January 24, 2007
BrainTrust Query: Is it just me, or are contradictions running rampant in retail marketing?
By Bill Bittner, President, BWH Consulting
I fly a small plane. I have an instrument rating, so I occasionally find myself flying solely by reference to the instrument panel. The mantra I have learned for flying is “Crosscheck, Interpret, and React.” In order to have back-up, there are multiple instruments that provide the same data, so the first step is to Crosscheck all the instruments to make sure they are saying the same thing. The next step is to Interpret the information, i.e., is your altitude or direction changing in the intended manner? The last step is to React in order to correct for any deviation. All these steps happen kind of simultaneously while your flying, but I have found them to be a good way to evaluate many other life situations.
There were many instances during the NRF conference this year when I found myself stuck at Crosscheck. I was not sure how to React to the messages I was receiving because they were inconsistent, therefore the Interpretation was ambiguous.
Here were some of the contradictions that struck me:
First, let’s consider the theme. The focus for the NRF show was CRM and target marketing to support customer loyalty. Yet the largest retailer in the United States does not even have a frequent shopper card and prides itself on operating a no-frills distribution channel. So how significant are the mist screen digital displays and new targeted messaging solutions demonstrated at the show?
Many of the manufacturers present emphasized the importance of their brands and the development of an image. Yet all the recent surveys of merchandise sales have confirmed the increasing importance of private label sales.
One of the exhibitors was a sports underwear brand named Under Armour. They have seen phenomenal success with their underwear line and are now branching out into sporting footwear – all this in a country where obesity among young people has just been declared one of the top health problems.
The primary description of today’s consumer is the time-starved individual who only wants to get their shopping done and then get on with their life. On the other hand, many of the retailers represented (and targeted) at NRF are “specialty retailers.” Who has the time to visit these stores?
I think one of the reasons I enjoy flying is that it is pretty much black and white. It is rare that the instruments don’t all say the same thing, so ambiguity is unusual (that’s a good thing). Real life is not the same and that certainly goes for retail as we try to understand what motivates the individual consumer.
Discussion Questions: What do you think are some of the reasons behind retail contradictions? Are there more you have seen?
I remember an advertising course I took where the professor said the number one mistake people make in advertising is to apply their own beliefs to the general public. His example (this was a professor) was book reading. At the time, the average individual read one book a year. That was the average so you know there were a lot of people who did not read any. Anyone building an ad campaign that depended on people reading a book was making a mistake.
I think contradictions will only escalate as markets become more fragmented and individuals exercise their unique tastes. As more targeting occurs, niche markets will continue to survive because they are no longer forced to homogenize. The one common theme that will remain is value. The emphasis will be on quality and price. For manufacturing goods, this means a flexible supply chain that begins with quality producers and a message that emphasizes quality. For groceries and other FMCG retailers, it means wide assortments that meet the needs of many niches.
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Congratulations Bill on being instrument rated. That is a terrific feat! Also, you raise a topic that is likely to be of high interest and do so in way that brings an interesting twist to it by comparing it to the flight scenario.
My take on this is that it is not at all “inconsistent” that there are so many messages floating around. There is not “one” consumer and those retailers (and manufacturers) are not all pursuing the same consumer, nor competing for the same dollar in all instances. There is room enough for all of these different floats in the retail parade–but they must be unique and differentiated enough to still cause the wide eyed amazement, oohs and aaaahs, as they pass by Main Street.
The case in point is the advertising professor who appears to have smugly commented that advertising via a book is a fool’s errand–yeah, sure–if you are trying to appeal to every adult and child. However, if your target is the literary set, that may in fact be effective. Tiffany’s is not Costco–but both will sell you a diamond ring. For each to succeed however, they need to have a handle on who shops, what they shop for, what they intend to do with the product, why they chose that store, etc.
It appears to me that we are making the assumption that retail is operating effectively, meaning that these contradictions and ambiguities are part of the world retail must work within.
Our data shows otherwise: 92% of all retail organizations have a 70% customer service rating or worse, 96% of all retail organizations meet customer expectations at 65% or worse, and 100% of all retail organizations are 25% inefficient or worse.
This data suggests (!) that these contradictions and ambiguities may be part of an overall set of fundamental difficulties in the retail world. Let’s call these “retail’s core, unsolved problems.”
