WFM: A Leader in Social Media

I recently read a few parts of Groundswell by Josh Bernoff and Charlene Li, and found many useful tips for thinking about online marketing strategically. As people all over the world spend ever-increasing amounts of time on the internet, marketers need to discover ways to reach their consumers through this new medium. Many companies have made an effort by creating a Facebook page, setting up product review functionalities or establishing other forms of online presence; however, very few seem to have a clear goal for their online marketing programs. Rather, marketers put their brands and companies online because they are following trends or feel as if they have to be online in order to be viewed as “current.”

The authors of Groundswell take this desire to be online one step further by putting structure around where companies should be online and what online tendencies are for customers. The categorization of “creators”, “critics”, “collectors”, “joiners” and “spectators” presented in the book has particularly compelling implications for marketers. By conducting market research to determine customers’ online behavior, marketers can tailor their online presence to fit the needs and contribution comfort level of their customers. There are a few companies that excel in tailoring their online presence to fit their customers; nevertheless, marketers have much to learn from those companies that use social media strategically and thoughtfully.

Whole Foods Market (WFM) has done a noteworthy job in creating an online experience for its customers. It is unclear whether WFM discovered its customers online tendencies through market research, trial and error or luck, but the company has certainly honed in on what works and used the online space as a way to communicate with customers foster customer relationship with WFM. For example, the WFM website contains multiple recipes featuring products available in the stores and seasonal ingredients. Customers can rate or comment on the recipes. Many customers offer suggestions or modifications for the recipes, and interact amongst them selves as well as with the WFM online contribution staff. The recipes create a WFM community around food that provides a favorable environment for customers.

The vibrancy of the WFM online recipe community suggests that the company’s core customer segment consists of “critics”. Customers seem to enjoy commenting on recipes and rating them, but fewer offer recipe suggestions in separate online portals soliciting them. Consequently, WFM has recognized the online preferences of its consumers, makes considerable efforts to create online content and allows customers to interact with this content.

Facebook is another online channel that WFM has used successfully to interact with customers. WFM team members contribute regularly to the WFM Facebook page and receive hundreds of responses of recipes, pictures and other content loaded to the site. Facebook allows WFM customers to form a community around the company and food, which creates another favorable online experience for customers. WFM also uses its strong Facebook presence to combat negative press and respond to discontented consumers. When customers use the online channel to either complain about poor in-store service or product quality, a WFM employee responds directly to the consumer within days and attempts to rectify the problem. This type of outreach allows the company to control the sentiment online and proves to customers that the company is committed to maintaining a positive relationship with them.

WFM has also had success in using online spaces to promote the community aspect of its stores. WFM has a highly active Flickr account and posts pictures from store events all over the country. These events include cooking classes, cooking demonstrations, farmers’ markets and holiday celebrations that are aimed at making WFM an experiential product as opposed to a more common grocery store concept. The company posts these pictures to Flickr and then links them to the WFM corporate site, Facebook and other social media channels. This strategy is likely to be effective in raising the interest level of infrequent customers who are less likely to know about WFM non-core services. WFM loyalists are key in spreading awareness to peripheral customers since loyalists will comment on these photos and generate activities in their network’s news feeds related to WFM. Using techniques such as picture posting illustrates WFM efforts to link its social media strategy across different sites and create a holistic online experience for its customers that goes far beyond buying groceries.

Walmart is Watching: Should We Care?

Customers

Walmart has long fought a host of reputational battles, and the company must be careful to avoid yet another over the issue of privacy. People are quick to criticize Walmart on various topics, including fair wages, local business development and the environment. While the company has made impressive strides in revamping its environmental strategy, it has not had quite as much success with other issues. If Walmart is perceived as going “too far” in collecting personal information, it may enter into confrontation with a host of new adversaries. It is in Walmart’s best interest to be mindful of how and when it uses personal data.

Consumers will be less likely to oppose Walmart’s data collection if it is obvious that the company is using the data to benefit customers. The article mentions that Walmart has been successful in using its data to predict demand levels and respond with accurate ordering. Customers will recognize the value of collecting data if it ensures Walmart shelves are stocked with the products they want. The company has been effective in using data to benefit consumers, so it should not be shy in telling consumers. Customers will appreciates efforts that allow Walmart to remain a low cost provider.

