, automotive, and media, has just unveiled the latest results from its Simultaneous Media Usage Survey(SIMM), which has been monitoring the multimedia behaviours of more than 15,000 consumers twice a year since 2001.

This particular release highlights the disparate sources which influence“advice givers” - i.e. those most likely to recommend products to others. According to the BigResearch data (and, for that matter, common sense), advice givers are likely to gather their information from different places depending on the product category.

“Word of mouth is the hot topic in marketing and promotion these days,” notedBigResearch. “The key to understanding and impacting the word of mouth process is to find out who the ‘advice givers’ are and target them before the purchase.“

The survey revealed that “advice givers” don’t always formulate their counsel on personal experience alone. The influence of the media ecosystem — where consumers live, work or take their leisure — also plays a critical role in moulding their advice to others. Their most trusted media sources range from word of mouth to articles to the Internet. In a specific example, “advice givers” tended to be mostly influenced by word of mouth, reading an article on the product, and TV/broadcast advertisements when purchasing electronics. However, coupons, newspaper inserts and word-of-mouth were the most influential when purchasing groceries.

Which of the following media influenced their purchases for…?

Grocery
1. Coupons
2. Newspaper Inserts
3. Word of mouth
4. In-store promotion
5. TV/Broadcast

Electronics
1. Word of mouth
2. Read Article on product
3. TV/Broadcast
4. Newspaper Inserts
5. Internet Advertising.

Okay, the examples aren’t exactly surprising. But – harkening back to that wonderfully idealistic Blueprint for Consumer Centric Holistic Measurement (just trips off the tongue, don’t it?) - what’s important is not just identifying the likely mechanisms which influence the influencers. The real opportunity lies in being able to use a common research currency to quantify the exposures delivered by your usage of such multimedia – and track reach, frequency and other vital statistics across the combined platforms.

Maybe the Blueprint for Consumer Centric Holistic Measurement needs a snappier name - the X-prize for the first private space flight captured the popular imagination, even though a mere ten million dollars was at stake. With seven hundred billion smackeroos up for grabs, surely someone could come up with a decent brand …. ?

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New U.S. private label research from ACNielsen, Daymon Worldwide, DemandTec and McKinsey, released earlier this month, aimed to demonstrate how retailers can build profitable customer loyalty and competitive differentiation though private label brands.

Key insights (from the portion of the study developed by ACNielsen):

1. Retailers with greater focus on private label (i.e., those with higher overall private label shares) are effectively shaping more positive consumer attitudes towards private label products and encouraging more solid buying behaviours as a result.
2. While heavier private label buyers offset “branded” spending with private label spending, they are in stores more often, buying both private label and branded products, providing retailers with opportunities to drive store loyalty.
3. Heavier private label buyers offset branded spending with private label buying – enabling consumer savings and allowing retailers to compete in a “value-oriented” environment.
4. Study findings suggest an opportunity to narrow existing price relationships between private label and branded products.
5. Consumers who spend the most at retail have a weaker private label commitment, but these are also the consumers where private label sales opportunities are the greatest – suggesting a need for greater focus on premium private label offerings.
6. Private label is no longer limited to the historic buyer profile of low to middle income, blue collar families. Nielsen see high buyer development in households with US$70,000 plus incomes, particularly among households who are top-spend private label buyers who shop in retailers with strong private label commitment.

Consumer Attitudes towards Private Label

Private label is in a position to compete on quality with national brands:

• Up to 85% of top-spend private label buyers say they are a good alternative to brands
• 59% of consumers say they are “just as good”
• One third of consumers state that some private label items have “higher quality” than brands
• 4 of 5 consumers think private label products are acceptable when quality really matters

Improvements to private label packaging are paying off:

• Even low-spend private consumers have a positive image of packaging
• 9 of 10 consumers say they feel comfortable serving private label to their guests

Consumers have positive attitudes towards private label’s value proposition:

• 2 out of 3 consumers believe private label is “an extremely good value”
• Consumers feel that private label is no longer for ‘lower income’ families
• 73% of consumers do not think brands are worth the extra price
• 36% are willing to pay the same or more for private label items they really like
• About half of consumers compare private label prices between retailers

Opportunities to expand private label assortment:

• Almost half of consumers state they would buy more private label products if a larger variety was available

ACNielsen’s recommendations as a result of the research:

• Private label provides retailers with the ability to compete in a “value-oriented” world & drive store loyalty
• Stop thinking about price gaps & start aligning private label pricing to reflect the quality of your private label offerings
• Expand or enhance your private label products to target demographic segments & attract most valuable shoppers

Encouraging news if you’re a retailer. But if you’re a branded product manufacturer, the news seems grim. How did this happen? What can be done? Australia’s Assent Consulting tackled the issue three years ago, in an article in their FAST journal of October 2003:

Clearly the branded manufacturer’s position is not as strong as it was. How did this happen?

