80/20 Market Research

Many years ago in graduate school, I took a seminar in advertising. The professor was a distinguished British gentleman who was a veteran of many years at the highest levels of the industry. This professor made it a point from the first day of class on to impress upon the students that advertising was a “weak force” that couldn’t do much more than nudge somebody to buy something they were already inclined to buy in the first place. Furthermore, he told us the people most likely to pay attention to a brand’s advertising were those who were already users of that brand.

Those sorts of proclamations from the professor took a little bit of the air out of my tires. As a child of ’70s and ’80s television, I had grown up believing that advertising was a powerful force that changed people’s minds on a dime and could persuade people to switch brands with just a little clever wordplay or a well-executed design. That was the whole reason I was in grad school studying it! I didn’t want to believe my professor’s arguments about advertising’s limitations. But ultimately, he convinced me by virtue of the fact that, like most Americans, I automatically accept any information delivered to me in a British accent as being authoritative.

Since then, I have seen for myself over the course of my career that the professor’s assertions were true, both about advertising and marketing as a whole. It is profoundly difficult to change people’s minds or behavior, even if your message can fight its way through all of the clutter of competing marketing that the target audience is doing its best to ignore. Word-of-mouth is much more likely to influence a consumer than anything the marketer can do or say.

I bring all this up because it provides some context for my appreciation for a piece by Ray Poynter that was recently featured on the GreenBook Blog. Poynter argues that, in most cases, a marketer should focus 80% of its market research on its customers. This is in contrast to the way much research was done in the past, which tended to focus on the whole market. A major underlying assumption of the whole market approach is that it’s important to understand a lot about non-users of a brand in order to figure out ways to convert them. In other words, it assumes that marketing is a powerful force, fairly capable of overcoming the consumer’s skepticism, previous habits or apathy.

Focusing a large majority of the research on existing customers is more of a nod to the factors that my grad school professor was talking about – essentially that marketing works best when it is applied to consumers already positively inclined toward the brand. Or, as Poynter says in the piece, “In many cases, perhaps most cases, the best way to grow a brand is to increase the number of customers who ‘love’ it, because these people will recommend it, use it ostentatiously, and offer it in group settings. In most cases, a new line, a new campaign, a new service will only succeed if existing customers respond positively to it.”

It’s a very sensible approach, yet I suspect that a lot of marketers who should be following this 80/20 recommendation are devoting less than 80% of their research efforts on existing customers. It can be hard sometimes for even experienced marketing veterans to admit how much more powerful the consumer’s own inclinations and social peers are than our best-laid marketing plans. And if you don’t have an advertising professor with a persuasive British accent on hand, reading Mr. Poynter’s article in its entirety is the next best thing to remind you otherwise.


How Big Data is Like Cable TV

When I want to impress upon my kids how much the world has changed since my youth, one of the facts I like to point out is that I remember a time when most people only had access to four channels on television: the three local network affiliates, plus PBS. When I was about 8-years-old, my household got cable, which expanded our options to channels 2 through 13…although not all of those slots had any content beyond a screen that continuously displayed the current time, temperature and barometric pressure.

Now, in 2014, I can’t even tell you how many channels our household has access to. Hundreds, certainly. There are so many that I have trouble remembering the channel numbers of even the small handful I watch on a semi-regular basis. In short, I have more television than I can handle. My choices over the past 40 years have expanded exponentially, yet I can still only watch one show at a time and there are still only so many hours per day that I can devote to television. As much as I enjoy the variety offered by modern cable and satellite providers, the truth is that most of that variety is wasted due to limits on my time, attention span and competing priorities like my pesky needs to go to work and to sleep.

I started thinking about that cable TV situation today after reading this post about Big Data on George Kuhn’s “Building Your Brand” blog*. If you work in marketing or market research, you have no doubt been reading a lot about “Big Data” over the past couple years. For those unfamiliar with the term, it refers to a recent trend in data analytics that stresses mining very large databases to discover patterns and insights. As an example, if you use a shopper’s card at your local grocery or drug store, you are contributing to that store’s Big Data analytics efforts. Those cards keep a record of your purchases that goes into the store’s database and can be used to create a profile of your buying habits. How detailed of a profile? Consider the famous (or perhaps infamous) example of how Target used Big Data to learn that a teenage girl was pregnant before her father was even aware of it.

Another familiar application of Big Data is the way that Amazon recommends products to you based on what you’ve previously purchased or looked at on their site. Closely related to that are Netflix’s recommendations of movies and TV shows based on the profile created by your previous viewing. In fact, Netflix has reached the point where it’s using profiles to actually develop new shows, like the popular “House of Cards,” designed to appeal to common user preferences.

