There is no doubt that customer purchasing behaviour is not only influenced by rational thought. Behavioural science examines how customer’s perceptions of an interaction are influenced by the amounts and sequencing of painful and pleasurable experiences during buying behaviour. Insight into the pleasure and pain that customers experience directly influences spend levels and customer satisfaction.

Academics such as Richard Chase have developed and tested guiding principles for managers and retailers to consider when they review interaction with customers. These principles were reported by McKinsey and are now widely applied by customer focused organisations. The five principles that Chase has developed are as follows:

1. Get Bad experiences over early

Examples of this include getting credit checks completed early when subscribing for a telephone or subscription service.  Tackling the most challenging aspects of the interaction early delivers higher levels of customer satisfaction.

2. Break up Pleasure and combine pain

Focusing on those factors that provide the customers with the most pleasure becomes possible by tackling the more difficult aspects of the interaction early. This allows many other aspects of the customer interaction to “flow” and pleasurable associations then form a stronger part of recollections.

3.  Finish Strongly

Many restaurants provide free desert that coincides with the delivery of the bill. They recognise the importance of finishing on a positive. Likewise providing customers with discounted or free products in a retail environment post purchase generally results in higher satisfaction scores.

4. Give Customers Choice

Using words that provide customers with choice is very powerful. Scripts and guidelines can be developed for interaction with customers. When these words are used customer feel like they are exercising their free will rather than being forced into making a purchase. Again this results in more positive customer satisfaction scores and purchase intent.

5. Let Customers stick to their habits

Many companies inadvertently cause psychological discomfort for their customers. Forcing all customers to self-serve at check-outs is an example of introducing unnecessary stress to the customer. Using IVR systems in call centres is another example of taking customers outside of their normal psychological comfort zone.

Applying the principles of behavioural science to interactions with customers has a direct impact on the bottom line. Many organisations could benefit from greater insight and understanding about the customer shopping experience. This type of insight can lead to process re-design which in turn leads to increased satisfaction and ultimately profit.

On face value, this story seems like any other story about disruptive technologies changing the market and the fallout from companies who were either on the front or back foot.  The real tragedy for Kodak was that the company was on both, the front foot and then the back.  How could a company with over 100 years experience in essentially capitalising on disruptive technologies get is so wrong in this case?

From reading the media coverage, the failure occurred on a single front.  Kodak was too closely wedded to their core competencies in organic chemistry and optics.  For any company playing to their strengths hardly seems like it would result in failure but in Kodak’s case sticking to what was familiar saw the company become more defensive rather than open to innovation.  The real twist in the story became public in 2008 when an engineer from Kodak reported that in 1975 he developed a prototype for the first ever digital camera.  He said management responded by saying, “that’s cute – but don’t tell anyone about it”.  Following from the 1975 breakthrough, in 1981 Kodak commissioned an extensive study to investigate the core technologies and likely adoption curves around film versus digital photography.  The findings were digital photography had the potential capability to replace Kodak’s film business altogether but it would take around ten years for this to occur.

This information tells us that Kodak firstly invented the digital camera that would eventually lead to its demise but also had knowledge of a 10 year timeline for which they could prepare.  This story of Kodak shifts from one of tragedy to perverse complacency.  However, in light of this information Kodak did invest heavily in digital technology.  It was the failure of Kodak to view the potential of digital technology as a way to push their core business rather than completely refine it.  Kodak’s entry into the digital camera space was about allowing customers to view then choose which images they liked to put on film for printing.  This hybrid of digital and film still allowed Kodak to tout their core business whilst dabbling in the digital environment.  Needless to say the product flopped.

