Voices: the CMB Blog

The other day I read an interesting article in the Chicago Tribune; the headline read:   Hard-hit Millennials less likely to be brand loyal. As a “hard-hit” millennial (those aged 19-34), who owes the value of a modest-home in student loans, I was very interested in what the marketing masterminds of the world had concluded. Turns out, it’s not so good.

According to a study released by WSL Strategic Retail, 25% of Millennials reported that they do not have enough money to cover basic needs. It also concluded that 80% of Millennials believe it’s important to get the lowest price when shopping and 60% would choose a lower priced item over their usual brand if it meant saving a few bucks.  The article also suggests that retailers had previously considered Millennials their “golden ticket” to growth and success. I guess they opened the wrong Wonka bar.

As an agent of consumer research, I began to wonder about our clients and other brand marketers. Are they spending sleepless nights trying to develop plans to compensate for a demographic that is not only unwilling, but virtually unable to spend? Millennials have already been dubbed “untouchable” by traditional marketing standards due to the digital boom; it makes you wonder why brands would invest countless dollars in research and marketing efforts if Millennials are such a lost cause. My advice to marketers? …don’t start losing sleep just yet.

To be clear, we see evidence that supports WSL’s conclusions. Our Winter 2011 Consumer Pulse research on loyalty found that Millennials expressed less loyalty than Boomers to a range of products, with the exception of social networking sites and electronics.

However, we can also find support that suggests Millennials are not as hopeless as they seem. The same Pulse research found that 84% of Millenials consider themselves moderately loyal. In addition, nearly half (46%) said that there are companies or products they’re so “loyal” to that they do not consider price when making a purchase decision. So how does one crack that egg?  What it comes down to is experience. Fifty-three percent of Millenials were willing to pay a bit more to companies they’ve used before and whose products they know they’ll like.

Despite it all, Millennials appear optimistic. Having grown up in an era plagued by war and economic strife, you would think the negativity would bring us down. However, Millennials are seeing a light at the end of the tunnel. According to a separate Consumer Pulse research study CMB conducted in summer 2011, 48% of Millennials surveyed were optimistic that their financial situation would get better in the next 12 months. And nearly a third (29%) said the economic downturn had no effect on their stress levels.

While our pockets may not be as deep as we would like, we are optimistic they one day will be. In fact, the same Summer 2011 Pulse research found 59% of Millennials viewed “being indulgent” a highly important goal/value. When the day finally comes where we can afford to spend, you can bet we will, and loyalty will be a driver. So have a little faith, brand marketers of the universe…we Millennials sure do. 

To read our latest Consumer Pulse reports exploring exploring trends in social media, healthcare, technology, travel, entertainment, and finance, click here.

Posted by Keri Ibbitson. Keri is an Associate Researcher with the Travel and Entertainment team. She considers herself very brand loyal, always choosing General Mills Cocoa Puffs over store brands.

Remember the heyday of the music industry? Remember how the big music companies pulled off a nearly unthinkable feat—convincing consumers to re-buy previously purchased products (vinyl) on a new medium (CD)? That’s what can happen when you’re the only game in town.

In addition to generating “found” revenue, the move from vinyl (including vinyl 45s) to CD had another profound impact—it solidified the album as the industry's unit of purchase. Hear a song you like? Hand over ten or fifteen dollars and you can own it. We’ll of course throw in other songs; maybe you'll like them, maybe you won’t. But you really have no other choice.

Somewhere along the line, young consumers—college students especially—got it into their heads that they no longer wanted to pay for music. And, as hard as it is to believe, they were even less interested in paying for music they didn’t want in the first place. File-sharing sites like Napster were happy to oblige. Not only did consumers begin downloading music for free, but perhaps more significantly, they also embraced a new type of music business model—an à la carte, unbundled model, where they could choose only the music they wanted.  How quickly did the music industry adapt? Well, you know how that played out….

Young consumers appear to be at it again, poised to disrupt another industry that's built its fortunes on a bundled-service business model and on being the only game in town: the pay TV industry. The numbers aren't huge yet, but 5% of consumers in our recent New Age of Television study say they've never had a pay TV subscription. If you’re thinking that these are the folks with aluminum-foil rabbit ears on their TV sets, think again. Half of these "never had pay TV" household decisionmakers are 22-30 years old (more than double the percentage in the study’s total sample) and 63% have college degrees (also higher than the norm) Their income is lower than average, but they've chosen to spend their money on broadband service (they had to have broadband to be included in our study), and not on cable and satellite.

And yes, they are watching TV and movies. They're just accessing that content the same way they presumably learned to do so in college—on their laptops (72% watched on a computer in the week prior to the study), and finding content from aggregators like Hulu (43%), network TV sites (33%), and file-sharing sites (10%). They’re accessing the specific programs they want without paying for unwanted programs or networks in a bundle. They may have to wait a year to watch the first season of Homeland, but that may not be a huge deal, considering how much they'd need to pay for that privilege and how much other content is available online.

The multimillion-dollar question: Will these young consumers eventually get pay TV? The answer: unlikely, at least based on what they told us. Only 15% said that they would definitely or probably sign up within the next 3 years.

