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To Label Me is to Negate Me (Sometimes): The case for occasion-based segmentation

Posted by Peter Cronin

Wed, Aug 29, 2018

beer

One of my favorite lunchtime routines is to walk from my office over to the Trillium Brewing Company in nearby Seaport to grab a 4-pack of their current small-batch, limited-time, freshly brewed double IPA.

As far as Trillium knows, I’m an “Epicure”—a beer drinker characterized by my ardor and appreciation for craft beer.

During the summer months, I occasionally stop at BJ’s Wholesale Club to get a 30-pack of Corona (along with a couple of limes) because I like to have something to offer guests when hosting a cookout. In these instances, I’m looking for value, but not necessarily the cheapest option because quality and image are still important to me. BJ’s might consider me your average “Cost-aware Enthusiast.”

Every year on my birthday, which typically coincides with the start of March Madness, I stop at my local beer store to buy a six-pack of Samuel Smith’s Oatmeal Stout. They probably consider me a “Sports Oriented” beer drinker.

So, who am I? A beer snob, a deal-seeking but conscientious host, or a sports fan?

The answers are “all of the above” and “it depends.”  

In some categories (like beer) the same person may experience a variety of needs in any given time and make different choices based on those needs. Segmenting people by their dominant motivation/need risks majorly oversimplifying reality.

To understand opportunities for growth in categories like this, a better alternative is occasion-based segmentation. Rather than segmenting people into groups, occasion-based segmentation considers multiple use occasions instead of just one. As you can see from my example, I’m more apt to purchase one type of beer over another based on the occasion (e.g., time/day, who I’m with, what I’m doing).

Occasion-based segmentation is particularly successful when anchored in the psychology of habits. When a behavior is rewarding, we tend to repeat it. The more we repeat it, it eventually becomes a habit. For many people, drinking beer is habitual. Take my backyard BBQ, for example. Throughout the summer, I repeat the cycle of having friends and family over, eating good food, drinking Corona with lime, and feeling relaxed, restive and connected. This occasion has all the key components of a habit: my craving (motivation) to host triggers a routine of good food and drink that results in feeling connected (reward). Feeling connected makes me to do it again.

When we ask people about their occasions at CMB, we also ask what motivates these choices and to describe the rewards—including the emotional and functional outcomes. These inquiries become the base of the segmentation. 

Segmenting your market by usage occasion can be a powerful source of insight about your consumers. By linking brands to occasions and understanding the psychological needs and emotions that drive choices, marketers can position their brands to be the preferred choice. They can tailor messaging to each occasion to build engagement, preference and loyalty.  

Brand managers at The Boston Beer Company, AB InBev, MillerCoors, etc., should be less concerned about whether I’m a “High Impacter,” a “Macho Male,” a “Trend Follower,” or a “Chameleon.” Classifying me attitudinally will dramatically underestimate the complexity of my buying habits. 

Instead, understanding the core types of beer drinking occasions (and the driving psychological needs and emotions of each), how much volume each occasion represents, and which groups of people over-index on them, can enable marketers to make informed decisions on where and how to focus their messaging, promotions, and product development efforts.

Peter is a brand guy who is fascinated with understanding how others see the world, and an equal opportunity beer drinker who refuses to be labeled.

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Topics: market strategy and segmentation, research design, quantitative research, brand health and positioning

What Amazon Can Teach Us About Delivering on Customer Loyalty

Posted by Ashley Harrington

Wed, Apr 25, 2018

 

amazon packages (resized)

I live in a historic Boston neighborhood rich in restaurants and charm, but poor in parking. If you have a car, you have two choices: spend a fortune on a dedicated monthly parking spot or drive in circles until you find free street parking.  I don’t like to waste money or time, so I don’t own a car.

I don’t own a car, but I do have two kids. So, I need stuff and I need it all the time. Enter, Amazon.

I use Amazon on all my devices and have multiple apps. I use it for both planned purchases and impulse buys. I Subscribe and Save for everything from baby wipes to granola bars. I order groceries from Amazon Fresh. I try on clothes with Amazon Wardrobe. I buy e-books. I watch movies and TV shows on Prime. I use Now to get emergency toddler bribes delivered in an hour.

On top of all that, I pay Amazon for the privilege of buying things with them with an annual Prime membership. If that’s not the ultimate sign of customer loyalty, I don’t know what is.

If I was responding to an Amazon loyalty study, I would certainly make it into the “Super User” group, checking all the boxes for how we might define loyalty: frequency of purchases, cross shopping, willingness to try new categories, likelihood to recommend, etc. 

