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?

VentureBeat took that subject on a few days ago. They posit that there are two big barriers to widespread adoption of mobile payments and commerce:

The lack of a developed, recognized standard. There is an industry-wide standard for credit cards, and processors work such that almost any credit card can be swiped at almost any retail point of sale, and the transaction will go through. The same is absolutely not true for mobile payments, at least not yet: retailers wishing to accept mobile payments have to guess what kind of phones their customers use, and potentially install multiple pieces of hardware to handle the transactions.

The significant cost of updating retail infrastructure. Hand in hand with the lack of certainty around a particular processing standard is the big cost retailers face in upgrading their infrastructure to handle mobile payments. Big retailers often use purpose-built or highly-customized point of sale software, designed to integrate smoothly with inventory and payment processing systems – positive qualities that make implementation of a new payment method prohibitively difficult and expensive. Included under this heading is the cost of training new staff to use the equipment – no small feat.

To this, I’d add one more: consumers just don’t seem to be interested. And I can’t entirely blame them. I might be being small-minded here, but it sounds like there’s no inherent advantage to whipping out one’s phone to pay for a retail transaction vs. whipping out one’s credit card. In the development of other forms of e-commerce, there was a real sticking point – the need to get up and go to a store to get books and other items, for instance – and there doesn’t appear to be one here. Unless it’s possible with mobile payments to walk out of a store without checking out – and it sounds like that day is very, very far in the future – I just don’t see the draw, at least in a retail setting.

So, I won’t go the easy pundit’s route, and say 2012 is the year of mobile commerce. I think 2012, and 2013 for that matter, will be years of mobile-enabled e-commerce – a series of incremental innovations designed to make the buying experience easier for mobile users. There’s real growth in that – maybe not whiz-bang growth, but growth nonetheless – and it’s something worth pursuing.

MLC members, for more on mobile, check out our Mobile Marketing Resource Center.

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.

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.

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:

Home Depot. The Home Depot app gives customers some basic tools in the retail environment, such as the ability to scan barcodes to find prices, additional information, and user reviews,  a function that checks inventory at the store and others nearby, and a map of the store where you’re shopping – invaluable tools to help navigate the mammoth DIY stores. But perhaps the coolest thing are the hundreds of videos, featuring professionals using the tools and parts you can buy in the store. (I’m a little biased here, since one such video helped me replace the fill valve on my ancient toilet.)

Apple. Apple’s Apple Store App (say that five times fast) wins the award for reducing hassle in a chaotic environment. You can make appointments with the company’s tech support Geniuses, customize the more customizable Apple products (desktops and laptops, mostly), and reserve products. But the latest version goes even further: you can actually pay for certain less-expensive products using the app and the credit card linked to your iTunes account. Finally, a solution to the age-old problem of how you actually buy stuff in the Apple Store!

Best Buy. Similar to the Home Depot app above, the Best Buy app allows users to scan in-store QR codes to get to product specifications and reviews, as well as allowing for quick product comparisons. But at Best Buy, that last one is more valuable than most other retailers – consumer tech purchases are a minefield of incompatible platforms, incomprehensible acronyms, and other barriers to easy comparison.

Teavana. Teavana, a national chain selling tea and tea paraphernalia, has an app that perfectly illustrates what a good app should be about: helping the customer get to the outcome they want. In Teavana’s case, that’s a perfect cup of tea, and to that end, they’ve created an app that includes an interactive tea timer, letting users know exactly how long to steep each kind of tea the store sells, as well as suggesting new blends to try based on the individual user’s tastes.

Have any other retail mobile apps impressed you recently? Let us know in the comments.

Social shopping. There’s been an awful lot of talk and theorizing about social shopping – a sort of blanket term for any technology that connects customers to each other in the retail experience – but not a lot of hard evidence as to what kind of foot traffic and incremental sales it can drive. That’s starting to change, though, as big brands like Walmart get involved in the space.

