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Innovate or die.

 

I suspect many of us have heard that quote, usually attributed to Peter Drucker.

 

The goal of innovation is to create products or services that have original value, perhaps in response to changing industries or solving impeding social, health, or economic challenges. With an effective strategy for bringing about that innovation, your brand can achieve real change and growth. Without an innovation strategy, well, your brand could simply wither away and disappear.

 

 

 

 

Benefits of Innovation

 

Is it worth the financial burden to take time away from day-to-day production to focus on innovation? Given the following benefits, successful marketing and business leaders would say yes.

 

• Remain relevant. In a world that’s constantly evolving culturally, economically, and politically, innovation helps brands remain relevant to people of today, not ten or fifty years ago when the brand was first launched. For example, today, brands take care to understand that gender is a social construct, not a precise measurement that dictates women use pink razors and men use black razors. And, remaining relevant means we work to understand changing consumer perceptions towards online ordering, something that really picked up over the last three years.
• Develop new products. For creative minds, one of the key benefits of innovation is creating brand new products like pet food made from insect protein. Perhaps you’ve discovered a new pain point, audience segment, journey, or channel that warrants building a for-purpose product. Even better, starting from scratch means you can build in privacy, accessibility, sustainability, and many other core features right from the beginning rather than trying to hack them in at a later date.
• Improve your existing products. Innovation is not just about creating new products. It’s also about improving the efficacy of existing products and appealing to new target audiences with those existing products. Growth comes from creating a more valuable product for your existing customers, and new value for new customers.
• Optimize your costs. Innovation can also take place in systems and processes. New methods of building a product, delivering a service, or running operations can speed things up or make them less expensive. For example, we now have the option to use automated signature tools rather than physically mailing or even emailing business contracts.

 

Of course, all of these benefits contribute to the growth and expansion of the business with new or more desirable revenue streams.

 

 

Benefits of an Innovation Strategy

Innovating alone is insufficient to maintain growth. Creating an effective strategy to bring those innovations to life is essential for preparing for long-term unanticipated lows and desirable highs. There are other benefits as well.

 

• Align everyone to the same goals. Creating an innovation strategy helps ensure efforts in all departments and groups are in keeping with the mission and vision of your business. When everyone has the same understanding of how innovation fits into the business growth strategy, every department can aim for the same, overarching goals rather than pursuing unrelated and unfocused individual goals.
• Focus resources. When everyone is aligned to the same goals, company resources, whether financial, personnel, or otherwise will be used much more wisely. Less waste, less distraction, and more energy spent in the right places.
• No resting on laurels. It’s easy to recall the good old days when you accomplished that awesome ‘thing.’ But 5 years ago is ancient in today’s world. Hundreds of new products and companies have since been launched, all of which have the potential to knock your brand out of the top 10 or top 1000 spot. You need to keep on proving that you deserve to be in the top 10 spot or someone else will. Without a strategy to stay there…. you won’t.

 

 

 

What Does a Successful Innovation Strategy Look Like

 

Though every company has a unique innovation strategy, successful strategies share a number of key characteristics.

• Continuous rather than ad hoc. Rather than developing innovations in response to external events, successful strategies have a goal of continuous improvement. Time and funds for innovation are built into every process. It’s expected at every stage from every person.
• Calculated risks. Playing it safe is rarely a good attribute of successful strategies. Be prepared to take risks along the way. Stretch your ideas just out of bounds to see what could be. Iterate, test, repeat.
• Embrace failure. Successful innovation strategies embrace every small and large failure that inevitably happens along the way, recognizing that each one is a learning opportunity. Learn from each challenge and put processes into place to ensure those mistakes can’t happen again. Seek out and embrace criticisms and challenges. Caught early, resolving small challenges will prevent massive mistakes.
• Measure the efforts. Successful strategies keep count. Count the failures, the successes, the ideas, the launches. Set fair expectations for both contributors and the leadership team around those metrics so everyone can monitor growth.
• Create and stick to timelines. Create fair timelines and stick to them. Time spent on innovations that get repeatedly delayed and never become reality are a waste of everyone’s time.
• Get stakeholder buy-in. Rather than waiting until an innovation is ready to launch, successful innovation strategies get buy-in from the leadership team from day one to ensure those innovations are in keeping with the long-term goals of the company. Without early buy-in and ongoing progress reports, those efforts could be completely wasted.

 

 

 

 

What’s Next?

Are you ready to get creative and put innovation at the top of your strategic plan? Our expert team is ready to help you gain new insights about your buyers, brands, and business that will support your next big innovation! Email your project specifications to our research experts using Projects at E2Eresearch dot com. We’d love to help you turn your enigmas into enlightenment!

 

 

 

Podcasts You Might Like

• How I Built This with Guy Raz
• Women in Innovation podcast
• What is Innovation with Jared Simmons
• Moonshoots Podcast: Learning Out Loud with Mike Parsons & Mark Pearson Freeland

 

 

Books You Might Like

• The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail by Clayton M. Christenson
• 101 Design Methods: A Structured Approach for Driving Innovation in Your Organization by Vijay Kumar
• Ten Types of Innovation: The Discipline of Building Breakthroughs by Larry Keeley, Helen Walters, and Ryan Pikkel.

 

 

 

Learn more from our case studies

• Identifying An Optimal Set of Flavor Variants to Achieve Incremental Reach | case study
• Increasing Customer Acceptance For Controversial Pet Food Format – A survey case study
• Monitoring Blockchain Adoption Over Time | A survey case study
• Stretching Brand Equity into White Spaces Using Data Fusion – A pharmaceutical data analytics case study

 

 

Learn more from our other blog posts

• Getting started with consumer, customer, and market segmentation
• How to conduct a journey mapping research project
• Journey Mapping from Enigma to Enlightenment: An E2E Research Webinar

Whether you go by Marketer, Strategist, Founder, Entrepreneur, or Start-Up Master, you need the right insights to help you build your growing business from local to global. Register for a webinar that will help you identify the unique insights that various types of market research can reveal in each stage of your business.
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> Find out which qualitative techniques would be most beneficial depending on the stage of your start-up.
> Identify opportunities to conduct quantitative research without treating questionnaires as a Swiss army knife.
> Learn how you can benefit from business intelligence.
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When

November 17, 2022; 1 to 1:50pm Eastern

The event has passed. Please enjoy the recording!

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Speaker

Annie Pettit, PhD CAIP FCRIC is the Chief Research Officer, NA, at E2E Research. She is a research methodologist who specializes in participant engagement, data quality, and innovative methods. She has spoken at conferences around the world, educating researchers about the best ways to conduct research that is valid, reliable, and actionable. She is also Chair of the Canadian ISO Standards Committee (ISO 20252). Most importantly, she’s an avid ukulele player.

The first thing I think of when I hear the name “President’s Choice” is chocolate chip cookies. Thirty-five years ago, when this store brand first appeared on Canadian Loblaw’s shelves, it packed more chocolate chips into their cookies than any other brand. Even more than the name brand cookies. (Even more than my mom’s home baked cookies.) It was the only “brand” of cookie that any Canadian kid wanted.

 

The President’s Choice brand was the brain child of Dave Nichol, the president of Loblaws Supermarkets, a premium supermarket chain. His strategy was to increase the company’s options by creating top quality products at better prices than the leading brands, products that couldn’t be purchased anywhere else but Loblaw’s. The plan wasn’t to create good products. It was to create great products. The President’s Choice brand, Dave’s choice, launched. The no name brand was launched around the same time, but we’ll get to that story in a minute.