My “Super User” status didn’t happen all at once—it was gradual thanks to the “Amazon Effect.” Over time, Amazon plucked one more category of our household expenses from another retailer.

I work with clients every day to help measure, understand, and improve their customer loyalty. While few companies have the infrastructure and the sheer breadth of product and services in such a frictionless way, there are lessons any brand can learn from Amazon’s excellence in curating a faithful customer base.

 Here’s how Amazon keeps me loyal:

  • Anticipates my needs: I wasn’t actively thinking about how great life would be with a paper towel subscription. But, I gave Subscribe and Save a shot and now we never run out and I can't imagine my household without it.
  • Gives me back my time: With Fresh, I can enjoy time with my family instead of spending it in the grocery store (if you enjoy taking your children to the grocery store, I nominate you for a Parent-of-the-Year Award!)
  • Provides me with flawless execution and problem resolution: Amazon’s apps and website are easy, fast, and intuitive. Once I order something, I know exactly when it’ll arrive on my doorstep. If there is an error, Amazon’s customer experience team is polite and fair in resolving an issue.

While I am a loyal customer, there are certain things I don’t buy on Amazon. Some because they aren’t sold (yet) (e.g., wine) and others because I enjoy shopping elsewhere. And there are Amazon services that aren’t for me. For example, I don’t need to tell Alexa to turn on my lights.

 So, even for this Super User, loyalty has its limits.

 Ashley Harrington is a Research Director at CMB who recently starting using “Amazon” as a verb and probably has goldfish crackers in her bag.

Topics: customer experience and loyalty, brand health and positioning, ecommerce, retail

NASCAR Races to Stay Relevant for the Next Generation

Posted by Brian Jones

Wed, Apr 18, 2018

As a stock car racing fan who makes an annual pilgrimage to the Daytona 500, I’ve experienced the evolution of the NASCAR brand from the seats of the iconic 2.5-mile track.

No place is the emotional connection between brand and customer more palpable than at an event where drivers enter the stadium in a gladiator-style procession before climbing into their cars for a 200+ mph chariot-like battle on a 31-degree banked asphalt track.

NASCAR 1

It is exhilarating.

But while NASCAR excels at creating an emotional experience for its current loyal fan base, the organization is challenged to deliver a branding experience that will attract the next generation of fans—while how people consume sports continues to evolve.

On top of that, NASCAR must motivate existing and new fans to view/attend/buy not only its own brand, but the myriad co-sponsors.

NASCAR is built on cobranded endorsements on all levels—including individual athletes (e.g., Dale Earnhardt and Jeff Gordon), teams (e.g., logo-plastered M&M’s Toyota racecar), tracks (e.g., Lowe’s Motor Speedway), and even the race series themselves (e.g., NASCAR’s Xfinity Series). More recently, at the 2017 Daytona 500, NASCAR rolled out Monster Energy NASCAR Cup SeriesTM—the latest sponsor of the premiere racing series.

So how is NASCAR adapting to meet changing consumer demands?

  • Less prominent onsite branding: At the 2017 and 2018 Daytona 500’s, gone were the prominent product swag and logo placements of its former series sponsors, Sprint (2008-2016), Nextel (2004-2007), and NASCAR’s 31-year relationship with RJ Reynolds (1971-2003). In its place, I witnessed Monster Energy bringing its next generation youthful appeal—less signage and more experiential, like offering fans ride-alongs on off-road vehicles.
  • New marketing channels: NASCAR is supplementing real-time coverage with exciting social media experiences geared towards the digital-savvy generation of younger driver-athletes.
  • Improved customer experience: The International Speedway Corporation (ISC) has invested $400+ million in a venue retool of Daytona’s Speedway and the surrounding property to improve fan experience.
  • Investment in content strategy: NASCAR recently created a Content Strategy Group to centralize its creative, digital, social marketing, and advertising operations.
  • Revamp of scoring system: Perhaps the most surprising change is NASCAR’s recent revamp of its point system. In 2017 NASCAR rewrote the rules for how drivers compete and earn championship points during the season. No other major sport has changed its product so completely in response to changing consumer opinion about how they want to experience their sports entertainment.

At the time of the Monster Energy deal announcement in 2017, Mitch Covington, Monster’s VP of Sports Marketing said, "I think you'll see a little more Monster at the Daytona 500. But at the same time, the sponsorship's not about painting it all green. It's really about doing some really cool things with sponsorship."

NASCAR 2

But last week, NASCAR and Monster Energy announced it’s “highly unlikely” the partnership will continue beyond the 2019 race season—a sign NASCAR is reevaluating its current sponsorship model.