This story of Kodak really highlights a couple of business imperatives.  Firstly it shows us that organisations can often get to closely wedded to their competencies to the extent that they are blinded to an ever evolving market place and avoid asking serious questions like, “is our business still relevant?”  The second imperative highlights the extreme difficulty in organisational transformation.  In this case, Kodak had all the right information to make an insightful strategic choice but still failed to do so.  Kodak management presided over the development of the breakthrough digital technology and also made an accurate assessment of the market risks and opportunities they presented.  Yet in light of this information, they still could not make the right decision.  It will be interesting to see how (and if) Kodak can reinvent themselves in the future.

Amorphous presentations will leave your clients with more questions than answers.  Preparation is the key.  Careful consideration must be given when preparing to present research findings to a specific client.  Typically when presenting research findings, you will be presenting to a client that may or may not have read your research report (Cavana et el, 2000, p.360).  Your client may seek answers to the market research questions, and thereby want to know the steps to take in addressing issues identified (Luscombe et al 2007) (Aaker et al 2001).  It is therefore your responsibility to understand who your audience is, what their level of interest is and what they essentially want to know from your research findings.  You also need to harness appropriate presentation techniques and tools (Cavana et el, 2000, p.360) in order to convince your audience of the value of your findings and recommendations.

In spite of your preparation, client resistance can manifest unintentionally thought apparent confusion, prolonged silence, focus on problems rather than solutions and arguing technicalities repetitively.  There are strategies that you can adopt, in order to appropriately react and respond. Do not respond defensively when your client finds fault or questions your findings. Remain open, listen carefully as the faults found may be an opportunity for you to review your research processes.  Welcome suggestions from your client as they may have thought of something that you unfortunately didn’t.  Address flawed questions from clients in a polite and non-judgemental manner – don’t make your audience look stupid.  In fact you should aim to give your client confidence and help them to learn (Zivanovic 2009 p.86).  Aim to make your audience feel involved and satisfied with the presentation of your findings.  Satisfied clients will then become potential
advocates for your professional services.

For most researchers and consultants, when a client rejects the research findings, they will already have a good idea of whether there is a problem on the client or consultant side.  Take the professional high-road and be positive through these moments.  The most important area of focus is for consultants to react appropriately.  Be prepared for a client that will question your results and findings.  This possibly shows that they are engaged in your findings.  It is a great opportunity to receive valuable feedback, improve your
research practices, identify any flaws and engage your client, not disengage them.  Denial is not a river in Egypt, but rather a passage towards better client understanding and relationships.

To illustrate using our equine example, Black Caviar has become a household name with her unbeaten winning streak currently standing at 15. This puts her at one win ahead of perhaps the most famous Australian racehorse in history in Phar Lap. Is the modern day phenomenon that is Black Caviar better than Phar Lap since she has a longer winning streak which doesn’t look even close to being stopped?

Let’s look at some of the variables that could determine which is the better racehorse in the eyes of the Australian public. If we were to compare these two horses’ performance at around 1200m, a sprinters distance, Black Caviar would most likely have Phar Lap eating her dust. Add this to Black Caviar’s greater winning streak and the result may be in favour of the mare being the best ever.

However, does this really answer the question of which is the best racehorse of all time?  It is pretty obvious that the answer would have to be negative, as many other factors would influence perceptions of which is the best. For example, Phar Lap remains a household name nearly 80 years after his death by winning over a range of distances, particularly excelling at longer races such as the Melbourne Cup. In contrast, Black Caviar is a born and bred sprinter who will most likely never race in the race that stops the nation. Furthermore, Phar Lap’s ability to uplift the nation during the Depression era and his premature death at the height of his racing career are other factors which may elevate him to the position of best ever in the hearts and minds of the Australian public.

In short, it is evident that the aim of determining the best Australian racehorse of all time would not be well served by referring to winning streak or performance over short distances.  In the same vein, research needs to be careful to keep the overall aim of the project in mind when deciding which questions to ask or which variables to measure. Although a simple example, the Black Caviar versus Phar Lap debate reflects the importance of consistently referring back to the initial research objectives to ensure that only the variables that actually influence these objectives are measured. Only by doing this will the needs be addressed, research questions answered and true value delivered on.