 

The PC brand started with ground coffee. As planned, they made a coffee product that was better than the leading brands. Along with its competitive pricing, it quickly became a top selling item.

 

The beloved chocolate chip cookies followed soon after and it didn’t take long for them to became the best selling cookie in all of Canada. When the competition was known for having just a few “chocolatey” chips (i.e., not real chocolate) in each cookie, a cookie made with real chocolate chips that comprised nearly half of the cookie was a huge success.

 

These two amazing products created a trustworthy foundation for people to want to test out all the other President’s Choice products.

 

The PC marketing strategy was also very focused. Unlike traditional store flyers/circulars which incorporated a multitude of competing brands, the PC team created a print magazine to showcase only their products. Now in digital form, the magazine boasted large tantalizing photos, tasty recipes, household tips, and details about upcoming new products. They also ran many campaigns featuring Dave Nichols as the stereotypical Canadian spokesperson – quiet, kind, and helpful.

 

By 1990, the PC product line had increased to 500 brands including environmentally friendly products, low-fat products, organics, banking, and household items, often innovating in categories before their competitors. Their magazine was read by nearly 60% of Ontario households. PC was 20% of Loblaw’s revenue and generated $1.5 billion in annual sales.

 

In the early 90s, PC products had expanded outside of Canada to the USA. Australia, Hong Kong, UK, Sweden, and South Africa.

 

In 1993, Dave Nichol left the Loblaws team, but when Galen Weston joined as Chair of Loblaws in 2006, he resumed the spokesperson role, also as a stereotypical quiet, kind Canadian. The brand continued to grow and in 2014, PC was named one of the top 10 most influential brands in Canada. In 2016, Strategy chose PC as the Brand of the Year.

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Today, there are more than 3500 PC products on the shelves at Loblaws and other affiliated stores. Canadians no longer view PC products as a store brand, and PC chocolate chip cookies are just as loved as they always were.

 

And what about No Name products?

 

Well, no name products have also been around a long time. Since 1978. It’s always been the value priced brand in the conspicuous yellow package with minimal messaging that frugal shoppers like myself fill their cart with.

 

For many years, no name was just another low-priced option on the shelf. They did only a little bit of marketing. But, in the last 5 to 10 years, people have become much more open to discount shopping. The stigma of buying the store brand was going away. It was time for the no name brand to really shine.

 

In 2019, the brand embraced the minimalism normally associated with store brands and actioned it with a much loved marketing campaign. It included a bright yellow website, a deadpan funny Twitter account, and cheeky minimalist messaging.

 

They even created “merch.”  Confusing to outsiders and humorous to Canadians, we’ve been able to buy bright yellow beach towels that say beach towel and bright yellow t-shirts that say t-shirt. Three years later, the no name marketing campaign continues as a huge success.

 

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If your brand needs some inspiration on how to grow, look no further than the product and marketing strategies of these two Canadian brands. Be singular in your product goals and take risks with your marketing strategies. Bringing real people and humour to people’s lives can make all the difference.

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Learn more from our other blog posts

• Getting started with consumer, customer, and market segmentation
• How to conduct a journey mapping research project
• Tips for the First-Time Conjoint Analysis Researcher
• What are customer personas and why does your brand growth depend on them?

 

Research Objective

• Our quick service partner was expanding to additional high growth markets and needed to understand consumer perceptions of several food categories and formulations against a key competitive brand.
• They needed a trustworthy partner with extensive global experience who could manage all aspects of the project including professional consulting, recruitment, field management, and analysis and reporting.

 

Scope & Methodology

• More than 1000 participants were pre-recruited reflecting GenPop category non-rejectors. Quotas were placed on age and gender.
• Over a period of 6 days, a sequential monadic preference taste test compared a set of ingredient formulations across several product categories. Product brands were concealed.
• Using tablets, participants rated each product across a range of sensory metrics, including flavor, texture, temperature, level of cooking, color, and many other features.

 

Value Delivered

• Using JAR analysis, penalty analysis, and a priori action standards, our partner discovered which formulations were preferred for each product category.
• They also learned which primary and secondary features of each formulation and product needed to be retooled to further increase their odds of success.

 

Are you launching a start-up? Then I bet you have hundreds of questions about your potential product and your target audience.

 

From conceptualization to market sizing and scaling, innumerable questions must be answered in order to build a solid foundation for a successful business.  Fortunately, a full range of qualitative and quantitative research, primary and secondary research, and data analytics solutions exist to help you discover actionable answers to those questions throughout the entire process.

 

During the initial conceptualization stage, you’ll need to gain a comprehensive and unbiased understanding of the problem and potential solutions. You’ll also need to understand the tangents, side-conversations, and unspoken truths and myths that people won’t necessarily share with just anyone. To gain these types of insights from your target audience, qualitative research will be your go-to method.

 

Numerous qualitative techniques can help you at this point so let’s start by learning about in-depth, individual interviews.

 

 

What are individual interviews?

 

As the name suggests, individual interviews are in-depth conversations between a trained moderator and one other person. If the product or service is specifically designed for 2 or 3 people to use together, dyads or triads with colleagues, best friends, children, partners, or spouses may be used as well.

 

Key to this technique is working with a trained moderator. Although everyone has experience chatting with consumers, customers, or clients on a one to one basis, a research interview is completely different from a “chat” or “conversation.”

 

Trained moderators have unique skills which include understanding and responding to the body language of the person they’re interviewing. They have learned how and when to use specific language to encourage someone to share more detailed and personal insights. And, most importantly, they actively strive to prevent bias from unconsciously creeping into a conversation.

 

Interviews are an excellent way to deeply connect with your target audience and get a first-hand look into their emotional and physical real world. Interviews will allow you to:

• Spend meaningful time with them such that they open up about their personal habits, behaviors, needs, drivers, emotions, and opinions.
• Watch and listen to them struggle using unsuitable, existing products and services in their real world, whether that’s in their home, school, office, or gym.
• Watch and listen to them as they attempt to shop for alternative products using both online and offline channels.

These observations will guide you towards a thorough and unbiased understanding of what the problems and required solutions really are.

 

What follows are key questions that an interviewer might address during the initial, conceptualization stage.

 

 

How are people emotionally connected to the problem?

• How do you feel about this situation? What types of emotions do you have dealing with this situation? How strong are those emotions?
• How does this situation interact with different aspects of your life – at home, at work, with your kids or parents?
  
• How do you feel about the available alternatives or lack of alternatives? How do you compensate for the lack of easily accessible alternatives?
• What is your emotional state when you really need an alternative and can’t find one?
• How do your personal finances and resources fit into finding alternatives?

 

 

Who are the primary and secondary stakeholders?

• Who uses or needs the product? Who else might use it if they saw it lying around? Who would do the shopping for it? Who would approve and pay for it? Who would ensure the product gets used? Who would help you use the product and how would they help you use it?
• What frustrations and pain points do you have during the situation? What are the pain points of people who must find alternative options and pay for alternatives for you?
• Who is negatively and positively affected by this situation being unresolved?

 

 

What alternative solutions are being used now?

• What compromises do you make regarding this situation?
• What do you wish you could do? How would you solve the situation?
• How do you find and learn about potential alternatives?
  