To simplify sponsorship opportunities for brands, NASCAR may bundle its top sponsorship with the sanctioning body to include the tracks and tv partners, omitting series naming rights which has been used in the past.

NASCAR Chief Operating Officer Steve Phelps told ESPN, “Our competitive advantage is that our fans understand the importance of sponsorship and they go out and support our sponsors… we just think there’s a better model to make sure that sponsors want to stay involved more broadly.”

The future of NASCAR’s sponsorship model is still unknown, but Covington’s quote sums up their efforts. For sponsorship to be effective, NASCAR must strike a balance between honoring what fans have always loved about the NASCAR brand (+ sponsors) while embracing innovation and change.

Brian is a loyal NASCAR fan who also enjoys helping clients solve their biggest business needs using advanced market research methodologies like CMB’s Brand FX— a solution that measures the social, emotional, and functional benefits a brand provides to customers.

Topics: customer experience and loyalty, BrandFx, brand health and positioning

What’s in a Name: CVS-Aetna Acquisition Brand Strategy

Posted by Amy Modini

Tue, Mar 20, 2018

merging.jpg

Earlier this month, shareholders approved the $69 billion CVS-Aetna acquisition, marking one step closer to what would be the largest health insurance deal in history—far exceeding Express Scripts’ 2012 acquisition of Medco Health and  the CVS-Caremark Rx deal of 2006.

The CVS-Aetna announcement could dramatically reshape the healthcare industry.

From a brand strategy perspective, this acquisition is interesting because it involves two distinguished brands in the healthcare space—CVS is the country’s largest pharmacy while Aetna is the nation’s third largest healthcare provider.

Two powerful brands coming together

There are many layers to mergers and acquisitions (M&A), but developing a sound brand strategy is one of the most critical components of any agreement—especially when it involves two mega brands like CVS and Aetna.

Aligning on a brand strategy is as important as sorting out financials, operations, logistics, and everything else that comes with the complexities of this kind of deal.

The tricky part is there’s no prescribed framework for the “perfect” M&A brand strategy. How CVS and Aetna plan to proceed is still unclear—whether they remain separate, combine names, or land somewhere in the middle.

But there are several best practices to consider when developing an M&A brand strategy.

Brand strategy must match the business strategy

Why are you merging/acquiring? Is it to expand a geographical footprint? To fill a product or service gap? Whatever the reason, the “why” (e.g., the business strategy) MUST inform your brand strategy.

Dig into each brand to identify what the intrinsic qualities are and let those distinct value propositions guide your strategy.

Account for your audience(s)

Internal and external brand communications must align and support the overall brand strategy and should be tailored to each brand’s audience(s).

In the CVS and Aetna case, both brands touch many constituents—patients, employers, physicians, etc. The brand strategy must account for all these touchpoints and create messaging and experiences that meet each group’s specific expectations and needs.

Bring everyone to the table

M&A is a unique opportunity for brands to refresh their image. However, developing a lasting strategy should include employee input and buy-in from the top down.

Be transparent about the chosen brand path—ideally employees should be privy to changes ahead of time so they can begin to internalize the new brand promise.

Especially in the CVS-Aetna case, employees on the frontline who interact with patients and customers every day need to understand the chosen brand path to ensure a smooth and successful branding transition.

The branding gist

Whether it’s a $69 billion acquisition or the merging of two “mom and pop” shops, building a brand strategy is an integral piece of the M&A puzzle.

There’s no “right” way to approach this, but keeping in mind the business strategy, impacted audiences, and employee input will help make the development and implementation of an effective M&A brand strategy much smoother.

Topics: brand health and positioning, healthcare research, insurance research, health insurance research

Competing on Image Isn't Enough: Why and How to Make Your Brand an Expression of Identity

Posted by Dr. Erica Carranza

Wed, Jan 24, 2018

girl with coffee.jpeg

Brand image matters.

For marketers, that’s a truism—and for good reason. Brand image does matter. I see evidence of it every day, in the work we do at CMB, uncovering insights that help brands craft winning strategies. We spend a lot of time helping our clients decide how to fine-tune their brand image, market it effectively, support it with products and customer experiences, and track their progress. Some brands have been wildly successful in their pursuit of a brand image that has helped them maintain a competitive edge (e.g., Disney is “magical,” Apple is “innovative,” Walmart is “affordable”).

But the traditional focus on brand image hasn’t kept-up with people’s lives.

We live in a world where people are inundated with options. Are you looking for something to eat? Something to watch? Something to wear? Whatever it is, rest assured you’ll have lots of possibilities. Even something as mundane as shampoo yields over 100,000 hits on Amazon. It’s gotten to the point where scientists are studying the effects of “too much choice” on our wellbeing.