Historically, the Qantas brand has been built on a solid foundation with a mix of two things: safety and reliability, as well as being Australia’s friendly ambassador to the world. Qantas’ positioning on safety and reliability comes from its extraordinary track record, also famously plugged as the world’s best in the Oscar-winning movie Rain Man: “QANTAS…QANTAS never crashed”. Qantas’ long-standing ambassador role harks back to its first overseas passenger flight from Darwin to Singapore in 1935. Since then, it has consistently reinforced that status by stirring feelings of patriotism: the use of the Flying Kangaroo logo in 1947 and the ‘Spirit of Australia’ slogan, the use of emotive advertising featuring sweeping shots of iconic Australian tourist attractions, the co-branded marketing campaigns with Tourism Australia (more recently Oprah and John Travolta).

Today however, the Qantas brand operates in a significantly different landscape, which in turn raises questions about whether it can still rely on the same brand associations and positioning. Whilst safety and reliability are sine qua non for the airline industry, perhaps air travel has become so pervasive that amongst well-known brands, safety and reliability are assumed to be a given or must-have (as industrial psychologist Herzberg would term it ‘hygiene’ factor) and may no longer constitute a point of difference. Volvo and safety worked well for a while; but for Mercedes Benz, prestige and performance are its selling points because their customers who look for those things largely assume that they are also getting safety as a standard. Similarly, Singapore Airlines has been consistently profitable by positioning its unique service experience, not because it screams “safety and reliability” in its advertising.

Recent events may have also changed public perception of Qantas’ positioning on safety and reliability. Recurring grievances and industrial action by Qantas engineers and maintenance personnel may have created lingering concerns about aircraft operating fitness. Even if regulators ensure that unsafe aircrafts do not take off, what will delays and cancellations do to an airline’s reputation for reliability? A scan of social media revealed that there is substantial chatter voicing concerns about Qantas’ safety standards, and with the speed at which negative word-of-mouth spreads in social networks, every minor issue now would be magnified and widely disseminated.

Increasingly, Qantas may also be perceived to be less Australian in spirit. Recent negative publicity about exorbitant executive pay smacks of corporate greed of Wall Street proportions. The spirit of giving executives a 70% pay rise while outsourcing operations to Southeast Asia would be perceived as fairly un-Australian. In fact, concerns about safety, reliability, and outsourced are linked: a recent survey of investors and shareholders revealed that 55% believe that outsourcing is the cause of many of its midair incidents. One could see that it would be slightly hypocritical to continue to capitalise on feelings of national pride among local consumers when a company is moving operations offshore because it no longer wants to pay national-average wages to its local workers. It may only be a matter of time when it strikes passengers that an Irish-led, part-British-owned airline can only control Australian skies for so long….until the next viable option comes around.

The branding challenges for Qantas are not straightforward, yet not insurmountable. Two of Qantas’ brand pillars, which have served its domestic and international markets quite well thus far, are weakening and the airlines is left scrambling trying to reinforce the same brand pillars with band-aids and PR spin. The domestic market may be forgiving because we are Australians (and we really don’t have a choice), but the international market is much less so. How will Jetstar and Red Q compete in the already-competitive Asian market? What will their respective brand equities look like when it can no longer rely on the endorsement of a once-strong parent brand? Building brand equity requires insights about what will make the brand differentiable and sustainable.

In the previous blog (posted 12^th August, 2011), the position was taken that it is the uniqueness of data that can provide quality insights that help establish a sustainable competitive advantage; but in saying this, the unique data needs to be matched by quality analysis. However this raises the question of how data can be “unique”? Should you look for the hard, quantifiable and crunchable analytics or the more “soft touch” that is afforded with qualitative data?