• How do you physically manipulate or use current products? What other items do you use the product with? What do you buy to support using the current product?
• Where do you use current and alternative products? How do you use them?
• Where do you store current products and packages? What are your fears about storing them?

 

 

 

What’s Next?

During the conceptualization stage, your main goal is to listen and understand the problem without bias. You need to truly hear people and learn about their personal experiences so that you can identify both major and minor problems that may need to be solved. Individual interviews are the perfect solution for understanding people’s most intimate perceptions and behaviors. You’ll build a broad and deep baseline for what the key problems are and the range of major and minor issues that need to be resolved.

 

If you’re ready to deeply understand your target audience with individual interviews, please get in touch with us. We’d love to help you grow your start-up into a successful business! Email your questions about gathering information to support your startup to our research experts using Projects at E2Eresearch dot com.

 

 

 

Learn more from our case studies

• Building a Strategic Business Plan Grounded in Industry Data – A pharmaceutical data analytics case study
• Creating a Beverage Launch Strategy in a Competitive Market – A beverage desk research case study
• Developing a New Nutritional Pasta Product – A survey + desk research case study
• Identifying Optimum Price Corridors to Predict Volume Share – An advertising price simulator case study

 

 

Podcasts You Might Like

• Masters of Scale with Reid Hoffman
• The Tim Ferriss Show
• Business Wars with David Brown
• How I Built This with Guy Raz

 

 

Books You Might Like

• What It Takes: How I Built a $100 Million Business Against the Odds Hardcover by Raegan Moya-Jones
• The Entrepreneur Roller Coaster: It’s Your Turn to #Jointheride Hardcover by Darren Hardy
• What I Wish I Knew When I Was 20 – 10th Anniversary Edition: A Crash Course on Making Your Place in the World by Tina Seelig

 

 

Conferences You Might Like

• CES Consumer Technology Association (January)
• AWE (June)
• Collision Conference (June)
• The Startup Conference (May)
• SaaStr Annual (September)

 

What is brand equity?

Think about a brand you absolutely love – a store you can never wait to go to, a product that makes you grin just thinking about it.

 

Now think about brands you absolutely hate – a product or company that makes millions of people roll their eyes and groan with disgust.

 

That’s brand equity! Or lack thereof.

 

Brand equity is a complex construct. At its core, it’s a subjective perception of a brand’s value, quality, performance, and personal relevance. It incorporates consumer perceptions related to the product and its packaging, presentation, mission, vision, and values.

 

An easy way to think about brand equity is that it’s the difference in price and preference between an unbranded (or store brand) product and a branded product. Even though they’re the exact same thing – soda, butter, oil, beef, corn, eggs, many people will choose the brand name version because of the higher value they perceive it to have.

 

It can take a long time to build brand equity but one wrong move and it can be destroyed in seconds.

 

 

Why is brand equity important?

There are many benefits to building brand equity, and collectively their benefits are massive.

• Premium pricing: One of the key benefits of high brand equity is the ability to charge premium pricing. When people believe in and love a brand, they will pay more for it. Coffee is coffee but people will pay more for coffee that comes in a cup with a Starbucks brand on it, a name they know and trust. That higher price leads to higher profits which, of course, leads to greater financial success.

 

• Low price elasticity: When people value a brand, they are more likely to purchase that brand even in competitive situations. High equity brands don’t have to worry as much that competitive brands will ‘steal’ their customers with a great BOGO or intriguing offer. And, they don’t have to spend as much time and money creating offers to convince competitive buyers to try their products.

 

• Customer lifetime value: When brands create high equity, their customers are more loyal to the brand and purchase more of their products over a longer time period. Even better, those loyal customers are more likely to try new products created by the brand, whether in the same or other categories. The trust has already been built and customers don’t have to overcome the fear of trying a new brand. They simply need to determine whether the new product meets their needs.

 

• Market resilience: Products with high brand equity are more likely to endure during uncertain circumstances. When environmental, social, and political events necessitate a change in purchase and behavioural patterns, people will still try to retain consistency in their lives. High equity brands offer consistency, trust, and reliability when consumers need it most.

 

• Market power: As a high equity brand that people trust and desire, you have increased opportunities to attract and demand the best. Your demonstrated power in the marketplace means you can attract the best employees, the best suppliers, the best investors, and also negotiate the best prices and rates.

 

 

 

How to Build Brand Equity?

Brand equity can take a long time to build. However, there are a number of strategies and tactics that companies can leverage to get there. The key is playing the long game.

• Understand consumer needs and values: By understanding what consumers truly want and need, you can ensure your products and services are relevant to them. Take advantage of quantitative questionnaires and qualitative focus groups and interviews to understand customer journeys, gaps and pain points, customer personas, and customer segments. Dig deep to uncover their physical, emotional, social, psychological, environmental, and spiritual needs so that you can discover what might convert them from casual tryers to long-term, loyal advocates.

 

• Understand product differentiators: Not only do you need to understand your buyers and prospects, you need to understand what attributes elevate your products and services ahead of your competitors. Primary and secondary research will help you understand the competitive marketplace, market positioning, innovation opportunities, or opportunities for product optimization.

 

• Fine-tune your messaging: Once you understand your consumers and your products, ensure your messaging is in alignment. Primary research will help you ensure your product messaging and campaign research focus on messages that resonate with your customers and address their key values, unmet needs, values, and pain points.

 

• Deliver on promises: It may sound easy, but delivering on your brand promise is tough. Most brands have many disparate channels, all of which need to present your brand and your products in an unrelentingly consistent way. Whether in-store, on the phone, or online, your brand’s character, values, and vision must drive every customer interaction and business decision in a consistent way.

 

• Foster loyalty: It’s important to foster loyalty among your existing customers. Pay attention to your most loyal customers and create opportunities to reward and encourage them. Give them reasons to continue loving your brand whether that’s special offers or enhanced customer service.

 

• Drive awareness: If you’ve been paying attention to the animated image to the right, you’ve probably been able to name the brand behind every single logo. Despite the fact that not a single brand name is shown. This is brand equity. And this is the level of brand awareness that every brand ultimately strives for. When your customers and prospects recognize your brand colors and shapes, it’s far easier for them to find and choose your brand off the shelf, virtual or physical. Run carefully targeted advertising campaigns on a variety of relevant channels that focus on your benefits, stories, and value to help consumers learn, and connect your messages and your branding. Try a variety of relevant tactics such as influencer marketing, celebrity endorsements, or event marketing.

 

• Create positive customer relationships: Customer experiences are no longer confined to the physical store. Brands need to create positive experience across every physical and digital touchpoint including their own online stores and social media channels like Twitter, Instagram, and TikTok. Pay attention and respond quickly to customers sharing their opinions on review websites like Amazon, Foursquare, and Yelp.

 

 

 

Positive brand equity vs. negative brand equity

When people pay more for a brand even when there are equivalent yet lower priced brands available, that’s positive brand equity.

 

But, when people avoid or ignore a brand, even when it’s pricing is very competitive, that’s negative brand equity. For some companies, negative brand equity can destroy a brand such that consumers quickly forget it ever existed. For others, the negative equity is fleeting and at least somewhat recoverable.

 

Amazon: Since starting up as a book seller, Amazon’s focused effort on meeting customer needs has resulted in amazing brand equity. Because of their unquestioning return policies, unending selection, and ability to get product in hand in mere hours, customers are fiercely loyal. That’s positive brand equity.