In a market this saturated, competing on brand image is no longer enough.

Most brands already strive to communicate a positive brand image and a well-defined set of brand benefits. In every industry, many brands are vying for the same customers and claiming the same (or similar) attributes. People are quick to say that Apple is “innovative”—but they say the same thing about Samsung. So, when they’re choosing their next smartphone, “innovative” won’t be a deciding factor.

Furthermore, competing on brand benefits (like service, cost, and convenience) isn’t always practical. I witnessed that firsthand in my time at American Express. Great customer service and Membership Rewards were once part of a unique value proposition. But, nowadays, card benefits offered by one brand are quickly copied by others, and the industry is stuck in a “race to the bottom.” In their efforts to beat competitors and increase share, brands are undercutting profitability to offer ever richer card rewards.

What’s a brand to do in a world where it’s gotten this hard to compete on brand image and benefits?

The answer: Compete on brand tribe.

People love brands that help them express their identities. And, thanks to the explosion of options for consumers, every choice is now a chance to express who we are.

Yet decades of scientific research have shown that our identities are social—they are shaped by our social groups, norms, and connections. Who we are depends on our real and aspirational relationships with other people. So truly strategic brands lead people to equate using the brand with joining a tribe that expresses an identity. And the secret to creating that connection is a clear, compelling brand customer image. After all, brands aren’t people. But brand customers are.

Your brand’s customer image is the mental picture people have of the kind of person who typically buys or uses your brand. It’s related to brand image, but it’s not the same. To take one of my favorite examples, consider Subaru. When we ask people to describe the brand Subaru, they say “safe” and “reliable.” But when we ask them to describe the typical Subaru owner, they say “middleclass,” “family-focused,” and “outdoorsy.” They picture someone with kids and a dog, who likes to hike, and who supported Bernie Sanders in the 2016 presidential primaries. There’s a lot of nuance to their image of the typical Subaru customer—including attributes a person can embody, but a brand cannot.

Of course no image of your brand’s typical customer will truly capture your actual customer base. Your brand’s customer image is more like a stereotype: A set of overgeneralized assumptions about typical members of your brand tribe. But people tend to rely on stereotypes—often unconsciously—in order to navigate our complex world. Accordingly, brand customer image has powerful effects on consumer behavior.

For example, at CMB we’ve found that:

  • When people identify with their image of a brand customer, they are 14-times more likely to choose that brand, and 15-times more likely to recommend it.
  • As predictors of brand engagement, our measures of identification with the perceived customer routinely beat perceptions of the brand—even on dimensions as important as quality, price, value, service, convenience, authenticity, reputability, and innovation.

Taking all this into account, it’s no surprise that many of the most iconic ad campaigns have invoked a clear, compelling customer image. Remember “I’m a Mac / I’m a PC”? Dove’s “Real Beauty”? Or the insidiously cliquey “Choosy moms choose Jif”?

To effectively compete on brand tribe, make sure that you have answers to these three questions:

  1. What is your brand’s current customer image? Does your target audience already have an image of the kind of person who uses the brand? If so, how clear is it? What attributes define that image (e.g., what demographics, motives, and values)? And what (if anything) makes it unique compared to competitors’ customer images?
  1. How compelling is that image? Is it an image of a person your target audience can relate to? Is it a kind of person they know and like, or would like to know? Does it represent an “ingroup” or an “outgroup” tribe—and how appealing is it compared to their images of competitor brand tribes?
  1. How can you optimize that image? What’s working about the image, and what isn’t? Which assumptions should you reinforce—and which should you work to change—to own a customer image that is compelling and unique for your audience, and realistically attainable for your brand?

If we want to influence consumer behavior, we must remember that consumers are people, and that people are social animals. Show them a group that they want to belong to, and they’ll adopt the attitudes and behaviors they believe to be normative (i.e., typical) for that group—including choosing the same brand.

Yet most brands today are not leveraging this powerful insight in a truly disciplined, quantitatively-validated, systematic way. 

And in the current competitive context—across industries—it’s more important than ever. Brands assume that consumers are asking themselves, “What brand do I want to use?” But, at a deeper and more decisive level, they are really asking: “Who do I want to be? Do I want to be the kind of person who uses this brand?”

Interested in learning more about how CMB leverages consumer psychology, advanced analytics, and market strategy to help clients build customer-centric brands? Watch out latest webinar on BrandFx and the three critical pieces to the brand engagement puzzle:

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Topics: AffinID, Identity, brand health and positioning