If all that seems a little creepy and Orwellian to you, you’re not alone. But you can take heart in the fact that, in the marketing realm, Big Data has some fairly significant limitations. Chief among those limitations is that much of the data sits un-analyzed for lack of people to deal with it. I have read any number of stories in the past year or so about an acute lack of analysts with the heavy-duty quantitative backgrounds needed to deal with Big Data at the largest corporations. Some small and mid-sized companies are collecting data and then quite literally doing nothing with it — not only because they lack the manpower, but also because they don’t really know where to even begin.

And that brings me back to the point of Kuhn’s post on “Building Your Brand.” In it, he points out that traditional market research is sometimes more actionable than Big Data analysis, in part because it is more accessible and easy to deal with. With any marketing data, “Big,” small or in-between, the challenge is to turn raw findings into knowledge that helps the marketer make a better decision. A simple survey or a qualitative in-depth interview might not be as precise as an algorithm based on millions of sales transactions, but in many cases they may offer more manageable paths to a useful insight.

Okay, you say, but what does all that have to do with cable TV? Just this: Technology has greatly expanded the amount and variety of TV available to me but, as a practical matter, the quantity of TV that I’m able to consume has not changed. The Big Data movement suffers from the same problem. Organizations now have access to many, many more data points than they can realistically ever use to make decisions or even look at in a meaningful way. In both cases, computers keep getting smarter and faster, but the humans they serve remain woefully limited. So, until our future robot overlords inevitably take over the world, Big Data will remain underutilized.

Now if you’ll excuse me, I’m off to check if one of the Terminator movies is on cable tonight…

*Full disclosure: George is my boss at Research & Marketing Strategies, Inc. This entire post may or may not be an exercise in shameless brown-nosing.

Shameless Self-Promotion

One of the drawbacks to working in market research is that I usually can’t talk much about my work. The projects are almost always confidential and oftentimes reports that I spend a lot of time working on and am very proud of are only seen by the client and a small handful of coworkers.

Fortunately, every once in a while, I get a chance to contribute to something meant for public consumption. Such was the case with a project that my employer recently completed for an organization called CenterState CEO. If you live in Central New York, you’re probably familiar with the organization. For the uninitiated, CenterState CEO is a Syracuse-based chamber of commerce and economic development group that covers 12 counties in the middle of New York State. At the beginning of each year, they produce an Economic Forecast Report which is widely distributed throughout the region. My colleagues at Research & Marketing Strategies, Inc. (RMS) and I were given the opportunity to conduct the core primary research and produce a good portion of the written analysis contained in this year’s report. 

After several months of work behind-the-scenes, the publication was unveiled to the public yesterday. Since it’s so rare that I get a chance to show off reports, because the book looks really sharp (I can take no credit for any of the graphic design), and because some people have requested proof that I’m capable of writing something that isn’t dripping with snarkery, I’m posting the CenterState CEO 2014 Economic Forecast Report here for your reading pleasure:

CenterState CEO 2014 Economic Forecast Report

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We’re Number 2!

A recently-released study from CareerBuilder and Economic Modeling Specialists International has projected the fastest-growing occupations in the U.S. from now through 2017. Number two on that list is the occupational grouping “market research analysts and marketing specialists.” That category is projected to grow 14% by 2017, adding over 60,000 new jobs during that period. It’s also one of the better-paying job categories on the high growth list with a median hourly wage of $29.10. That’s about triple the wage of the #1 occupation on the list (personal care and home health aides) and almost double that of #3 medical secretaries.

As a market research analyst, my first reaction upon seeing the list was to say to myself, “Yay, Team Market Research!” It’s always nice to see that your chosen profession will be in high demand for the foreseeable future as opposed to being, say, a printer of phone books, a domestic textile worker or Taylor Hicks‘ booking agent.

On the other hand, I am wary that everyone will see this list, decide that jobs like mine are the Hot New Thing and pretty soon the labor pool will be flooded with market research wannabes. So, in the interests of showing the vocationally curious that life as a market researcher isn’t all beer and skittles, I would like to direct your attention to a post I wrote for The Research Bunker Blog (the official blog of my employer, Research & Marketing Strategies, Inc.) in which I highlight some of the adverse side effects of my career choice:

10 Signs That I’ve Been in Market Research Too Long

While you’re reading that, I’ll be here pondering what might have been if I had followed through on my childhood dream job: Becoming the world’s next Six Million Dollar Man.

Market Research Break

As you may or may not know, when I’m not writing this blog or teaching, I am a market research analyst. My first jobs in that field were specifically media research for newspapers. As such, I place a lot of value in readership surveys.

The Marketing Smart Aleck Blog has now been around for a couple months and consists of 20 posts. That seems like a good milestone at which to stop and solicit some reader feedback. Please take a moment to fill out this poll. All answers are anonymous and confidential. And don’t worry about hurting my feelings if your answer is less than glowing. I am nothing if not thick-skinned.

If you have any specific suggestions for improvement, I’d love to hear it. Just leave a comment below. (Unfortunately, comments are not anonymous.)

Thanks in advance for your honest feedback. It will help me make this a better reading experience for everyone.