There are a number of reasons.

1. Manufacturers haven’t really mounted a response to economy category generics. Many have simply gone into denial; it is still not uncommon to hear complaints along the lines of “It’s not fair – the battle for the consumer is fought in-store and they are giving their brands disproportionate shelf, time and focus.We can’t compete with these margins!”
2. It has been put in the too-hard basket.
3. Marketing has, in many cases, foisted it onto Sales,and vice versa.
4. A number of manufacturers have believed their so-called strategy was to make Private Label themselves. (The Harvard Business Review of 1996 said quite clearly, “If you aren’t making Private Label now, don’t start”.)
5. The decline and fragmentation of traditional mass media – in both reach and effectiveness – is an acknowledged cause. It is no longer easy to plant authoritative messages in consumers’ minds with an obvious ROI.
6. A lot of manufacturers believe that the aspirational quality, emotional benefits and image cues they have built up through years of advertising can never be replicated by Private Label – yet the introduction of Private Label into mainstream categories is challenging this. Most at risk, consequently, are second and third tier brands since they lack these image and quality cues.

So what can be done?

There are several strategies, most of which are not new. However, the six reasons outlined above, as to why it happened in the first place, contain the real answers to the problem. In many ways, retailers are simply a strong competitor who is brilliantly copying established innovators. So, the solution is clear – more product and sales innovation, more quickly, to a higher quality. Radical strategies such as diversification into new channels, or NPD, will then back up traditional brand strategies.

However, denial, the too-hard basket, Sales versus Marketing, arrogance as to brand strength, as well as lack of insight as to consumers’ real view on large companies (particularly overseas ones), have allowed a succession of marketing directors to ignore the problem. Here’s how to start the comeback.

Brand management versus product stewardship
If the category is full of products with no emotional benefit, no aspirational quality and therefore no image, it is obviously at risk from (1) any kind of competitor and (2) strong retailers in particular. Therefore, brand strategies (not line extensions, sales strategies or a few hastily cobbled together promotions) are essential. This means that good brand managers must have a good process, and rather than ducking, everyone in the organisation above their level should support them in addressing the opportunities and threats they have identified.

Portfolio strategy to support brand strategies
Brand strategies must be complemented by portfolio strategies. A typical CPG category contains six large sub-categories.

• First, there is the super premium category – probably not large volume in grocery, very profitable, generally imported.
• Then there is premium –while marketers are busy making this, the salesforce are often busy getting it on frequent and deep discounts so that it can become mainstream. While this tactic has merits in encouraging trial and shifting lots of pallets, it has to be done sparingly. The premium category will have a good price premium, may have authentic local cues or may be from overseas. It will be chockablock with real (emotional) brands.
• Then comes mainstream. Often the largest, again contains good strong brands with good blue-collar socio-economic cues, sensibly priced, often discounted. This category can be very cluttered.
• Value is another often cluttered category.
• Next is economy which is the heartland of the original Private Labels. Its cues: large pack sizes, ‘buy one get one free’, banding together of packs. The consumer who regularly buys only on promotion is particularly strong at this level.
• Finally, there is sub-economy. Budget and No Frills are familiar brands here. Until now, only the courageous have shopped at this level, or people who are or have to be genuinely bargain-obsessed.

Many manufacturers simply don’t segment in this way. While it isn’t the only segmentation model that should be used, it is the most fundamental model for running health checks on your category.

If you don’t have real (emotional) brands playing in all these categories, you will be under attack from any kind of competitor. It follows that if you play in economy, you must have an economy brand, and if you play in mainstream, you must have a mainstream brand. Brands are often associated only with premium categories. Not so. Some of the world’s most powerful brands sit in mainstream. It can be argued that McDonald’s, for example, sits across mainstream and value categories.

Winning in the portfolio, and in the category
So, it is essential that as well as having a portfolio of brands across the key categories, you have brand strategies in each. You can be as aspirational in lower-value categories – for example, I am a thrifty Mum – as you can be in premium or super premium – for example, don’t I look good eating, drinking this? If branded manufacturers do not field a brand in the value or economy category, a competitor (retailer) will!