Our data says further that retail does not know how to solve these core, unsolved problems. This is a difficult position to be in, so the natural response is to say that these problems cannot be solved. The next step is to say that these are not really problems. The next step is to put these issues in the background and forget about them.
What happens now? At this point, we are in a never-never land of contradiction, because every organization has a different set of unsolved problems, cover-up strategies, and adaptation strategies. We also have a huge need to be distracted from these unsolved problems, so we look for “cool” and “sexy” and “novel” technologies, ideas, fads, etc.
This puts us in the place where we are. It isn’t that the retail world is all this complex. Complex, yes, but not THIS complex. Instead, it is that we are not facing our most critical problems. Anyone wanting to see the data behind my statements can please reach me through RetailWire, and I will be happy to show you what we have found.
Herb Sorensen points out the error of using averages in understanding shopper behavior. This type of error is equally present in attempts to classify consumers. The variation in my own shopping behavior from day to day or year to year is as great as the variations among the small demographic (54 years old, male, married, father of three, consultant, sometime runner, and owner of too many phones) to which I belong. My shopping objectives vary from getting a specific item to browsing alternatives, from getting a low priced product to getting a well designed product, from valuing a specific brand to paying little attention to brand.
The “contradictions” observed by Bill reflect the contradictions inherent in consumers themselves. These consumer contradictions also reveal some of the folly, for most retailers, of pursuing CRM-oriented strategies. Your success in targeting me today provides little assurance that you will be successful tomorrow. Retailers can only attempt to understand how many consumers, at how many points in time, will assign enough value to the particular combination of products, service, location and experience the retailer provides to allow them to earn a profit. When the value is high and the combination of attributes distinct and clear, success will look incredibly easy, as Starbucks has shown. When the value is low or the combination of attributes is undifferentiated, failure will seem inevitable.
So, let the contradictions proliferate, just don’t let them occur within the retailer’s own position.
Retail does live in a world of contradictions. Breadth of assortment provides customer service while slowing turns, reducing profitability, and potentially reducing customer service through decision paralysis. Customer service creates differentiation, yet no two people define the term in the same way.
I think the most intriguing aspect of this conundrum is in the definition of the word “value.” Bill’s right about the equation. However, “value” is really a complex algorithm all its own embedded in a simple equation. Defining value requires labeling these variables…which only becomes valid for the subject group being discussed. Then, assigning coefficients to these variables…well, that’s only valid at the sub-group level. So what should marketers do?
The first step to managing the contradictions is to clearly state the consumer group you are attempting to serve. Spend the time understanding and then keeping clear about their definition of value. Construct an offering which delivers superior value, and engineer your company to do it profitably.
Simple! LOL as my texting kids would say.
My first reaction to Bill’s excellent question is “welcome to the world of consumer marketing.” Much of the conflicting information Bill cites is driven by the fact that most retailing organizations are now trying to embrace a “give the consumer what they want” philosophy as opposed to the old “let’s see how many people want to buy this” model. The problem is “figuring out what consumers want.” The truth is that they change their mind in reaction to every stimulus and situation–and sometimes they just flat out don’t know at all until they see it.
The consumer decision tree (CDT), central to most category management philosophies, is a great example. We often use those branches in the tree to make very concrete decisions. But the truth is that even the most well-researched CDT’s are based on “the majority of the people do it this way the majority of the time.” There are no absolutes (that I’m aware of anyway) in dealing with consumers.
Just had a flashback to my corporate marketing days when I used to challenge the Market Research departments to “just tell me yes or no. How hard is that?” and once suggested to an outside firm that they change their name to “Ambiguity ‘R Us.” (They didn’t consider it one of my finer positioning strategies I guess.) But the truth is that consumers will always react to a variety of stimuli in a variety of ways. And that will keep things interesting.
Bill, you should be commended for raising thoughtful questions about our industry’s mixed messages. By definition (it seems to me), a consumer-centric focus is at odds with a mass-marketing focus. The more we choose to recognize, track and cater to the differences between customers (and the differences within individual customers) the less we can enjoy the scale advantages wrought by mass production, mass media, and a tuned supply chain.