In another Harvard Business Review blog entitled, “You can’t analyse your way to growth” (12 September, 2011), Roger Martin argues the need to separate “analysis from appreciation”. By his definition, analysis is basically crunching the readily available data to make assumptions about and extrapolate into the future. The problem being this data is usually historical and fails to provide insight into new opportunities that can grow your organisation. By contrast, appreciation is the qualitative side of data. This data is regarded as being more in tune with your customers, basically putting yourself in their shoes and having a deep “appreciation” for their lives. How you capture this data relates to understanding how your customer uses or interacts with your product and service – what makes it easy, what makes it hard, is it enjoyable and fun or tedious and difficult. It is from having this appreciation that Roger Martin believes opportunities will present themselves because you can imagine new possibilities that did not previously exit.

The blog cites some great examples from Procter & Gamble which shows how being in tune and close to your customers can present great opportunities for growth. The product Febreeze was born from the company having an appreciation for consumers. The market for air fresheners was only showing minimal growth and the product simply “masked” odours. Having an appreciation for the needs of consumers P&G understood that air fresheners fell short of expectations; where users would prefer a product that eliminates odours. Out of having that appreciation, Frebreeze was developed and the product produced tremendous growth and profit for P&G.

In this instance, the unique data that is needed to provide quality insights is captured by having an intimate and deep appreciation for the lives of your consumers – how they interact and use your product is vital to understanding where new growth opportunities lie and maintaining your sustainable competitive advantage. However, it is also the analyst, with their qualitative proficiency, that could identify the expectation versus performance gap, like in the case of Frebreeze, which created a new growth trajectory for P&G. So is it data or analysis? The debate continues.

This link between celebrity and brand image is examined in new market research that suggests the stronger the attachment to a celebrity, the higher their purchase intentions of a brand the celebrity endorses (Ilicic et al 2011)*. Brands should thus seek out celebrities with whom their target market is engaged with to endorse their products. This may sound like stating the obvious, and it is to a degree, however the new finding here is hard evidence of the effect consumer-celebrity engagement has on the ability of celebrity endorsements to work.

For example, imagine a brand is considering two celebrities to endorse their product. One may be much more famous in terms of people who are aware of them and know what they do. The other is less widely known, but has a loyal fan base that is strongly attached to this person and happens to comprise the target market. This new research suggests the lesser known celebrity would be a better choice for this brand because the target consumer attachment to this person is higher, even though the other celebrity is more widely known.

Although further market research would be required to fully validate the findings discussed above, it provides an interesting introduction into examining the relationship between consumer-celebrity attachment and the effectiveness of celebrity endorsement. This is particularly important given the high-profile nature of celebrity endorsements, the hefty pay packets involved in these deals and the fallout if celebrity endorsements are not chosen carefully.

*Ilicic, J & Webster, C.M. 2011, Effects of multiple endorsements and consumer–celebrity attachment on attitude and purchase intention, Australasian Marketing Journal, Australasian Marketing Journal, vol 19, p. 230 – 237

The relationship between data and analysis can be a tenuous one. Having high quality data and a lack to talent to analyse it means insights and potential opportunities contained in the data will be missed or overlooked; meaning the data’s potential is underutilised.  Conversely, data that lacks in depth and breadth results in a talented and creative analysts being limited in what insights they can provide; potentially creating more questions than answers and leading to poorer decision-making outcomes.

In a recent Harvard Business Review blog entitled, “Success comes from better data, not better analysis” (8 August, 2011) the General Manager of American baseball team, Houston Rockets, weighs in on the debate offering his perspective from a sporting point of view. He asserts that it is not the analysts that give an organisation its edge but rather the ability to capture data that is unique and no one else has.  The example given relates to sporting teams but has lessons for the business environment as well.  He suggests that teams need to track the performance of their players because the data is used to provide evidence of what a coach is trying to emphasise that can win games, it also highlights to players where efforts can be increased.  This data takes a purely internal focus and is limited.  Is a home run hit one in every five games a good statistic or not?  Where data can more unique and provide greater value is through taking an entire league perspective, whereby similar data is also captured from all games and players; essentially creating an external focus.  All of a sudden the statistic of a home run in one in every five games has greater perspective.