 

Apple: Apple is another great example of a company with positive brand equity. Their customers are massively loyal. Even though Apple products are known to be pricey, customers line up every time a new product is released even if their existing product still works great. Customers trust the quality, reliability, and functionality of Apple products and remain loyal customers for years. Why? Because Apple focuses on creating innovative, self-explanatory products that meet customer needs every single time.

 

Chipotle: In 2015, Chipotle experienced a food poisoning crisis which led to a $25 million federal fine. After years of positive growth, that crisis caused the brand value to decline sharply. It was several years before they managed to regain consumer trust, and recover and grow their brand value. This is a great example of positive brand equity turned negative and then reverting to positive again.

 

McDonald’s: Though McDonald’s has been the #1 burger chain for years, they struggle with ongoing negative brand equity. Customers and consumers have complained about unhealthy food options for decades, and that perception seems relenting no matter how McDonald’s tries to head it off.

 

Starbucks: Want some high-priced coffee? Well, Starbucks customers are willing to pay a premium because they love the high-quality product and they love the top-notch customer experience – even when their name is accidentally (deliberately?) misspelled on their cup. Whether you’re a customer or not, everyone immediately recognizes the logo of this high equity brand.

 

Toms: People love the Toms shoe company. Why? Not only do they make a great shoe, they donate a pair of shoes with every purchase. This human centered value makes customers feel good about their purchases, and keeps them coming back again and again to support a company that matches their own values.

 

 

 

How to Measure Brand Equity

Because brand equity is so multi-faceted, measuring it isn’t simple nor templated. It’s important to incorporate a range of relevant quantitative and qualitative metrics, as well as financial and market assessments to gain a holistic view of brand equity.

 

Quantitative metrics: As part of a quantitative questionnaires, there is a wide range of questions that can be posed to consumers and customers to better understand your brand equity. As you’ll seen in the images below, these kinds of questions can be posed not simply as traditional radio buttons and checkboxes, but also as interactive, engaging image style questions.

• Brand awareness: What three brands come to mind first when you think of washing detergent? What other brands have you heard of?
• Brand perception: Which of the following words reflect how you feel about this brand of washing detergent?
• Consideration: On a scale from 1 to 10, how likely are you to buy the following brands of washing detergent the next time you go shopping?
• Loyalty: On a scale from 1 to 10, how likely are you to recommend the following brands of washing detergent to your friends or family?
• Loyalty: How often do you buy the following brands of washing detergent?
• Trial: If this brand of washing detergent were to release a fabric softener, how likely are you to try it?
• Customer experience: On a scale from 1 to 10, what is your opinion about the customer service you received from our online chatbot or our social media or telephone representative?

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Qualitative metrics: Of course, there is far more to measuring brand equity than focusing on quantitative questions. Focus groups, interviews, and other qualitative tools like online communities are also excellent ways to measure brand equity.  By combining qual and quant methods, you can gain a more holistic view of this subjective construct. Here is a sample of some types of questions and tasks to incorporate in qualitative research, again with a couple examples of how more qualitative questions can be incorporated into traditional online measurements.

• What is your opinion of this logo and imagery?
• Describe 3 things you love about this brand and 3 things you hate about this brand.
• Why do you buy the following brands of washing detergent?
• Why would you choose one brand of washing detergent over another?
• Which of the following images reflect how you feel about this brand of washing detergent? Tell me why.
• If this brand of washing detergent was a person, how would you describe it?

 

 

Behavioral/transactional metrics: Financial and company metrics are also extremely important for understanding brand equity.

• Company metrics: What is the value of the company, and is it increasing?
• Brand metrics: What is the market share of the brand, and is it increasing? What is the profit of the brand, and is it increasing? What is the price difference compared to generic brands, and is it increasing? What is the purchase volume and frequency for the brand, and is it increasing?
• Employee metrics: What is the cost of employee acquisition, and is it decreasing? What is the average tenure of an employee, and is it increasing? How many applications per open position are received, and is it increasing?
• Customer metrics: What is the cost of customer acquisition, and is it decreasing? What is the average tenure of a customer, and is it increasing? How many customer complaints are receiving during a specific time frame, and is it decreasing?

 

 

What’s Next?

Are you ready to discover top quality insights about your brand and grow your brand equity? Email your project specifications to our research experts using Projects at E2Eresearch dot com. We’d love to help you better understand your buyers and your brand to help you turn your enigmas into enlightenment!

 

Learn more from our case studies

• Stretching Brand Equity into White Spaces Using Data Fusion – A pharmaceutical data analytics case study
• Benchmarking Brand Awareness and Competitive Brand Space – A consumer food survey case study
• Increasing Enrollment Through A More Meaningful Brand Purpose – An education survey case study

 

 

Books and Videos You Might Like

• Strategic Brand Management: Building, Measuring, and Managing Brand Equity by Kevin Lane Keller and Vanitha Swaminathan
• The Strategy of Global Branding and Brand Equity by Alvin Lee, Jinchao Yang, Richard Mizerski, and Claire Lambert
• Brand Equity & Advertising: Advertising’s Role in Building Strong Brands by David A. Aaker and Alexander Biel

 

There’s more to creating a successful food or beverage product than selling something you love eating or drinking. Consumers are always on the lookout for food and beverage options that are scrumptious but also better quality, healthier, affordable and easily available.

 

If you’re hoping to move a product from successful with kids in your household to successful with kids in your country, many questions need to be identified, answered, and acted on. This list of questions focused around the five Ps will ensure you gather the information you need to get there.

 

 

Better Understand the Product: Nutrition, sensory, packaging

At the heart of a successful food or beverage business is a carefully researched and designed product that meets the key needs of its target audience – yes, even food and beverages products have key needs. By conducting well designed surveys and product/sensory tests via IHUTs or Central Location Tests, you can understand:

• What nutritional, sensory, or emotional needs are your shoppers and consumers trying to meet and what unmet needs need additional development?
• How is the food or beverage used to meet unexpected needs such that new audiences could be targeted? E.g., are slow foods being converted into fast foods, are meat foods being converted into meat-free foods, are solid foods being converted into drinkable foods?
  
• What features, whether sensory, emotional, packaging or otherwise, of the product are unique within the broader, competitive category and how could they serve as your unique selling points?
• How are the package and eating implements “correctly” and “incorrectly” used suggesting needs for redesign or improvements?
• Does the memorability of your food or beverage require improvements in terms of its sensory features, packaging, branding, colors, or logos?
• Should certain product lines be expanded or reduced based on growing or decreasing market needs?

