It’s officially 2012, and, again this year, we’re hearing “2012 is the year of mobile commerce“. We heard it in 2011 too. Did we hear it in 2010? Yep. In fact, as far back as 2007, pundits and observers have been prophesizing that the days of whipping out our phones to pay for all sorts of retail sundries are just around the corner.

First, I think it’s probably important to get some definitions right. As the Forbes link above says, I think it’s fair to say that mobile-enabled e-commerce does not equal mobile commerce, at least strictly speaking. When you buy a book from Amazon on your iPad, you’re not engaging in mobile commerce per se – you’re using an e-commerce portal adapted for your mobile device. “Mobile commerce” is probably best described as shopping that takes advantage of unique properties of mobile devices.

So, why doesn’t it ever seem to happen – and when it does, why does the development in the space seem to happen so slowly? Read More »

It started off innocently enough.  Back in the 1980’s when the first Special Economic Zones were established there were only a handful of places you even dared talk about as “consumer markets” in China.

As a modicum of affluence appeared in Shenzhen, Guangzhou, Shanghai and Beijing, companies began making more concerted marketing efforts on a market by market basis.

Deng Xiaoping’s “Southern Tour” in the fall of 1992  unleashed (or ratified) individual efforts across China focused on the pursuit of wealth.  Soon, some people were talking about more markets than they could count on two hands.  Impressive.

Somewhere along the line in the run up to the turn of the century, discussion of “Tiers” emerged to facilitate sharing of information and depth of market penetration.  Where you only spending media in Tier 1?  Was your product showing up in Tier 3?  This was merely shorthand for talking about the big four markets, the other provincial capitals, and the rest.

The problem is that the rest is actually some amalgam of 361 official cities, 2,811 couties, and 34,171 townships.  Over the first decade of this century, some MNC’s were actually seeing their brands reach every corner of the country.  Others were managing points of sale across hundreds of cities.

Despite the blunt tool, business executives were stuck with tiers to discuss their market coverage.  These conversations could be quite frustrating.  We might all agree on Tier 1, and maybe had an 80% overlap for Tier 2, but then your Tier 3 was different from mine.  You had a tier 4, I had a tier 5.

The reocognized disconnect was that each company’s “Tier” definition was different.  And if I needed to create a market expansion plan to grow from 30 markets to 100 markets, which 70 were supposed to be my priority.   Some efforts started to appear that attempted to index all the markets in China by certain economic statistics, but if you’ve ever worked with Chinese economic statistics you know how you felt about that.

Well, I think the new decade is finally bringing around some sound thinking about how to talk about China market coverage without putting up a list of 600 cities:  Clusters.  Most recently advanced rather publicly by McKinsey, the concept was already in practice as executives looked at the total market and preceived newly defined regions that did not adhere to provincial boundries or other traditional market maps.

The cluster approach won’t surprise any practioner.  Afterall, who would ignore a neigboring market that absorbed your media, was easy to distribute to, and spoke the same dialect as your sales team?  Just because it was indexed 40 spots lower?

Talk of Clusters recognized not the indexing of cities, but the interconnectedness of markets that emerged in the wake of rapid infrastructure development, personal car ownership, and the reach of the internet.  Manageable in number (less than 30) these geographicly defined areas offer scalabilty and reach to brands that need efficiency.  Tackling 31 provincial capitals at the same time offers none.

With Clusters, executives can dismiss with talk of cities.  They can focus on reachable populations within defined geographies.  The market becomes manageable again – almost intuitive.  Distribution centers, media spend, and trade marketing investments scale up better.  Focusing on three or four clusters is naturally simpler than focusing on 50 or 75 markets.

Clearly, I’m a fan of clusters.  I recommend you adopt it in China.  Like all good ideas, this one isn’t new, but it sure feels good when you use it in a new location for the first time.

Black Friday may need a name-change – to Black Thursday.

Many big-box retailers this year are opening their stores on Thanksgiving Day itself to kick off the traditional after-turkey shopping rush.  Toys R Us is opening at 9 p.m., with Wal-Mart following soon after at 10 p.m.  Best Buy, Kohls, and Target are all opening at midnight.

The benefit of opening early seems clear: retailers hope that shoppers will head to their stores first and complete all of their holiday shopping in one fell swoop.  Also, opening on the night of Thanksgiving may attract shoppers who are bored after the turkey’s been eaten, the dishes have been washed, and the kids have been put to bed; an early opening may also attract those who love sleeping in (but are still awake at 9 or 10 at night).