So, what’s the potential for consumer brands and retailers? Stressing that this is my opinion only, I don’t see a ton of returns from this technology – at least yet. First, there are organizational as well as technical challenges in developing the nimbleness to quickly take advantage of rapidly-shifting social data. Even if you can generate consumer insights from social data, there’s no guarantee you can implement changes based on those insights rapidly enough to take advantage – and, we’re hearing that many organizations can’t.

Real-time demand management. Along these same lines, retailers are beginning to use social media data – as well as more finely-tuned seasonal sales trends – to inform decisions about inventory levels, store placement, and in-store promotion in real time. Walmart’s @WalmartLabs is doing some of this – for instance, adjusting supplies of bicycles when it detects an increase in cycling-related chatter in a given area – but most retailers haven’t cracked this nut in any serious way.

The same caveats apply: while technology might be enabling real-time knowledge into demand, most companies’ internal processes – everything from legal to supply chain and beyond – aren’t yet ready to take systemic advantage of those new insights.

Mobile payments. By this point, I think most of the audience is at least somewhat familiar with the concept of mobile payments – paying for goods using a variety of mobile-based technologies like SMS, RFID, or near-field communications. A number of analysts have projected mobile cash flows to increase exponentially between now and 2015, and with a number of big-name financial providers and processors jumping aboard, it’s only a matter of time before most large retailers are accepting pay-by-phone.

We’ve written a little about mobile payments before, and since I asked the questions in that post, to be honest, there haven’t been a ton of answers. If it’s simply about making payment as painless as possible for the consumer, then great; if there’s a greater strategic reason to roll these systems out, then I’d like to hear your take!

Apps for staff. Developments in the smartphone and tablet spaces have mainstreamed the concept of “apps”, but brands are typically rolling these out for consumer benefit. But there’s an exciting new trend in deploying apps for floor staff that we expect to continue. So far, the retailers empowering their staff with mobile apps have mostly been luxury and high-end brands: for instance, Nordstrom is testing iPod-touch mobile POS systems, and BMW is giving leasing agents iPads that will allow them to finalize paperwork immediately after test-drives. Among more everyday retailers, Lowe’s is also rolling out iPhone-based POS systems.

This strikes me as relatively low-hanging fruit for retailers. Yes, there’s a fairly large up-front expense in app development, as well as actually deploying devices to the sales floor. But a well-designed app, I think, could reduce in-store “friction” and allow staff to spend more time serving customers and less time checking if items are in stock, for instance.

In-store context and navigation. Hand-in-hand with reducing staff informational friction is reducing customer informational friction, and there’s been some movement to empower individual customers with apps and tech designed to enhance the retail experience. For instance, a number of brands are using QR codes and RFID technology to offer contextual information to customers in the buying experience: Macy’s is using QR to link physical goods to online videos featuring interviews with designers, Home Depot is rolling out QR to link to videos explaining how to use products, and LL Bean is using RFID to launch videos on in-store screens when consumers interact with certain products.

This is another piece of low-hanging fruit that I think is a no-brainer for retailers to implement, particularly in certain classes of goods. Home improvement tools are notoriously complex and hard to differentiate in-store; why not give consumers the ability to do it in a way that benefits the brand?

What other cool tech have you come across? Let us know in the comments.

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.

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.

The PC revolution of the late 80s and early 90s allowed traditional brick-&-mortar businesses to expand and add stores in an organized fashion – a resulting increase in foot-traffic was reflected in inventory holdings growth across multiple retail segments.  Then, at the turn of the millennium, eCommerce began herding people home to the comfort of online shopping.  Today, online sales are still up, but I’ve noticed that my friends have begun physically returning to stores more often, rarely without their Smartphones in hand.

The recent ANA Mobile Marketing Conference provided three insights as to how some companies are using the third technological revolution  – the mobility revolution – to bring consumers back out of their homes.

Simplifying/Store Mapping. Walmart, one of the presenting corporations at the conference, utilizes a mobile app that maps out an entire store as you go through while simultaneously providing price transparency.  In-and-out in half the time – I’d certainly consider saving myself the online shipping fees.