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    Review a product case study:

• Developing a New Nutritional Pasta Product – A survey + desk research case study
• Identifying An Optimal Set of Flavor Variants to Achieve Incremental Reach – Case Study
• Choosing a Set of Flavors to Minimize Substitutions – A food survey + data analytics case study
• Fine Tuning New Personal Care Products with JAR Analysis – A sensory IHUT case study
• Sentiment and Content Analysis of Qualitative Consumer Comments – A food survey + text analysis case study

 

 

Better Understand the People: Cooks, bakers, shoppers, eaters, snackers, caregivers, meal planners, meal preppers

Before a new food or beverage product is even launched, it’s important to understand the perceptions of all key stakeholders. From eaters to shoppers and those who will be preparing or recommending the product, it’s imperative that each group understand the benefits and drawbacks of the product to ensure maximum success. Using questionnaires, business intelligence, and secondary research, you can understand a number of key questions:

 

• Who are your target shoppers and consumers in terms of their demographic, psychographic, family, social, economic, and health characteristics?
• Which stakeholders come into contact with your food or beverage e.g., caregivers, shoppers, cooks, bakers, eaters, snackers, meal planners, meal preppers?
• Which stakeholders will influence your target audience to consider using or buying food and beverages?
• What does each stakeholder group need, want, feel, and prefer, and how do their needs conflict with each other?
• What drives each key stakeholder group to choose, use, buy, and recommend your brand vs competitive brands?
• How does the shopper journey evolve from discovering a need through to shopping, comparing, and buying while also considering nutritional, emotional, financial, and social needs at each stage?
• What personal histories and experiences do people have with the food or beverage product and category including with your brand and competitive brands?

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    Review a stakeholder case study

• Measuring Consumer Preferences for Successful Ready-To-Eat Development | A Sensory Research Case Study
• Identifying Target Audiences of Two New Tea Variants – An IHUT + JAR analysis case study

 

 

Better Understand Placement, Industry, and Competitive Market Space

Every food and beverage product exists within a broad ecosystem of competitive brands and companies. By conducting engaging questionnaires or secondary desk research, you can understand a wide range of business problems such as:

 

• Who are your primary and secondary competitors locally, globally, and virtually?
• What sensory, product, physical, emotional, social, and economic needs is the market failing to address?
• How has the competitive landscape changed over the last year and how might the food and beverage category evolve over the next 3 to 5 years within your region and potential expansion regions?
• Where are the white spaces to develop new food and beverages, or new service locations?
• Can secondary data help you understand how large your existing market is and how large it could be while still remaining profitable?

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   Review a market case study 

• Benchmarking Brand Awareness and Competitive Brand Space – A consumer food survey case study
• Tracking Customer Satisfaction Across 8 Countries – A consumer food survey case study
• Creating a Beverage Launch Strategy in a Competitive Market – A beverage desk research case study

 

 

Better Understand Promotions, Advertising, and Campaigns

With a great food or beverage innovation and a well understand target audience, a marketing campaign is often required to reach out to a wider audience and introduce the masses to your offering. Using questionnaires or data analytics, a number of key questions can be answered:

 

• Which online and offline information channels do your consumers and shoppers use to learn about new food and beverages, gather recommendations, or make purchases?
• What types of messaging would be most successful at reaching your target audience and differentiating your product from competitive products?
• What types of ads would be most effective with each of your audience segments when considering likability, meaningfulness, believability and the likelihood to act?
• What types of food and beverage marketing campaigns are more likely to be successful?
• What types of brands, companies, or influencers would your consumers and buyers like to see incorporated in an integrated marketing campaign?
• Which food and beverage concepts are most memorable and would generate the most action from your target audience?

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   Review an advertising case study:

• Evaluating the Effectiveness of a Campaign with Brand and Message Recall – A consumer media survey case study
• Identifying Optimum Price Corridors to Predict Volume Share – An advertising price simulator case study

 

 

Create A Fair and Profitable Pricing Strategy

There is more to pricing than picking a number that will generate profit. A price that is too high can reduce recommendations from friends and family. A price that is too low leaves achievable profit on the table. A final price can only be determined by understanding your true profit margin, market pricing, and stakeholder needs. To build the most effective pricing strategy for your new food or beverage, conduct the appropriate surveys, interviews, and secondary research first.

 

• Based on secondary research, how are competitive products on the market currently priced?
• Using questionnaire data, what type of pricing strategy is most appealing to shoppers?
• What type of pricing strategy would facilitate product recommendations from influential friends and family?
• Which user segment has the least and the greatest revenue potential?
• Based on a Conjoint or MaxDiff questionnaire, which product features drive higher and lower prices?
• What type of pricing strategy is fair and accessible versus out of reach to lower income people vs higher income people?

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   Review a pricing case study

• Optimizing Trade Promotion Spends with a Pricing Simulator – A food business analytics and price simulator case study
• Improving Operational Effectiveness at a CPG Company – A retail B2B survey case study
• Identifying Optimum Price Corridors to Predict Volume Share – An advertising price simulator case study

 

 

Conclusion

Creating a successful food or beverage product requires a foundation of well designed and executed research coupled with well actioned research results. Whether you’re tasked with supporting the growth of an innovative cannabis beverage or helping a company understand the different needs of buyers and consumers, our team has years of experience helping researchers, marketers, and brand managers generate great quality food and beverage data and insights. Please email your project specifications to our research experts using Projects at E2Eresearch dot com. We’d love to help you convert your enigmas to enlightenment!

 

 

 Learn at upcoming food and beverage industry conferences

• Food and Beverages, London, March 9 to 10, 2022
• International Conference on Food Marketing and Tourism, London, March 11-12, 2022
• Food Marketing Conference, Michigan, March 22 to 23, 2022
• Food 2.0 Conference, Las Vegas, April 11 to 13, 2022
• Beverage Forum, Chicago, April 28 to 29, 2022
• International Conference on Food Marketing and Tourism, Netherlands, May 16-17, 2022
• Food & Drink Trends & Innovations, London, May 18, 2022
• Food and Beverage Packaging, Spain, June 13 to 14
• International Food Marketing Research Symposium, Texas, June 14 to 16, 2022
• The Ecommerce & Digital Marketing Conference for Food & Beverage, Austin, July 25 to 26, 2022
• Food Marketing Institute Annual Business Conference, Chicago, September 11 to 14, 2022

 

Listen to some great podcasts about food and beverage marketing

• A Fresh Perspective Food News with Jenny Kolzer (Player.fm)
• Beyond the Shelf
• Dennis Knows Food with Luke LaBree (Player.fm)
• Food Biz Wiz with Allie Ball
• Real Food Brands Marketing Podcast with Katie Mleziva (Spotify)
• Restaurant Marketing School with Josh Kopel (Player.fm)
• Restauranttopia with David Ross, Brian Seitz, and Anthony Hamilton
• Secret Sauce – Restaurant Marketing Podcast with James Eling (Spotify)
• The Experiential Table with Cynthia Samanian (Player.fm)
• The Insatiable Appetite
• The Virginia Foodie with Georgiana Dearing (Player.fm)

 

What is a persona?

Simply put, personas are short, simple descriptions of a group of targeted people but written as if they were describing one single person. The best personas are grounded in quantitative and qualitative research and summarize the demographics, psychographics, motivations, needs, and goals of those people.  You might also see them referred to as Buyer Personas, Customer Personals, Patient Personas, User Personas, or something similar.

 

Personas are a fantastic way to ensure that a business puts the customer at the center of everything they do, whether it’s product development, packaging, messaging, or customer service. As we all know, the most successful companies focus not on their own desires, but rather on ensuring their customers’ needs and desires are met. Building personas is a great way to get there.

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How do marketers and researchers use personas?

Personas are particularly useful when combined with segmentation and journey mapping research. After conducting segmentation research, you’ll have a list of very specific details and statistics about each of the various groups of consumers who are, or may become, relevant to your brand. You will also be able to identify which segments are valuable enough to pursue and therefore would benefit from having a persona. And, after personas have been built, you can use them to map the journey each persona would take as they progress on their path to learning about your category, your brand, and finally choosing a product to purchase.