And the demand may be there.  Brick-and-mortar retailers have increasingly more competition.  Amazon is offering daily deals leading up to Black Friday, and Amazon offers a lot more convenience than the hassle of dealing with Black Friday’s crowds, traffic, and sleep-deprivation.  In addition, consumers are retaining many of their recessionary behaviors, so they are more likely to hunt for the best deal.

This doesn’t mean that it is a good idea all around, though.  The early openings mean that employees have less time to spend with their families on Thanksgiving Day.  This early start to their Black Friday shifts means that many will have to duck out of Thanksgiving dinners early to sleep and prepare for work.

In a lot of ways, it’s a reflection on just how miserable the consumer economy in the US might be. Retailers know that they’re alienating their staffs by opening earlier and earlier each year, but it’s a clear effort to capture a greater percentage of consumer wallets. Retailers used to be able to do that by lowering prices, offering better products – that sort of thing – but as consumers fail to respond to those kinds of stimuli, stores are competing in other areas – like opening hours – instead.

Employees aren’t letting their bosses get off easy: A Target employee has launched an online petition to protest Target’s hours, and it has generated over 180,000 signatures as of Nov. 18.  A quick look through the comments suggests that consumers (as well as the employees) think Target has gone too far.  Many argue that Thanksgiving is a holiday that should be spent with family, and shopping should wait until about dawn on Black Friday.

Do you think consumers will relish shopping on Thanksgiving and adopt it as a new holiday tradition?  Or do you expect stores to be empty until the wee hours of Black Friday morning? Share your thoughts in the comment section below.

A few years ago, marketing pundits were predicting the slow death of brick-and-mortar. After all, when you can buy anything you need on Amazon, what’s the point of braving the crowds for lower-value goods? But as mobile ascends in popularity, retailers are finding that the optimal experience for consumers involves the touch-and-feel experience of the brick-and-mortar store, combined with the high information density of the computer – and they’re optimizing their customer-facing technology efforts to take advantage.

This year, a number of brands released or updated their apps to better fit into the brick-and-mortar retail experience. Here are some of our favorites: Read More »

In its battle with online sellers, the brick-and-mortar retail industry has refined its value proposition, offering customers more of a reason to come to the store. A key part of enabling this changed value prop is technology, so we decided to look at a few new shopping technologies that are making a splash among retailers: Read More »

In a world of overflowing choice, shoppers get overwhelmed by purchase decisions.  Finding the right product can be even harder in-store than online, since you can’t filter by category or consumer ratings, for example.  Indeed, MLC’s recent research shows that consumers tend to find websites simpler than stores.  And with foot traffic on the decline, simplifying the in-store experience is more important than ever to entice shoppers back into stores.  [For information on other ways to boost foot traffic, please see Courtney's recent post or shoot her an email.]

The simplest retail experiences involve staff who help you find the right products for your needs.  But with high turnover, it can be hard for sales reps to learn different segments’ needs and product preferences.

What store staff need is a simple way to guess what customers want. Since preferences aren’t always visible, staff need a few quick questions for diagnosing needs – and the fewer the better (to avoid annoying customers).

In some ideal cases, a single question will be enough to send shoppers to the right section of the store.  One pet store, for instance, asks the question, “Do you buy your pet a Christmas present?”  This question alone helps determine whether to direct pet owners to the luxury section of the store or not.

Another great example of the single-question segmentation technique comes from a beer maker. To identify their target customers, they simply ask: “Do you like to get drunk quickly?”  An elegant segmentation technique indeed!

But finding those one or two questions that accurately predict shopper needs is no easy task. Most companies turn to their segmentation studies, but these are typically 100+ question surveys that can’t possibly be repeated in a store environment.

La-Z-Boy has solved this conundrum.  They reduced their 100-question segmentation survey down to just 2 simple diagnostic questions.  These 2 questions enable floor staff to predict which section of the store will be right for each shopper – with about 80% accuracy.

MLC members, to see La-Z-Boy’s in-store segmentation questions and learn how they came up with them, please click here.