The Utopians among us would like to believe that clever technologies can help bridge the natural gap that divides mass marketing from micro-marketing. Tools are helpful, but as an industry we must also examine our business practices and assumptions and seek more systematic ways of detecting and meeting customer needs.
For decades, reliance upon mass numbers and big averages has allowed brands and retailers to sweep their errors under the rug. Half our advertising was wasted and markdowns were just part of the game. When we shift our thinking to answer the question, “how well did we do with Customer A on her back to school shopping trip?” our response and entire methodology must begin to change.
Colour me confused. I have just two words to add to this discussion–competition and differentiation. These do not equate to contradiction. How many times have we said in this space that not everyone wants the same thing and that no single consumer wants the same thing all of the time? Are competition and differentiation not the basic reasons why manufacturers and retailers boast so vehemently about the choices they supply in response to consumer demand? Obviously having customer demand that ranges from wanting the cheapest to the best (and being willing to pay for what they perceive to meet that criteria) could be termed contradictory. But that’s life, folks. Not everyone thinks the same or can afford the same or wants the same. We are a contrary kind of breed, we shoppers. Bill and others are interpreting contradiction as bad; I see contradiction as a positive recognition that retailers can’t satisfy all of the people all of the time.
Retailers can make money in an infinite variety of ways. Some need CRM and use it every day. Some ignore CRM. Some have frequent shopper cards. Some don’t. No single retailer needs to please everyone and no single strategy is superior. You can be a dollar store or you can be Nordstrom. You can be a sitdown whole-meal restaurant like Applebee’s or you can be coffee-focused Starbucks. You can invest in training and low-turnover compensation, like The Container Store or you can assume your staff is temporary, like McDonald’s. There are many roads to profitability.
Your example of the “average” person reading one book a year is an excellent illustration. Not only do we all project ourselves onto the world we are observing, we also tend to think of populations in terms of central clumps. That is, averages, or on a more sophisticated level, segments or “buckets.”
The problem is that a lot of the world doesn’t fit this kind of thinking. The 80/20 rule (Pareto’s Principle) calls attention to an asymmetric, continuous distribution. There is something abhorrent to us about having radically unequal distributions, so we ignore them, attempt to override them, create murderous political philosophies to attempt to banish them.
So retailing, like the rest of the world, is largely NOT a rational undertaking. But that doesn’t mean that its “self-image” can deal with the reality.
The difficulty here is that the general public’s wants and needs are changing all the time. Keeping up with those changes is difficult, and retailer’s can’t be all things to everyone.
NRF reports today that their conference showed technology as being a trend the industry must address. So if I’m a consumer on my way home from work and need some bread, I should be able to link my cell phone into a site that tells me who has the brand I want at the best price in the direction I’m going? Not happening. If that’s what the consumer really wants, no wonder retailers stick to their own beliefs.
Many of your observations are valid and valuable. The truth is that over 25% of retailers don’t do anything with their CRM data (or so our recent survey showed).
But your assumption about specialty retailing is not quite right. Customers ARE time starved. Their shopping trips are “missions,” not excursions. Specialty stores are important because the customer is saying, “I know what I want, and I don’t need a lot of noise.”
For example, if I want to buy a hedge clipper, I’d like to go directly to the hedge clipper department. I don’t want to have to wade through an apparel department to get there, just because the (unnamed) retailer thinks this will drive incremental sales.
Specialty stores answer the need for a focused experience. There’s a reason they are also called “category killers.” They also provide better all around service than most mass merchants or department stores.
From a purely financial perspective, there are more specialty retailers than there are mass merchants, etc. So, follow the money.
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Congratulations Bill on being instrument rated. That is a terrific feat! Also, you raise a topic that is likely to be of high interest and do so in way that brings an interesting twist to it by comparing it to the flight scenario.
My take on this is that it is not at all “inconsistent” that there are so many messages floating around. There is not “one” consumer and those retailers (and manufacturers) are not all pursuing the same consumer, nor competing for the same dollar in all instances. There is room enough for all of these different floats in the retail parade–but they must be unique and differentiated enough to still cause the wide eyed amazement, oohs and aaaahs, as they pass by Main Street.