Enhancing the Experience. Hewlett-Packard, another presenter, has been using QR codes to provide targeted information to consumers in the store.  HP currently has unique QR codes for 32 IPG products on 84 packaging varieties in 34 languages.  That’s a whopping 379 unique web experiences, all accessible from your mobile.  Its app provides pre- and post-sale support, incorporating all the information available online with a visual and tangible in-store experience.

Transforming the Process. Tesco PLC has taken out-of-home shopping to a whole new level.  In Korea, it has launched a platform where mobile users literally shop on a metro platform.  With photo images printed onto the car exteriors, shoppers need only scan the codes on the products they want, which are then shipped directly home.  This is real shopping on-the-go.

MLC members, how has the mobility revolution impacted your business?  Let us know in comments, and don’t forget to check out our Mobile Marketing Resource Center for more on this growing trend.

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.

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.

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!

Don’t get me wrong – social gives businesses an enormous opportunity to change the way they talk to customers, and as technologies advance, marketers should be on the forefront of developing new ways of reaching the people that matter. And marketers do talk a pretty big game about listening, but that usually takes the form of fixing individual consumer complaints, monitoring levels of negative sentiment, and pulling verbatim quotes to provide color to larger consumer-focused initiatives.

But a new effort from Johns Hopkins gives some clues as to how health marketers, especially, can take advantage of consumer sharing habits to inform key decisions – particularly around media spend, shelf placement, and other choices whose optimal resolution can vary significantly between – and even within – local markets. Researchers at that JHU’s School of Public Health analyzed 2 billion public tweets, from May 2009 to October 2010, to determine whether semantic analysis could unearth meaningful information about public health trends.

The results were remarkable: plotting the overall Twitter chatter around the word “flu” and the actual reported flu rate for a given week according to the Centers for Disease Control indicated that the two metrics are highly correlated:

(image via the Pharma Marketing Blog)

So, for influenza, at least, the self-reported flu rate as indicated by social sharing closely mirrors the flu rate as measured by more typical epidemiological methods. I could imagine that, for other familiar ailments (think colds, stomach viruses, and headaches) the chart might look the same.

These data could be tremendously useful to pharma marketers looking for ways to segment their marketing mix by hyperlocal criteria. For instance: here in Washington, DC, sessions of Congress often lead to longer hours and higher levels of stress, not only for congressional staffers but also for the lobbyists, public relations folks, policy experts, and bureaucrats that support and influence them. I could imagine that mentions of the word “headache” might spike during these times – and marketers who have that knowledge can move headache relief to the top of the local marketing mix for a few weeks, rework in-store displays, and, to the extent they can, move those products to higher-traffic areas of the store.

It mirrors Walmart’s new social shopping initiative, profiled here by FastCompany. This program aims to detect subtle shifts in language and sentiment across geographical areas – for instance, if chatter about “bicycles” increases in Silicon Valley, stock can be shifted around local stores, additional inventory can be ordered, and in-store marketing materials can be placed to guide shoppers towards what they’re looking for. If Walmart can tell who wants bikes, surely pharma companies can tell when certain ailments are spiking in different places around the country.

More broadly, though, the judicious use of data is one key part of marketing agility – the function’s ability to quickly take advantage of subtle shifts in the landscape. We might not yet have the ability to accurately predict demand and capitalize on it, but we’re getting there, and the marketing departments of the future will need to be able to use tools like these.

MLC members, for more cutting-edge uses of social media data, check out our appropriately-title webinar replay from last year, as well as our social media tactics topic center.

Rather than trying to out-discount the discounters, or compete with the scale on which Amazon and other online retailers operate, I think retailers should be reevaluating their value propositions, both to their customers and to their consumer manufacturing partners. How do retailers in general, and your retail chain in particular, bring value to business partners and consumers?

I think the key to this is taking advantage of the two things retailers have in spades, and that all manner of disintermediation and price undercuts can’t take away: knowledge and space.