The company is likely to run into trouble if it uses the data to price discriminate or increase prices. If customer demographic information leads the company to increase prices on certain items that are determined to be more price inelastic, Walmart runs the risk of upsetting its customer base. Disgruntled customers are likely to refuse to share personal information or look to other providers with whom they feel a deeper sense of trust. Data must be used for actions that have an overt customer benefit in order to keep customers at ease with passing on their personal information. If the consumer advantage is evident, consumers may even share information willingly and freely.

Suppliers

Walmart’s extensive purchasing data is invaluable to suppliers who are trying to accurately forecast production levels and track demand across geographic areas. Working with Walmart affords them the opportunity to improve efficiency and focus advertising on areas where sales are slipping. While Walmart is notorious for using its size to influence suppliers’ actions, suppliers have much to gain from satisfying this retail behemoth. The article mentions that 100 million customers, one third of the U.S. population, walk through Walmart’s doors each week. No other retailer has the ability to give suppliers access to that many consumers. For suppliers who can use purchasing information to improve their product offerings and marketing, Walmart is the ideal place to reach a host of customer segments.

Suppliers must know their customers well in order to determine proper relations with Walmart. Since Walmart concentrates its data collection on purchasing activity, suppliers will not gain insight into customer profiles from Walmart’s databases. It is essential that suppliers conduct marketing research in order to understand their customer base, and determine factors such as loyalty and shopping habits. Major CPG players, such as P&G or Unilever, have a few legacy brands with loyal, long-time consumers. Consumers expect these items to be available in all major retailers, so retailers are obligated to carry these items in order to satisfy consumers. If retailers are able to use their internal data and market research to measure customer loyalty and expectations, they can push back on Walmart to maintain margins on these products. Losing distribution of these items would be detrimental to Walmart, so the company would be more inclined to compromise. Suppliers must use data collection to their advantage to identify areas in which they may have some leverage over the retailer, and then use this information to protect their profitability.

How do Consumers React to Environmental, Social and Health Positioning in the Food Industry?

Major Research Questions:

1.     What environmental and social messaging resonates best with consumers?

   Does consumer behavior toward green products change depending on whether product consumption is conspicuous or private?  If a difference does exist, how does this behavior change?

I am a sucker for social and environmental positioning.  Throw a Fair Trade label on a box of tea or bag of coffee and I’m sold.  Heck, I spent a year of my life helping farmers get Fair Trade certifications.  Needless to say, I fall under the “Greenest Americans” minority in Joel Makower’s “American Environmental Worldview” bell curve.  Unquestionably, environmental and social marketing works well if I am the target.  Since I am such a fan of this new wave of marketing, I am really interested in trying to remove my personal biases and look at how the American consumer base is reacting to this nontraditional marketing. 

I am choosing to concentrate on the food sector because this industry is riddled with impulse buying decisions.  Food purchases are relatively inexpensive, so customers spend less time researching and preparing for the buying process.  Further, customers usually do not engage in a long deliberation period at the point of purchase.  Habit and price are assumed to dominate purchasing decisions in this space, but the proliferation of alternatively positioned products and the rise of retail concepts such as Whole Foods Market suggest that other factors are influencing buying decisions.   I want to get at the heart of what is turning impulse buying green.

In this research report, I am operating under the assumption that some key words related to environmental and social product attributes are more effective in influencing consumers’ decisions than are others.  At this point, I am still uncertain as to which phrases are the most effective.  My assumption is that this will differ by target segment.  Here is an initial list of the terms that I wish to consider:

Health: natural, organic, no GMOs, % organic, vegan, no bioengineered ingredients

Social: Fair Trade certified, % fair trade, ethically sourced, fairly traded, locally grown, local, vegan, Girl Scout, % profits to nonprofit

Environmental: Rain Forest certified, organic, % organic, % profits to nonprofit

Health: natural, organic, no GMOs, % organic, vegan, no bioengineered ingredients(This study will not look at consumers’ reactions to the traditional health claims, such a “zero trans fat” or “low in carbs”, but rather will consider health claims related to lack of chemicals or artificial ingredients.)