The case in point is the advertising professor who appears to have smugly commented that advertising via a book is a fool’s errand–yeah, sure–if you are trying to appeal to every adult and child. However, if your target is the literary set, that may in fact be effective. Tiffany’s is not Costco–but both will sell you a diamond ring. For each to succeed however, they need to have a handle on who shops, what they shop for, what they intend to do with the product, why they chose that store, etc.
It appears to me that we are making the assumption that retail is operating effectively, meaning that these contradictions and ambiguities are part of the world retail must work within.
Our data shows otherwise: 92% of all retail organizations have a 70% customer service rating or worse, 96% of all retail organizations meet customer expectations at 65% or worse, and 100% of all retail organizations are 25% inefficient or worse.
This data suggests (!) that these contradictions and ambiguities may be part of an overall set of fundamental difficulties in the retail world. Let’s call these “retail’s core, unsolved problems.”
Our data says further that retail does not know how to solve these core, unsolved problems. This is a difficult position to be in, so the natural response is to say that these problems cannot be solved. The next step is to say that these are not really problems. The next step is to put these issues in the background and forget about them.
What happens now? At this point, we are in a never-never land of contradiction, because every organization has a different set of unsolved problems, cover-up strategies, and adaptation strategies. We also have a huge need to be distracted from these unsolved problems, so we look for “cool” and “sexy” and “novel” technologies, ideas, fads, etc.
This puts us in the place where we are. It isn’t that the retail world is all this complex. Complex, yes, but not THIS complex. Instead, it is that we are not facing our most critical problems. Anyone wanting to see the data behind my statements can please reach me through RetailWire, and I will be happy to show you what we have found.
Herb Sorensen points out the error of using averages in understanding shopper behavior. This type of error is equally present in attempts to classify consumers. The variation in my own shopping behavior from day to day or year to year is as great as the variations among the small demographic (54 years old, male, married, father of three, consultant, sometime runner, and owner of too many phones) to which I belong. My shopping objectives vary from getting a specific item to browsing alternatives, from getting a low priced product to getting a well designed product, from valuing a specific brand to paying little attention to brand.
The “contradictions” observed by Bill reflect the contradictions inherent in consumers themselves. These consumer contradictions also reveal some of the folly, for most retailers, of pursuing CRM-oriented strategies. Your success in targeting me today provides little assurance that you will be successful tomorrow. Retailers can only attempt to understand how many consumers, at how many points in time, will assign enough value to the particular combination of products, service, location and experience the retailer provides to allow them to earn a profit. When the value is high and the combination of attributes distinct and clear, success will look incredibly easy, as Starbucks has shown. When the value is low or the combination of attributes is undifferentiated, failure will seem inevitable.
So, let the contradictions proliferate, just don’t let them occur within the retailer’s own position.
Retail does live in a world of contradictions. Breadth of assortment provides customer service while slowing turns, reducing profitability, and potentially reducing customer service through decision paralysis. Customer service creates differentiation, yet no two people define the term in the same way.
I think the most intriguing aspect of this conundrum is in the definition of the word “value.” Bill’s right about the equation. However, “value” is really a complex algorithm all its own embedded in a simple equation. Defining value requires labeling these variables…which only becomes valid for the subject group being discussed. Then, assigning coefficients to these variables…well, that’s only valid at the sub-group level. So what should marketers do?
The first step to managing the contradictions is to clearly state the consumer group you are attempting to serve. Spend the time understanding and then keeping clear about their definition of value. Construct an offering which delivers superior value, and engineer your company to do it profitably.
Simple! LOL as my texting kids would say.
My first reaction to Bill’s excellent question is “welcome to the world of consumer marketing.” Much of the conflicting information Bill cites is driven by the fact that most retailing organizations are now trying to embrace a “give the consumer what they want” philosophy as opposed to the old “let’s see how many people want to buy this” model. The problem is “figuring out what consumers want.” The truth is that they change their mind in reaction to every stimulus and situation–and sometimes they just flat out don’t know at all until they see it.
The consumer decision tree (CDT), central to most category management philosophies, is a great example. We often use those branches in the tree to make very concrete decisions. But the truth is that even the most well-researched CDT’s are based on “the majority of the people do it this way the majority of the time.” There are no absolutes (that I’m aware of anyway) in dealing with consumers.