Generation Y is a hard crowd to please.  Being a Millenial myself, I know that our generation never stops demanding more from the world around us.  Over the past two decades, no part of our lives has ever been static.  Our music tracks blasted from cassettes, then CDs, then mp3s.   Our online chatter accelerated from dial-up to DSL to cable.  As students, we took notes on paper notebooks, then laptops, and now tablets.

Of course, few things are more important for a female Millenial than shopping.  Now I haven’t been the most ardent shopper amongst my friends and peers (and not just the ladies, mind you), but I have been an ardent observer of their passion.  From what I’ve personally noticed, shopping, too, underwent a layered transformation, one that is particularly significant to marketers. Read More »

Even though the weather and leaves are just beginning to turn, and we still have to get through Columbus Day, Halloween and Thanksgiving before turning our thoughts to visions of sugarplums and eight crazy nights, marketers are hard at work figuring out ways to close the year off strong with a good holiday season.

But how should they do it, while stengthening their brand positions for the year to come? We’ve got a few tips below:

Find ways to lighten the load. For kids, the holiday season is a magical, wonderful time of presents, candy, and sometimes magical elves. For adults, though, it’s probably among the most stressful times of the year – even if the stress is likely to pay off in the form of fun with family and friends.

Great brands recognize that not only is the season particularly hectic, the very act of brand interaction might be, too. Finding ways to save consumers time and money, as well as raising the chances they’ll make the right choice when it comes to gifts, can pay dividends throughout the rest of the year.

So how does this play out practically? Offer your consumers some measures of assurance that they’re making the right choices. Some brands we’ve studied have done this through transparent buying guides – presenting consumers with a range of criteria and offering relevant gift ideas for each – while others have gone the technology route, using social networks to make gift recommendations.

Clarify the brand promise – and deliver it, 100%. There’s no better time to make sure brand promises are airtight – and delivery consistent – than the holidays. The uptick in shopping offers brands an opportunity to make a positive imprint on the consumer, but if crowd-weary shoppers aren’t satisfied with what they get, you may suffer the consequences the rest of the year.

MLC has a wealth of material designed to help companies consistently deliver their brand promises: for instance, here’s how Exxon Mobile motivated employees to consistent brand delivery, how Starbucks ensured consistent brand delivery across all touchpoints – human and not human, and how we recommend brands ensure consistent brand delivery across geographies and segments.

Find avenues of emotional differentiation. Here’s the place where brands – particularly consumer and retail brands – have a golden opportunity to set themselves apart from the competition: finding areas of shared values and ways to emotionally differentiate themselves from competitors. We’ve found, for instance, that brands that align with consumers around emotional values perform at a much higher level than brands that emphasize functional differentiators.

Luckily, emotions are running high during the holiday season, and there are a number of brands that have particularly strong associations with the holidays. Macy’s, for instance, is associated in my mind with the holidays: their sponsorship of the Thanksgiving Day parade and the movie “Miracle on 34th St.” form that association in my mind, and I’m much more likely to shop there during the holidays than at any other time.

Understand and fit into seasonal routines. Routines shift a bit during the holidays for a lot of people and families. I’d say that, on average, one is more likely to bake cookies on a random Tuesday night during December than in other months; one is more likely to visit a mall in December than in other times, one is more likely to drive around looking at tacky Christmas lights – all sorts of things.

Brands that unearth subtle shifts in consumer routines during the holidays can capitalize big on them. For instance: there’s the classic case of General Mills’ Betty Crocker brand figuring out that parents often spent the first week of the holidays doing nothing special, then felt guilty about doing so. So the brand targeted cookie-baking in the second week of the holidays, figuring this was an easy way to assuage parental guilt about not being festive enough.

MLC members, how are you shifting your brand communications mix for the holidays? Let us know in comments below.

I had the pleasure of attending Retail Advertising and Marketing Association’s CMO meeting here in DC last Thursday.  Conversation ranged from loyalty to simplifying consumer decisions (MLC presented this year’s B2C findings) to the growing economic divide in developed economy consumer populations (our friends from Iconoculture shared their insights on this topic).

But the most fireworks happened around a discussion on mobile marketing.  Sean Bartlett, the director of mobile strategy & platforms at Lowe’s, presented on recent mobile activity by that company.  What they’ve accomplished is great mobile work for marketers to emulate. The new Lowe’s app, which has been on the top download boards in the App Store, scores very well against MLC’s 11 criteria of a world-class mobile execution.