Good news
The good news, from a strategic perspective, is that retailers are copying the established leaders. True, they may be playing unfair in-store with shelf space, facings and obvious priorities. True, they are now advertising. But they are copying. So, if they have copied product quality, if they have copied packaging quality, if they have copied advertising, then obviously the way to address this must be – to borrow from Edward De Bono – sur/petitious. Sur/petition is leaping over the competition.

If your next sur/petitious idea is not around yet, getting it should be top priority. How about a new processor manufacturing technique that gives some capability, that will take at least three or four years for the competition (including the retailer) to copy? A core competence in generating better creative is much more likely to succeed than “Let’s hope this year’s advertising does the trick”.

If you have not yet discovered an emotional benefit to build on the functional benefit of your product, this must also be top priority. For example, if your product genuinely does taste better, it’s time to turn up those messages about discerning consumers, how the difference is important, and get into competitive advertising/communication. If you believe that value (the functional benefit – “I buy it because it saves some money”) will help you build a sustainable strategy, then bring in an emotional value benefit now. Emotional value cues come as: nurturing, being clever with money, stretching the budget, being a good Mum, getting one over on the big boys.

Sounding too hard?
Already, this will be sounding too hard. Most strategies in CPG are too hard. By definition, CPG is so intensely competitive, with such low barriers to entry, such focus and reliance on a few key retailers, and such established manufacturing technology, that keeping your brand different and real is always in the too-hard basket!

Think of it as seeds and harvest. By continuing to brand-build the way you have for a few key brands with budgets concentrated on these and no alternative form of brand development, firms are in effect continuing to harvest the ideas built many years ago.

Retailers still get us in-store
True, there is little sense in forward-thinking marketing strategies being put in place if you don’t have talented key account managers to keep banging the drum. Key Account Managers need to be involved at the portfolio level of strategy. They need to be goaled, motivated to prevent down-trading from premium to mainstream, and so on. They need their own strategies and tools to persuade retailers of the (obvious) benefits of true emotional brands.

We can do this
As with so much marketing, this article basically recommends that the strategies that have worked so well in the past should be reviewed and re-engineered. Where it goes one step further is in the urgency that is required. If brands cease to own (through continual innovation) every aspect from flavour/efficacy/performance, to aspirational image/quality, to the way they dialogue with consumers, the industry will change irreversibly towards store brands. There will be more CPG people working for retailers, there will be fewer second and third tier brands and SKUs on the shelves, and the consumer will become loyal to their retailer brands.

Is this really something that CPG CMOs can continue to put in the too-hard basket?

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The island kingdom has been diagnosed with MAIDS (Mobile And Internet Dependency Syndrome) according to new UK research from Lloyds TSB. Two thirds of those surveyed (63 per cent) admitted that they feel concerned if they leave their mobile phone at home and three quarters (72 per cent) worried if they are unable to check their emails for a day.

At the extreme end, three per cent admitted to feeling completely freaked out and panicky if they leave their mobile phone at home with a further one per cent suffering physical symptoms of panic – such as sweaty palms and a racing heart.

When asked what they would do if they were half an hour from home before realising they’d forgotten their phone, 15 per cent said they’d make time to go back and collect it, would get a partner, friend or family member to bring it to them or would send a courier to pick it up.

Dependency on e-mail access is just as great, with five per cent admitting that they become very stressed when deprived of checking their inbox.

Those aged between 16 and 24 are the most dependent on their mobile phone. A third (33 per cent) stated that they would take action to get their phone back if they left it at home compared to just one in 10 (nine per cent) of over 55s.

The younger generation are also the most dependent on email with those aged between 16 and 24 being the most worried if they cannot check their messages. Nearly a fifth (19 per cent) said they’d be concerned or stressed compared to just 13 per cent of over 55s.

Reasons respondents gave for feeling concerned when they don’t have their mobile phone or can’t read their email:

• Fear that people won’t be able to get hold of them and will be worried (34%)
• Worry that they’ll be missing out on important business calls and correspondence (18%)
• Concern that plans will change and they’ll be out of the loop (12%)
• Afraid of missing out on important social calls and invitations - did the palace phone?(11%)

To quote William Shatner (aka Captain Kirk), joking about obsessive Star Trek fans: “get a life”.

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