What is being described is the ability to benchmark ones performance against another.  This is nothing new to the business environment. However, what is being suggested is to look for unique ways to benchmark yourself against your competitors because if you are measuring something they are not then you have an insight they are not aware of.  This is your source for a sustainable competitive advantage.

The lessons learnt from this sporting analogy are to be audacious in the data you wish to capture.  Maybe it is considered too audacious to measure the distance covered by the out-field players and the time they can over it in but when a player can cover a great amount of distance in a short time to make a game winning catch, the insight just paid for itself.  So in business, look for new ways to measure yourself up against the opposition because the quality of data you can capture that better illustrates the environment you compete in, the greater advantage you already have.

Until now, that is. The European Society for Opinion and Marketing Research (ESOMAR) has just released their official “Guidelines on Social Media Research”, with the aim of guiding market researchers on what is considered ethical and professional in this field of study. The Guidelines cover internet-based platforms where users exchange information, such as online forums, discussions, communities, blogs, social networks (e.g. Facebook), video and photo sharing and group communication and/or collaboration platforms (e.g. Twitter).

Some of the key points covered by the Guidelines include:

-          Personal data collected in a market research project must not be used for any purpose other than the research project in question.

-          The research must comply with data privacy legislation for notice, consent, accuracy, security and access when personally identifiable data is collected and stored.

-          Research must also comply with the service owners’ terms of use.

-          Users’ co-operation must be based on adequate information about the research and their consent obtained when using personally identifiable data. If consent is not obtained, only depersonalised data may be used.

-          Researchers interacting directly with users of social media must convey their contact details, purpose, and role, how they will use any data collected and seek permission to do so.

-          When reporting research results from projects using social media, researchers need to explain the effects of using this source on the validity and reliability of results.

This formalisation of guidelines for appropriate use of social media for research is a vital step towards ensuring the market research industry as a whole acts with integrity and honesty in using this kind of data. Being a relatively new area for research, the guidelines help reduce the potential for mistakes or misunderstandings that could irreversibly damage the industry’s reputation in the eyes of the broader community; without which there would be no research participants.

However, what isn’t so straightforward is the ethics behind such market research when the researcher joins an existing online discussion to gather data. Does the researcher reveal themselves, become involved or stay hidden? Should a message that is posted in an online forum open to everyone be considered fair game for research? Debate about these kinds of ethical issues is ongoing with no definitive “code of ethics”.

Such issues have become even more pertinent given the rapid growth of social networking sites such as Facebook and Twitter in the past few years. Now more than ever, users are engaged in online social lives and making information publicly available: sharing their location at a given time, “posting” comments on friend’s social pages and uploading photos. Facebook’s “like” button allows users to display their preferences regarding almost anything: from TV shows to other users’ “status” updates, all with a simple click of the mouse. “Tweets” are 140-character grabs of information about what the user is thinking, feeling or doing at the time. This information is often publicly available with privacy settings not always available or understood by the user.

With over 500 million active users on Facebook and 75 million on Twitter, online communities such as these are virtual goldmines of data and participants for market research. Thus it is no wonder that researchers are keen to tap into this resource. The problem is, the ethical issues that existed a decade ago with the rise of online discussion forums still exist today; and have perhaps become even more perplexing. Can “tweets” that are made publicly available be seen as example of implied consent? Or is the fact that the user wasn’t aware their information would be used in this manner mean consent cannot be implied?

Researchers need to continually evolve to keep up with the ever-changing face of online social lives if they are to tap into this rich source of information. The ability of the market research industry to instil trust and ensure future participation of respondents relies on addressing the ethical issues inherent in conducting research using online social media. Without this, the industry is at risk of losing the ability to use this information in a credible and defendable manner.