Focus less on selling, more on educating. Retailers looking for an edge over online and discount counterparts can find it in the on-demand knowledge of their employees. Online retailers like Amazon have some degree of product knowledge, but they don’t have the ability to tell whether individual consumers are actually looking for it – risking cognitive overload in the process.

On the other hand, retailers have extensive product knowledge, and sales reps to deliver it exactly when the customer wants it – and not a moment before. La-Z-Boy’s  simple in-store segmentation method, designed to figure out what kinds of sales expertise different customers are looking for, is an excellent example of how frontline staff can be trained to recognize the optimal way of delivering product knowledge.

Revive – or establish – emotional connections. It’s standard advice to companies and brands fighting commoditization and discounting: figure out the way your brand makes consumers feel, and pull on those heartstrings to shore up margins and marketshare. It’s a strategy used by businesses both tiny and gargantuan: for instance, Ukrops’, a family-owned grocery store in my hometown of Richmond, VA, dominated the grocery market in that city despite maintaining higher prices, refusing to sell alcohol, and being closed on Sundays. Why? The chain had a long association with the city of Richmond, such that shopping there was almost an exercise in civic pride.

We’re not all family-owned grocery stores, of course, and most of us can’t pull the heartstrings of civic pride convincingly. But we can figure out ways of plugging into our customers’ emotions: our study on Accelerating Loyalty can get you started.

Sell services, not products. Leveraging product knowledge by service selling is usually a B2B affair. But if your product is or has the potential to be confusing, service sales can be a great way to keep the customer happy, reinforce the brand promise, and fatten up margins a bit at the same time.

Best Buy’s Geek Squad, as well as similar services offered by other electronics big-box stores, is the quintessential example of this, and I think other retailers will get into the game as disintermediation begins to affect their core businesses.

Embed into routines. Retailers may be threatened by cheaper shipping and the ubiquity of computing platforms, but the one thing they have a ton of that online retailers can’t match is space. Physical space, that is – retailers occupy a dominant place in the built environment, and are fixtures in the midst of human routines. By piggybacking onto an unassailable part of people’s daily lives, retailers can give value to the customer in ways online stores can’t.

Redbox, for instance, has monetized the routine of stopping off at the grocery store to grab something for dinner on the way home from work: customers grab a bite to eat, pay for their purchases, and walk directly by a vending machine offering cheap movie rentals on the way out. 7-Eleven is trying to monetize the pre-work rush by offering gourmet, ready-to-eat snacks. And in a lot of places around the world, Starbucks has monetized the mid-morning work break.

MLC members – how are your companies shifting your value propositions to take advantage of the new normal? Let us know in comments.

One way that all brands are having success in engaging consumers is through providing extra value.  By giving the consumer something she wants, the brand can insert itself into the conversation in a meaningful way.  Here are five examples of how brands have created extra value for consumers:

Memories. American Girl Place allows families the opportunity to share experiences while shopping for historical-themed dolls and era-specific accessories.  This mecca for tweenage girls features doll hairstylists, historical-themed parties, and matching dresses for girls and their dolls.  It even has a cafe where families can share a meal, complete with doll-sized food and chairs.  By developing a space where girls and their families can create memories, American Girl has built a successful shopping destination.

Community. Nike created a program – Nike Plus – that runners can use to track and share their runs.  (We wrote about it a few months back.) This has allowed Nike to build a community of runners who sign up for challenges and comment on each others’ runs.  By building a community, Nike has created an online destination where avid runners can share their experiences with like-minded people, amplifying the experience.

Unexpected Value. The ING Direct Cafe offers tasty and low-priced drinks that compare to fancier coffee shops.  While enjoying their drinks, patrons can surf the internet and learn more about accounts with ING.  Since ING charges a competitive price for each drink, the bank is able to introduce potential customers to the brand without making huge investments in media.  Customers seem to be happy as well – the bank’s cafe in Chicago has 4.5 stars on Yelp (a score half a star higher than a nearby Starbucks).