 

There are many ways to use personas, but here are seven of the more common use cases for marketers and researchers.

 

• Understand your customers: Fundamentally, personas help you understand who your customers are. On just one page, they provide a clear description of the key traits, needs, and desires of each important customer segment, and what makes each of them distinct and valuable.

• Shared understanding of the target audience: Particularly in larger companies where people and departments are often siloed, personas help ensure that everyone has access to the same understanding of who they’re trying to serve. A single reference point means that messaging for each persona is consistent regardless of whether it’s used on packaging, in a campaign, or on the website.

• Fact-based decision making: Whether you’re in marketing, product development, or executive leadership, it’s really easy to generate ideas and run with them. But for decisions to lead to business success, they need to be grounded in fact not unconsciously biased, personal perceptions. With your idea in hand, confirm that it matches up with the personas that have been carefully built to support your work.

• Tailor campaigns and messaging: There is an infinite number of messages you could share about your products and brands but which one is the right one? As you brainstorm potential messages, regularly refer to the appropriate persona to ensure your messaging is relevant, and therefore heard and attended to.

• Target high yield channels: Sure, you can drop some funny or educational videos on TikTok or buy a Facebook ad. But if your best customers don’t like either of those channels, you’ve just wasted a lot of money. Using personas will help you make sure you spend your marketing dollars on the channels your targeted persona prefers to use.

• Prioritize product development: What do you do when you’ve got 5 great products on the go but only enough people and budget to work on two? You review your personas to identify which products would be most desirable to your high value or underserved personas.

• Tailor new product development: Is your product development team ready to work on a brand new product? It’s time to get out the personas. Which persona has the greatest needs or product gaps? Brainstorm ideas with that specific persona in mind.

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How many personas do you need?

Depending on the size and complexity of your business, you might need 1 or 2 personas or 15 to 20 personas.

 

If you’re just beginning the process, start with 1 or 2 or your most important segments. You can work on more later as you better understand what you need from your personas and how you will use them.

 

Here are examples of three (excessively brief) personas that might be useful for a small, online company that makes cosmetics. Daisy and Chris could be the most important personas to concentrate on in the early years because they will form the core customers of the business. Then, over time, as the company grows into having a retail outlet, they might need to add another persona to incorporate occasional high spenders.

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Tips for building an effective persona

As you build out your personas, remember a few key tips.

 

• The goal isn’t to include every precise detail about every research participant. Focus on shared commonalities and broad generalizations.
• Similarly, notice what makes each segment or persona different and ensure those differences are clear in the details.
• Even though personas are a generalized idea of a group of people, they aren’t stereotypes. Personas are based on data collected using scientific methods, not personal perceptions and opinions. If you find that a persona incorporates stereotypes, refer back to your research method and your data, and ensure that you’re not incorporating your own personal biases.
• Personas should be concise and clear. Sure, you could probably write a long essay with the information gathered from a segmentation study. However, the goal is to get a quick feel for each persona. When you’re just starting out, try to keep persona biographies under 200 words, particularly if you are working with many personas.
• Finally, if your personas don’t relate to a specific age, gender, ethnicity, disability, or sexuality, be sure to reflect a wide range of people across all of the personas.

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Components of an effective persona

When you’re ready to build each person, make sure to consider each of these four key parts. None of them are as simple as they may seem!

 

• Headshot: As the person designing the personas, you need to make sure everyone who uses them remembers that they reflect real people. This is why you want headshots of real people rather than clip art drawings or illustrations. Further if there are no appearance differences among the personas, don’t be led down the erroneous path where they all end up looking like you ethnically and demographically. There are plenty of stock art websites that include people of all genders, ages, ethnicities, disabilities, sexualities, and personal styles (e.g., Pexels, Pixabay, AffectTheVerb, Jopwell, Nappy).
• Humanistic name: Come up with a meaningful name, not a gamey name like “Susy Shopper” or “Mohammed the Hoarder.” Your customers are real people, not jokes. 1) Think about the age of the persona and then search out a list of names from that decade. 2) Think about the gender of the persona. If the persona isn’t gender specific, choose a name that isn’t stereotypically associated with a specific gender (e.g., Chris, Noor, Alex, Blair, Nehal, Robin). 3) Think about names that have some kind of relation to the persona. For instance, “Heather” works well for a woman who is environmentally conscious whereas “Dusty” works well for a carefree, disorganized person. As before, avoid choosing names from a single ethnicity unless that is truly representative of all the personas.
• Biography: You’ve probably got a hundred bullet point details from the segmentation research. Now it’s time to weave those details into an interesting, short story about the person. Keep it short, simple, and interesting. You’re supposed to be writing about a real person so make the bio come alive. Don’t try to include every detail in the summary. Build a picture in your mind based on those details and describe the person as eloquently as you can.
• Quotes: As a bonus, you may wish to write a quote that reflects each persona. Think about whether that persona would use incomplete or full sentences, simple or complex words (e.g., “buy” or “purchase”), new or old slang (e.g., “spill the tea” or “chew the fat”), or casual vs extreme profanity (e.g., dang or f***).

 

Finally, what kinds of details belong in the biography? This depends on the type of product and target audience you’re working with. If you’re building a persona for a consumer product, you’ll want to pay more attention to personal demographics and psychographics. On the other hand, if you’re building a B2B profile, you’ll need to focus more on professional details. Here is a good list of starting details.

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Demographics	Psychographics	Profession	Category
Age, gender, income, education, marital status, household size, children, religion, where they live	Personal life goals, personality traits, values, motivations, goals, pain points, information seeking Hobbies, interests, sports, music, arts Publications they read, channels they watch, use of online and offline media	Industry, company, company size, job title, job level, skills, qualifications, decision-making role, technology used	Brands they like and dislike, related categories they use and don’t use Favorite influences and channels Typical challenges, barriers, and pain points with the brand and category Consideration and purchase motivations, messaging preferences

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After all your hard work, it’s time to present your findings in a creative, visual display such as what you see in this simple yet detailed example. If you want to see the full spectrum of possibilities, do a quick image search for “customer personas.” You’re sure to find inspiration for your own designs!

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What’s Next?

Now that you’ve seen first-hand how helpful a user or customer persona can be, it’s time to build some customized personas of your own! If you haven’t already done so, start with a segmentation study to identify each of your customer segments and the details that will go into the personas. If you’d like some help along the way, email your project specifications to our research experts using Projects at E2Eresearch dot com. Let’s turn your enigmas into enlightenment!

 

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Podcasts You Might Like

• Navigating the Customer Experience with Yanique Grant
• The Intuitive Customer with Colin Shaw
• Crack the Customer Code with Jeannie Walters and Adam Toporek
• The Chief Customer Officer Human Duct Tape Show with Jeanne Bliss

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Learn more from our case studies

• Consumer Perceptions Towards Online Ordering – A retail survey + desk research case study
• Identifying Target Audiences of Two New Tea Variants – An IHUT + JAR analysis case study
• Increasing Enrollment Through A More Meaningful Brand Purpose – An education survey case study

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Learn more from our other blog posts

• Getting started with consumer, customer, and market segmentation
• How to conduct a journey mapping research project
• Tips for the First-Time Conjoint Analysis Researcher

Journey maps are commonly created in the market and consumer industry to illustrate a set of steps taken to accomplish a goal. Well designed maps help marketers, brand managers, and researchers understand how people perceive and interact with overt and covert stakeholders, products, channels, and services along their way to completing that final goal.