Why the fireworks? One marketing leader in attendance asked a simple question: how does Lowe’s measure the ROI on its mobile efforts?  The assumption behind the question was that Lowe’s is spending well into six digits, or even seven digits, and so how to justify the resources internally?

(light fireworks here)  The discussion quickly bounced back and forth between various other retailers in the room, several of which stated that the ROI discussion is over—that was for 5 years ago.  Consumers are moving so quickly that it’s not a question of if, but how.  One retailer shared that it had just launched m-commerce the week before, and watched as its mobile sales ticked up to 3% of total–in just 3 days!!  The CMO indicated customers must have been wondering what took the retailer so long to offer mobile purchasing.

The discussion took on a life of its own, and ultimately landed in a place that struck me as a turning point for retail marketers—if you’re obsessed with ROI to the point that it’s hampering getting some big mobile bets up and running, you’re moving too slow for your consumer.  I’m sure there are exceptions in categories that serve older generations, but by and large, the mobile train has left the station.

MLC members, score your mobile concepts against world-class criteria using our Mobile Execution scorecard.

(Our current research stream on in-store marketing for retailers and CPGs is on its way in a few months, and we’re looking for interested marketers to talk to about the topic! If you’re working on any in-store activations – shopper, mobile, etc. – please e-mail me and we’ll set up a time to chat!)

Last week, Target generated so much buzz that increased traffic shut down its website and some stores sold out of new merchandise within hours.  Surprisingly, this wasn’t a big Black Friday-style sale – it was the introduction of a new clothing line.

With e-commerce sites increasingly encroaching on bricks-and-mortar sales, retailers are being forced to innovate to keep consumers coming back to their stores.  From 2009 to 2010, e-commerce revenue increased 15.8%, while general merchandisers’ revenue increased 2.9% and department stores saw a revenue decrease of .8%.

A major factor in this shift to e-commerce is the rise of price transparency.  Before the rise of smartphones and price trackers, consumers would have to either go to many physical stores or leaf through many weekly circulars to know which stores offered the lowest prices.  Since both of these methods are incredibly time-consuming, though, consumers didn’t research the products and prices as much.  This gave retailers some wiggle room to offer slightly higher prices without alienating their shoppers.

But now, price trackers and smartphones abound.  Consumers are able to research products in-store, getting historical price information on sites like camelcamelcamel and finding cross-store location-based price information on sites like Goodzer.  And since so many shoppers have smartphones, they are now able to do this anywhere – even while standing in one retailer’s aisles, examining the product.

So what’s a retailer to do?

Make stores more of a destination experience.

One way to do this is to make the shopping experience incredibly fun, like I wrote about earlier about the American Girl Place or the World of Coca Cola.   Retailers are making their stores more novel by pursuing strategies like launching lines of unique merchandise (like Target’s Missoni example above), while others are hosting classes and events (like Home Depot’s Kids Workshops).  These unique products and classes can intrigue shoppers enough to get them into the store, and they will often buy more things once they are there.

Several retailers are also adding departments that feature products that can’t be or aren’t yet often purchased online.  For examples, health clinics can encourage shoppers to come to the store.  Since most visitors to a health clinic will pick up little things like cough drops and medicine on their way out, these health clinics can help increase both foot traffic and sales.  Groceries, too, can help increase foot traffic.  Since most grocery products have relatively short shelf lives, most consumers go shopping on a weekly basis, boosting foot traffic.

Use technology like mobile alerts and coupons.

New technologies like Shopkick can reward consumers for going into a store by providing points and coupons.  These points for checking in may be enough to actually get to the store, and the coupons may be enough to get them to buy more once they are there.

Take the store to the shoppers.

This summer, H&M successfully took its merchandise to the consumers by building a beachfront pop-up store that sold summer clothes and accessories, like shorts, swimsuits, and sundresses.  Shoppers were able to buy the beach gear and use it almost instantly.  This model increases foot traffic by significantly reducing the effort shoppers must exert to get to the store.

Other retailers are doing this by building smaller locations that cater to local shoppers.  This is taking the form of City Target, a store under construction that will be in a historic building to blend in with the nearby streetscape, and it will feature products like apartment furnishings to cater to neighborhood shoppers.

We have just begun our 2011 research on ways to boost foot traffic.  If have any ideas on how retailers should do this, please email me at colong@executiveboard.com to get involved!