Clearly, there is some overlap as to which words fit under each category, but I think that this may lead to one of the most interesting components of the research.  I tend to associate the term “organic” with both beneficial health and environmental connotations, but am unclear as to how most Americans would react to this word.  Understanding how these words resonate with consumers will be extremely important for green marketers crafting marketing communication.  I threw in the term “Girl Scouts” in attempt to get at consumers’ reactions to social positioning before it was a hot topic.  Whether the Girl Scouts knew it or not, they were way before their time.  I am curious to see the difference in consumers’ responses to Girl Scout cookies versus Fair Trade bananas.  At first blush, these products seem light years away from one another, but I have a feeling that they may share a common thread in positioning.

The second piece of this research will look at whether individuals’ consumption environment influences green purchasing decisions.  With this, I am really trying to figure out whether people that order a Venti Fair Trade Coffee with Soy Milk at Starbucks buy Folders and whole milk for their homes.  My guess is that social pressure and lifestyle aspiration may increase the demand for environmental and socially positioned products in public environments, hence the rise of Starbucks and Chipotle.  In supermarkets, where social pressure is less prevalent, customers may retreat to cheaper options that they can enjoy in the privacy of their own home.  However, only research will have the answer.

I plan to use Joel Makower’s book, “Strategies for a Green Economy” as a resource for my report.  I will also read Makower’s blog as a means of gathering information.  Makower’s work will be particularly useful since he is viewed as a leading thinker in green business.  Any more reference or research suggestions are welcomed and appreciated.

True of False? "The Customer is Always Right"

This week I did some reading on marketing research that was particularly valuable. The articles that I read, “Turn Customer Input into Innovation” by Anthony Ulwick, “Metaphorically Speaking” by Gerald Zaltman and “Kenna’s Dilemma” by Malcolm Gladwell; all challenge the notion that the “customer is always right”.  Maybe I am biased from the countless summers that I spent working in the restaurant business while in school, but I took issue with this notion as it was first introduced.

            I began with Gladwell’s article, which made for an ideal starting point since it was replete with examples of how customers have led marketing executives astray.  I must admit; I have a lot more respect for Coke after hearing about the extensive customer taste testing and research that went into the launch of the “New Coke”.  Prior to reading this article, I would have considered that launch one of the most ill advised new product releases in history.  However, Gladwell changed my mind as he described the panic of Coke marketers as customers repeatedly picked Pepsi over Coke in blind taste tests as their competitor continued to gain market share.  I now empathize with those who believed something had to be done. 

The moral of the Coke story hit me hard and I believe that it is a lesson to all of us involved in customer insights.  What customers say and do may not always be aligned.  While New Coke prevailed in blind test tastes by impressive margins, it was a complete failure in the market.  The reality is baffling until completely digesting Gladwell’s maxim: “Customers do not consume beverages blindly.”  This insight is invaluable in new product development.  In order to understand how customers truly feel about a product, marketers must simulate as natural of a trial experience as possible.  People must me permitted to bring the product into their homes and integrate it into the course of their loves in order to evaluate it properly.  I find this thesis particularly compelling and will attempt to keep this concept in the back of my mind, as I imagine that I would regret the day that I forget the lessons from Coke.

While Gladwell’s argument for simulating reality in product trials resonated well with me, I was less convinced by Zaltman’s case for greater customer abstraction.  After some convincing by Gladwell, I was able to buy into Zaltman’s assumption that consumers have a difficult time articulating what they truly want or need.  I was right there with him as he posited that most social communication is nonverbal as well.  His argument fell apart for me when he suggested that having interviewees make a photomontage of a research topic would allow researchers to tap into consumers’ deeper thought processes.  In my opinion, it is dangerous to assume that individuals will spend six hours thinking about this assignment prior to the marketing interview.  Further, I would expect that individuals would be frustrated as they search for relevant images to no avail.  One’s propensity for creativity must certainly affect the quality of the materials produced in the process.  While there may be some value in moving the customer toward a more abstract way of thinking, my limited time and budget as a marketer will be spent exploring the product usage process more deeply.

I was drawn to Ulwick’s article since he takes particularly outcome-oriented approach toward market research.  Ulwick recognizes customers’ adeptness in highlighting small improvements or missing features for existing products, but posits that customers are not able to stretch much further to give game changing insight.  Ulwick is probably accurate in this assessment.  Intuitively, it seems reasonable that customers will not know that they want something that does not already exist.   Nevertheless, customers are aware of the results that they want from a certain product, whether it be greater comfort, increased ease of use, better accuracy, etc.  Rather than asking customers what features they want to achieve these goals, it seems logical to leave the product design up to professionals that are aware of the product attributes that are most likely to achieve the desired results.