 

Journey maps used to be simple, and the details and processes often seemed obvious. Today, however, with the internet in our pockets providing unlimited opportunities to talk to people around the world, learn about millions of new products and companies, and acquire nearly any product within hours or days of hearing about it, journeys are extremely complex. They’ve evolved from linear 5-step journeys into 30-stage ricocheting piles of spaghetti.

 

As such, it’s important to conduct well-rounded research to ensure erroneous assumptions and misconceptions aren’t included, and to ensure all aspects of the journey, both hidden and obvious, are accounted for.

 

Journey maps are more complicated and more necessary than ever.
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What kinds of journeys can we map?

Nearly any journey wherein people progress through a set of stages, interacting with channels or people, over a short or long time frame to accomplish a goal can be mapped. Here are just a few of the more common journey maps that marketers and brand managers use.

 

• Customer journeys: How do consumers, or your customers, discover the need for and end up buying a product? Where do they learn about various products, who do they talk to along the way, at what point do they finally buy one and how?
• Patient journeys: How does a patient or care-giver discover a health issue and follow through to a treatment plan? What was the initial point of discovery, who did they talk to about their concerns at each step, when did they choose a healthcare provider, how did they choose from among the treatment options?
• Recruitment journeys: How does a person decide to seek employment and follow through until they have settled into a new role? What created the initial interest, where did they turn to for advice about hiring companies, how did they select a best role?
• Financial journeys: How does a person decide to buy a home and follow through on that major expenditure? What caused the interest in the beginning, where did they go for advice about large loans, and how did they choose a mortgage provider?

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Why create a journey map?

Maps aren’t simply pretty pictures that make great wall posters. In addition to illustrating an entire journey on one convenient page, they serve a number of important purposes.

 

• Facts over factoids: Assumptions about processes, pain points, strengths, and weaknesses are easily affected by context and perspective. Every brand manager, marketer, researcher, and customer has a different view of the journey which is affected by their role, life experience, and current needs. Data-driven journey maps are simply more accurate and all-encompassing than anecdata-driven journey maps.
• Resolve issues: By mapping the journey, you’ll be able to identify strengths, weaknesses, and pain points that are negatively impacting people at any stage in the experience. You’ll learn which mobile apps need improved navigation, identify disjointed online and offline experiences that need fixing, and be better able to ensure people receive key messages at critical times via the channel they prefer.
• Optimize spend: Once you discover which channels people are accessing – or not accessing – during their journey and what the strengths, weaknesses, and pain points of those channels are, you can allocate your spend more wisely. You may discover new channels, realize the need to optimize favorite channels, or decide to eliminate out-of-date channels.
• Innovate: Journey maps will help you identify gaps in product development or processes that can be solved by creating new tools, products, or services.
• Plan for the future: When you understand where your business is today, you can plan for tomorrow. Identify which experiences can be enhanced and improved for everyone.
• Level-setting: When everyone has the same understanding of the journey, it’s easier to ensure that every touch-point meets your high standards and best practices. You’ll be better able to reduce silos and increase efficiencies of functions and tools across the company.
• Understand personas/segments: Every product or service can be represented by multiple journey maps, each reflecting a unique segment of people. As you understand each segment more precisely, you can improve each experience in a more targeted, relevant way.

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How to conduct a journey mapping research project

Set Clear Goals: The most important component of every research project, including journey mapping research, is to set clear goals and objectives for what you want and need to achieve. In addition to creating the map itself, you will need to specify how you intend to use the map once it’s complete. For example:

 

• Why do so few people use the mobile app?
• How can we better serve omnichannel customers?
• Where are our communication gaps?
• Why do we lose so many consumers after they call our help-line?

Review Secondary Research: Take the time to review any existing qualitative and quantitative research you may have conducted over the last several years. Though it may not directly focus on the journey experience, there are likely to be important tidbits of knowledge that will help you design your data collection instrument – take note of people, processes, and channels mentioned and ensure they are covered in the new instrument.

 

Detail the Research Questions: As you prepare to build your data collection tool, focus on all aspects of the human experiences – who, what, where, when, why, and how. Let high quality data tell you how many stages there really are rather than trying to fit people into preconceived notions.

 

• Who: Which personas would benefit the most from journey mapping? Who are the direct and indirect people the consumer could possibly come into contact with? Consider people at the call-center, people answering questions on Twitter, people in finance, operations, and management who may be called in to help with more difficult problems.
• What: What messages and information people need at each stage? What are their motivations? What are they getting or not getting? What are their pain points and barriers?

• Where: Where do customers seek information or products? Are they experiencing the journey from home, work, school, or the retail outlets? Are they experiencing it on a mobile device, a desktop computer, or in person?
• When: Think about how journeys change when they are experienced in the daytime, evening, nighttime, or weekends. Is the journey one day, one week, one month, or one year long?
• Why: Why did customers start or stop each point in the journey?
• How: How do customers feel about each point? How do they perceive each stage? What are they thinking and believing? Where is their breaking point or their moment of exhilaration?

Identify the Research Method: Ideally, both qualitative and quantitative research techniques should be used to ensure you capture all potential aspects of the journey. Starting with qualitative techniques allows you to probe deeply and ensure that subsequent quantitative techniques are properly informed.

 

• In-Depth Interviews: Whether in-person, over the phone, or virtual, personal interviews are the perfect method for diving deep into every single aspect of an individual’s journey. Not only are first hand accounts great at creating empathy among company stakeholders, the ability to probe with multiple “whys” ensures you can dig down to the inner most held beliefs and opinions associated with a behavior.
• Online Communities: Most journeys last far longer than a few minutes. Buying shampoo could be a ten minute or ten-day journey whereas a house hunting journey could take a year. Online communities are an effective way to bring people together to discuss each other’s unique journeys and discover which steps are common or unique, and why. For consumer goods mapping, you could even ask participants to maintain and share a diary throughout their journey.

• Observational Research: We all know the saying that actions speak louder than words. That’s why it can be extremely beneficial to include observational research as part of journey mapping research. Most commonly, this research is conducted by researchers quietly observing people as they progress through their journey in retail outlets. However, observations can also be made of digital behaviors after first getting permission to record people’s browser activities.
• Surveys: Finally, finishing with a quantitative survey will help ensure your final outcome is not only comprehensive, but also reflective of the broader population.  Remember to build surveys that incorporate data quality techniques and include fun question types that help participants remain engaged during the research process.
  

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What’s Next?

Are you ready to gain a thorough understanding of your customers’ journeys? Email your project specifications to our research experts using Projects at E2Eresearch dot com. We’d love to help you turn your enigmas into enlightenment!

 

Learn more from our case studies

 

• Communicating More Effectively with Insurance Customers – A bulletin board case study
• Mapping a Patient Funnel to Mitigate Treatment Barriers – A cancer patient survey case study
• Removing Customer Barriers to Auto Insurance Renewals – An insurance survey case study

 

Learn more from our other blog posts

 

• How to Leverage TikTok as a Consumer and Customer Insights Tool
• 8 Engaging Question Types to Improve Participants’ Survey Taking Experience
• Everything You Need to Know about Conducting Effective Secondary Research
• The Who, What, Where, When, Why, and How of Online Insight Communities

In market and consumer research, segmentation is the process of categorizing consumers, customers, companies, or markets into distinct groups or segments based on your desired criteria.