Just had a flashback to my corporate marketing days when I used to challenge the Market Research departments to “just tell me yes or no. How hard is that?” and once suggested to an outside firm that they change their name to “Ambiguity ‘R Us.” (They didn’t consider it one of my finer positioning strategies I guess.) But the truth is that consumers will always react to a variety of stimuli in a variety of ways. And that will keep things interesting.
Bill, you should be commended for raising thoughtful questions about our industry’s mixed messages. By definition (it seems to me), a consumer-centric focus is at odds with a mass-marketing focus. The more we choose to recognize, track and cater to the differences between customers (and the differences within individual customers) the less we can enjoy the scale advantages wrought by mass production, mass media, and a tuned supply chain.
The Utopians among us would like to believe that clever technologies can help bridge the natural gap that divides mass marketing from micro-marketing. Tools are helpful, but as an industry we must also examine our business practices and assumptions and seek more systematic ways of detecting and meeting customer needs.
For decades, reliance upon mass numbers and big averages has allowed brands and retailers to sweep their errors under the rug. Half our advertising was wasted and markdowns were just part of the game. When we shift our thinking to answer the question, “how well did we do with Customer A on her back to school shopping trip?” our response and entire methodology must begin to change.
Colour me confused. I have just two words to add to this discussion–competition and differentiation. These do not equate to contradiction. How many times have we said in this space that not everyone wants the same thing and that no single consumer wants the same thing all of the time? Are competition and differentiation not the basic reasons why manufacturers and retailers boast so vehemently about the choices they supply in response to consumer demand? Obviously having customer demand that ranges from wanting the cheapest to the best (and being willing to pay for what they perceive to meet that criteria) could be termed contradictory. But that’s life, folks. Not everyone thinks the same or can afford the same or wants the same. We are a contrary kind of breed, we shoppers. Bill and others are interpreting contradiction as bad; I see contradiction as a positive recognition that retailers can’t satisfy all of the people all of the time.
Retailers can make money in an infinite variety of ways. Some need CRM and use it every day. Some ignore CRM. Some have frequent shopper cards. Some don’t. No single retailer needs to please everyone and no single strategy is superior. You can be a dollar store or you can be Nordstrom. You can be a sitdown whole-meal restaurant like Applebee’s or you can be coffee-focused Starbucks. You can invest in training and low-turnover compensation, like The Container Store or you can assume your staff is temporary, like McDonald’s. There are many roads to profitability.
Your example of the “average” person reading one book a year is an excellent illustration. Not only do we all project ourselves onto the world we are observing, we also tend to think of populations in terms of central clumps. That is, averages, or on a more sophisticated level, segments or “buckets.”
The problem is that a lot of the world doesn’t fit this kind of thinking. The 80/20 rule (Pareto’s Principle) calls attention to an asymmetric, continuous distribution. There is something abhorrent to us about having radically unequal distributions, so we ignore them, attempt to override them, create murderous political philosophies to attempt to banish them.
So retailing, like the rest of the world, is largely NOT a rational undertaking. But that doesn’t mean that its “self-image” can deal with the reality.
The difficulty here is that the general public’s wants and needs are changing all the time. Keeping up with those changes is difficult, and retailer’s can’t be all things to everyone.
NRF reports today that their conference showed technology as being a trend the industry must address. So if I’m a consumer on my way home from work and need some bread, I should be able to link my cell phone into a site that tells me who has the brand I want at the best price in the direction I’m going? Not happening. If that’s what the consumer really wants, no wonder retailers stick to their own beliefs.
Many of your observations are valid and valuable. The truth is that over 25% of retailers don’t do anything with their CRM data (or so our recent survey showed).
But your assumption about specialty retailing is not quite right. Customers ARE time starved. Their shopping trips are “missions,” not excursions. Specialty stores are important because the customer is saying, “I know what I want, and I don’t need a lot of noise.”
For example, if I want to buy a hedge clipper, I’d like to go directly to the hedge clipper department. I don’t want to have to wade through an apparel department to get there, just because the (unnamed) retailer thinks this will drive incremental sales.
Specialty stores answer the need for a focused experience. There’s a reason they are also called “category killers.” They also provide better all around service than most mass merchants or department stores.
From a purely financial perspective, there are more specialty retailers than there are mass merchants, etc. So, follow the money.