Overall, these articles won me over with the argument that the customer is not always right, or at least not in the papal, infallible sense of the expression.  Customers know what they like and don’t like, but may not always be able to properly articulate what aspects of the product lead them to making that evaluation.  That is where experts must fill the void in designing and assessing products.  Customer involvement in the development process remains critical, but the generally accepted way that marketers interpret customer insights must be modified in order to create truly innovative product offerings.            

"Personal" Persona

The jury is still out.  What I am about to embark upon could quite possibly be either my hardest or easiest marketing assignment ever.  Creating a persona for you (or people like you).  Sure, I have access to endless information stored amongst my grey matter; however, the difficulty will arise in overcoming personal biases and adopting an objective lens.  Well, here goes nothing.

Transitioning Newlyweds

Median Age- 26

Education- 100% have a college degree; 50% have or are working toward an advanced degree.

Career Types- Professionals entering mid-level positions predominantly in a corporate or government setting.

Income- Highly variable depending on whether the couple has a dual income or single income due to one spouse pursuing higher education.

 

Personality:

 

• There is nowhere that we would rather be than the great outdoors.  Running, biking, skiing, we love it all.  We have absolutely no self-control when it comes to outdoor gear.  Who doesn’t need powder skis, downhill skis and twin tip skis?  We would spare no expense on a lifestyles product that maximized our outdoor experience.

• We are relatively tech savvy, but cannot sit still long enough to use technology for recreation.  Tech competent is probably a more accurate description for our capabilities than tech mavens.  Apple products fit our lifestyle as we value a dependable operating system for both work and school and are willing to spend more for better performance.  Smart phones are a must in order to stay connected when we are on the move.  We answer emails, all 30 that we receive daily, within 24 hours.
  

 

• No location has been able to tie us down.  In the past eight years, we have moved at least eight times.  The moves are becoming less frequent as we transition out of school, but we won’t shake the travel bug anytime soon.  Our trips are becoming shorter and we are graduating out of hostels into more comfortable accommodations.
  

 

• While we are professionals, public service is still important to us.  Mike is a military officer and Shannon spent time working for the Department of State.  The couple is likely to transition out of the public sector completely within the next three years, but a sense of service, environmental stewardship and social welfare will be enduring values.
  

 

• We love good food and wine, but this is where we tend to make cuts to accommodate for a single income and student loans.  We still cannot resist the occasional night out at a top restaurant, but this has become more of a monthly or bimonthly treat.  Instead, we dedicate quite a bit of discretionary spending to premium food products and cook at home.  We are Whole Foods loyalists.  Health concerns lead us to purchase organic products and we favor smaller brands over food giants.  We are always looking for great new microbrews and wine labels.
  

That wasn't too bad after all.  Now, if only someone would create a product for me so that I can see whether I am a stellar market research candidate... 

UT Sustainable Business Summit

   For my first entry and general introduction to the world of blogging, I feel obligated to make a shameless plug for my latest pet project, the 2010 UT Sustainable Business Summit.  

  As head of marketing I may be biased, but I truly believe that this year's event has an exceptional speakers line up.  Trust me folks, this is not something to be missed.  Nate Hurst, the mastermind behind Walmart's sustainability strategy, will kick off the event with some remarks about the current state of Sustainable Business.  Love 'em or hate 'em, Walmart is one of the largest companies in the world with assets totaling more than the GDP of most countries.  Just from a sheer size perspective, Walmart's capacity to impact the sustainable business movement is mammoth, and Nate's influence over sustainability at Walmart makes him one of the most influential people in sustainable business today.  I, for one, look forward to hearing what is next for the world's largest retailer.

   More than 25 speakers from companies of all sizes, Austin locals to Fortune 500s, will round out the speaker series, addressing some of the most polemic topics in sustainability.  More than 200 people have already signed up to partake in a day of learning and networking, so I encourage you to join us and share your opinions on sustainable business.  Tickets are available at utsummit.org.  I hope to see you there.