 

The hope is that each member of a segment shares a set of characteristics with others in their segment, characteristics that are distinct from members of the other segments. Oranges with oranges, and bananas with bananas.

 

Why is segmentation so important?

 

Well, we know that people don’t care about everything. They care about things that are particularly relevant to their situation – their demographics, their psychographics, their hobbies, their political views, their geographical location.

 

Rather than broadcasting the same market messages to everyone or the offering the same product to everyone, segmentation allows marketers and advertisers to increase the odds that people will notice, pay attention to, and act on messages they see because those messages are particularly relevant to them. That means directing chew toy promotions to people who have dogs, gardening products to gardeners who love succulents, and restaurant promotions to area residents who love Indian food.  This targeted approach leads to increased appeal, trial, and repurchase.

 

As with any research study, segmentation research is fluid. In response to cultural, political, social, and economic shifts over time, consumer opinions and behaviors evolve in response.

The behaviors and targeting strategies of marketers, advertisers, and business leaders must also evolve in response. When major events such as pandemics and extreme economic uncertainty take place, existing segmentation strategies can quickly become irrelevant, necessitating a refresh before a typical 3 to 5 year period is up.

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What and who can be segmented?

 

Just about anything can be segmented!

 

• Consumers: Consumers are people who use products and services from food and beverage to personal care items to financial services – basically everyone! Consumers can be segmented into an infinite number of categories depending on your unique needs.
• Customers: Customers are a segment of consumers. They are the people who use or buy the specific product YOU sell.  Ideally, you want to find segments of consumers that could become your customers.
• Markets: Markets can also be segmented based on many criteria to find geographical regions, retailer categories, or channel categories where your product or service would be best suited for use.

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What are the key benefits of segmentation?

 

There are many benefits of a market segmentation but what follows are a few key benefits. Segmentation allows you to:

 

• Identify most and least valuable people: Segmentation research will help you identify nuggets of gold, those groups of people who have the highest ROI, so you can increase your targeting and resourcing efforts with them. Similarly, segmentation will help you identify who has the weakest ROI so you can consider decreasing any resources focused on them.
• Identify unknown people: Segmentation research may identify an important group of consumers you were previously unaware of, or a product feature that warrants extra or different messaging or promotions.
• Improve connections with people: Following through on segmentation strategies proves to consumers you understand and will address their unique needs. This increases your likeability and top of mind awareness.
• Create products that are more desirable: When you understand the unique needs of various segments, you can improve existing and create new products and services that are better equipped to meet their needs, leading to increased trial and repurchase.
• Create promotions, pricing, and placements that are more desirable: Once you’ve created or improved a product, you will be better able to identify the best pricing and promotion models, and best channels for each segment. In other words, fewer dollars are wasted on ineffective strategies and more dollars go towards effective strategies.

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What are the key features of a successful segmentation model?

 

Consumers, customers, companies, and markets can be described in many different ways. However, without these four characteristics, a segmentation strategy is sure to fail. As you build your model, make sure it incorporates each of these four requirements.

 

• Operationalizable: Each segment must have describable characteristics. For example, it’s impossible to target people who have some kind of, strange, well, you know, emotional sort of feeling about soup. However, you CAN act on people who visit a soup shop every month, who buy soup once a week, or who select “Strongly agree” to a question like “Eating soup makes me feel happy.”
• Actionable: Segments must be described in a way that allows members to be found. For instance, without knowing where someone lives, you cannot deliver a soup coupon to their door. Or, if they don’t use a TV, it makes no sense to create a television commercial for them about soup.
• Size of Opportunity: Segments must be large enough to warrant the cost of targeting them. You may be able to identify 400 people who would be interested in soup made with insects but…
• Value of Opportunity: Segments must have sufficient value to warrant the cost of targeting them. Targeting a segment of people who are interested in soup made with insects is not worth the investment if they’ll only buy it once as joke.

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What are the types of segmentation models?

 

The best segmentation models are effective because they incorporates a range of complementary demographic, geographic, psychographic, and behavioral variables.

 

If you’re a visual / audio learner, here’s a quick video summary for you.

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Demographic Variables

 

Common variables: Age, gender, ethnicity, education, income, occupation, family size, religion, language, dialect, life stage.

 

Source of data: Questionnaires, focus groups, census data, third party data, data aggregators.

 

Because demographic data is so readily available, segmenting people based solely on their demographics is the simplest and most common strategy. Retirement homes target people based on age, and children’s campgrounds target people based on the presence of children in a home.

 

But, ease of targeting is definitely not always reflective of the quality of the targeting. Some older people move in with their families and not all families can afford to send their children to camp.

 

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Geographic Variables

 

Common variables: Region, country, state, city, neighborhood, zip.

 

Source of data: Postal lists, mailing lists, census data, third party data.

 

Geographical data is also fairly easy to acquire and particularly easy to action on. It’s helpful for many products and services that are associated with distinct geographical regions. Restaurants target people in specific neighbourhoods with door-to-door flyers, children’s camps target families in specific cities, and some products may only be legal in specific countries. For increased relevance, geographic segmentation is often combined with demographic segmentation.

 

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Behavioral Variables

 

Common variables: Product use or frequency, purchase behaviors, coupon use, retailer visits, lifestyle behaviors, hobbies.

 

Source of data: Transactional databases, loyalty databases, association membership lists, employee databases, website click-streams.

 

Behavioral data can be more expensive to acquire and, hence, this type of segmentation is less common. It focuses on how people behave, including what, when, and how they do it. That could mean which products they buy, whether they buy them in-store or online, or more personal behaviors such as how often they go to the movies or where they go on holidays.

 

As most researchers and marketers know, the best way to predict future behavior is by knowing past behavior. As a result, behavioral segmentation can be extremely effective.

 

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Psychographic Variables

 

Common variables: Lifestyle, opinions, attitudes, beliefs, values, interests, personality.

 

Source of data: Surveys, focus groups, interviews, online communities.

 

Unlike behavioral variables that tell you WHAT someone does, psychographic variables tell you WHY they do those things. This type of segmentation is generally the most difficult because it is difficult to see and difficult to action on.

 

Psychographic data help us understand why people make specific choices such as why they use coupons even though they can afford luxury brands, or why they don’t watch musicals at the theater even though they love watching musicals on TV.

 

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Business Variables

 

Common variables: Industry, revenue, company size, job title, decision making powers.

 

Source of data: Surveys, third party data, data aggregators, census data, secondary research.

 

It’s important to remember that, not only can we segment people, we can also segment companies for B2B purposes. There may be far fewer companies but businesses still need to understand the segments of potential buyers that are more and less relevant for them to target.

 

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What’s Next?

 

Are you ready to discover top quality insights about your buyers, brands, and business? Email your project specifications to our research experts using Projects at E2Eresearch dot com. We’d love to help you turn your enigmas into enlightenment!

 

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Learn more from our case studies

 

• Customer Behavioral Segmentation to Support Targeted Marketing – A BFSI data analytics case study
• Optimizing Treatment Pricing Strategies For Multiple Patient Segments – A pharmaceutical survey analytics case study

 

Learn more from our other blog posts

 

• How to Leverage TikTok as a Consumer and Customer Insights Tool
• 8 Engaging Question Types to Improve Participants’ Survey Taking Experience
• Everything You Need to Know about Conducting Effective Secondary Research