Three years is practically an eternity in today’s TV world; who knows what will happen between now and then? Once these consumers settle in to a more stable life, start a family, and make more money, they could decide that the convenience of picking up a single remote for access to a ton of content is too attractive to resist. But then again, by that time someone may come up with an online solution that's just as, or even more, convenient. And maybe it will be less expensive.

We're going to keep an eye on "never had pay TV” consumers in future waves of our study. And the industry will probably want to as well. After all, it’s not as if college graduates—looking for places to live, comfortable accessing content online, and with limited finances—are going to be in short supply any time soon.

Posted by Peter Fondulas. Peter is co-author of the New Age of TV study, a CMB consultant, and President of Fondulas Strategic Research.

Download the summary report The New Age of Television: How Consumers Make Choices in a New Era of Entertainment Options

 

In 6^th grade, my teacher sent home a survey to parents about “What motivates your child.” My mother wrote down three things: candy, money, and anything free. I remember this so vividly because I was mortified. I wanted her to say something meaningful like, “positive praise” or “a creative academic environment.” But no, she laid it all out on the table; that I was a greedy, Twix-loving, free loader.

Here at CMB, we spend a considerable amount of time investigating what motivates consumer behaviors. We want to know what the consumer is doing and why, and we want realistic and actionable insights. Keeping this in mind, I have considered my mother’s response to that long-ago survey and realized she probably should ditch being a nurse and consider a career in marketing.

To take an in-depth look at what motivates consumers to “Like” a company on Facebook and subscribe” to e-mails we partnered with Constant Contact to survey 1,481 Americans over 18.  The top motivators to these two strategic means of engagement are: to receive special discounts, or take part in special promotions. This concept of free giveaways, deep discounts, and being privy to special information is a major driver of customer engagement.

While the understanding that consumers enjoy receiving deals and free gifts may not seem like breaking news at first, it’s an important finding for companies looking to get the best return on where they decide to spend money on special deals, discounts, and giveaways. In a recent Consumer Pulse exploring the motivations of customer satisfaction survey takers, we found many consumers were motivated by the desire to improve the company and service rather than free gifts and incentives. Yet this doesn’t hold true for consumers “liking” brands on social media or subscribing to email lists.

Many consumers don’t particularly care about the bottom line of their favorite brands or businesses. They want to know “what can you do for me?”  Businesses who utilize e-mail and social networking to engage with their consumers need to heed this opportunity. More often than not, consumers want to know how they will benefit from a long-term business to consumer partnership.  Organizations that best understand the underlying intentions of their consumers have the key to turning special promotions and discount programs into lasting customer relationships. 

Long-term engagement is essential to solidifying a brand in any market. With the volume of communication and information sharing ever growing, businesses need to be prepared to meet their markets’ expectations. Consumers spend a lot of time on these outlets and businesses must be able to find a way to provide something meaningful so they’re not lost in the noise. Facebook pages and informational e-mails are only as good as what they can provide to their audience.

Download the full report: 10 Facts about Why and How Consumers "Like and Subscribe here.

 

 

 

Posted by Keri Ibbitson. Keri is an Associate Researcher with the Travel and Entertainment team. She has found her motivational drivers have grown since 6^th grade, and they reach well beyond candy, money & free stuff. 

The 2014 implementation of many of the Affordable Care Act’s (ACA) key provisions has sparked a great deal of speculation about the future of the healthcare market; there seems to be no end to the models predicting how the law will impact the insurance industry. There is no question that reform will shift the health insurance industry to a more retail based model, and in the process challenge traditional insurers to develop new consumer oriented capabilities.  A vital piece of planning for this shift will require understanding changes in consumer decision-making. The traditional approach of health insurers to segmenting the market is unlikely to provide the kind of insight necessary to win in an industry facing such fundamental regulatory, economic, and cultural change.

Traditional segmentation approaches cut the consumer market by demographics (e.g. age, gender) or funding source (e.g. who pays).  This approach was appropriate in years past when there was relatively little competition, differentiation, and when choice was limited. However, the insurance industry’s move to a more complex and competitive model requires a more nuanced understanding of customer needs and differentiators. The newly minted college grad indeed has different needs from their parents moving toward retirement or the young professional starting a family. This is proven out in some recent research we conducted.

To get a better sense of insurance consumers and their preferences, CMB and the South Street Strategy Group analyzed the responses of nearly 1,500 Americans over the age of 18, surveyed as part of CMB’s Consumer Pulse Program.  We then segmented the market by plan features and found five distinct segments that illustrate the needs and goals people have for their insurance coverage.

The segments we found are defined not solely by age or insurance source but by the needs and goals people have for their insurance coverage, and provide far more insight than traditional methods. For example one large segment, who we’ve termed “e-Patients” are the most interested in managing their healthcare or “visiting” their doctor online.  They’re price sensitive, want out-of-network coverage and are willing to switch primary care providers to get the benefits they want. Knowing the attributes of this and other significant segments of the insured population is invaluable to insurance providers who are facing an increasingly customer-centric industry.

To learn more about our approach and see more detailed profiles of the other segments click here.

Posted by J. Mark Carr, Mark is co-founder and managing partner of South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

Last year we partnered with Constant Contact to learn how consumers use Facebook to connect with brands. Take a look at this cool infographic from Intuit and Column Five featuring some of our findings and how small businesses are using social media:

 

 

 

Download the full report here.