Entertainment. The World of Coca-Cola provides an incredibly fun experience.  Between a minigolf course and a tasting room where a visitor can sample drinks from around the world, guests at this Atlanta attraction are able to experience branded fun.  Like American Girl Place, the World of Coca-Cola focuses on providing an entertainment experience that links consumers to their brand.  Since the Coca-Cola brand represents happiness, this attraction does a great job at tying itself to this emotion.

Pure Utility. Needing to use the restroom is a fact of life, and it can be hard to find a clean restroom when out all day shopping.  Charmin realized this, and built temporary restrooms in Times Square during the holiday season.  The restrooms were cleaned after each use, guaranteeing a good experience for all users.  These restrooms were a success because they found a consumer need and then leveraged the brand to create a solution.

For brands, especially CPGs, sampling can still be a very important marketing tactic (after all, having a taste of a food product can be a great experience), but expanding beyond this to provide an extra value can be great for boosting brand health.

Think about that: consumers, when budget-constrained and given the choice between buying less food and buying food that clashes with their values, chose the former. It’s evidence for our assertion that shared values are among the most important differentiation and loyalty drivers available to brands – aligning your brand with higher-order needs is a great strategy to insulate your products from budget cutbacks.

But what are those values and higher-order needs, and how do they play into household decision-making process? To answer that question, we’re hosting a webinar next week that will dive into the evolving American family and present highlights from brands that have done the best job of engaging the modern family in recent months.

MLC members, for more, please register for the webinar or check out our research into accelerating loyalty with the use of shared values.

But other stores are deciding that there’s an opportunity to differentiate with customer service. Albertson’s, a grocery chain on the U.S. West Coast, has decided that it will drop self-checkout lanes in some of its stores in order to focus on human interaction and service. An Albertson’s spokesman said that the chain was looking to “talk to customers more”.

Now, normally, this kind of assertion would set off alarms in our heads: the last thing customers want is more confounding information in the retail environment. Already overstimulated by the plethora of choice available and the conflicting messages they hear in media touchpoints, interaction with staff could be enough to push them over the edge of the decision spiral, and lead to suboptimal brand stickiness, repurchase, and satisfaction.

Also, as the store becomes an important battleground for marketing efforts, it’s clear that retail marketers will have more success injecting sophisticated, just-in-time messages into more-automated store environments than less-automated ones. Frontline compliance with marketing initiatives is spotty at best, and as retail marketers seek to tailor messages to the right points in the decision process, a more-automated environment offers the platform to make sure the message reaches its target.

But, on the other hand, a well-timed customer interaction can decrease purchase complexity by offering a few simplifying words. Consider a consumer looking at the different varieties of tomatoes available in a produce aisle, for instance; if a store employee approaches and tells her which variety is most popular, that’s a decision-simplifying touchpoint.

On the whole, I think that more automation offers two great things for marketers – first, an easier, less cognitively-taxing experience for the customer, and second, a more reliable channel for tailored information delivery during the in-store experience. But I know that it’s difficult to get the mix right – a just-in-time word from a trusted human adviser has a whole lot more weight than an algorithm-driven decision guide – and that with fewer human beings in the stores, brands are giving up a powerful emotional lever that can drive repeat visits and purchases.

What do you think? Take the poll below – I’ve set it up so that the first option is “fully human” (i.e. no self-checkout lanes, no electronic displays in-store, etc.) and the last is “fully automated”. Vote at which point along the continuum you think your retail brand would optimally sit.

But the major impediment to getting there is choosing which messages to push out. “Green” has come to encompass a wide array of eco-friendly beliefs and values, from cost-concerned consumers worried about energy efficiency, to values-oriented consumers worried about the sustainability of supply chains, to health-oriented consumers concerned about the risks of chemicals in products. Picking the right green dimension can go a long way in striking a profitable chord with your customers.

Timberland, an apparel company famous for its rugged footwear, developed a process to help weed out irrelevant green messages and hone in on exactly the ones consumers will respond to. Faced with a growing demand for green products and messages, Timberland’s various business units developed a dizzying array of green communications initiatives, from a partnership with solar installations to carbon-neutral retail stores to employee incentives for sustainable activities. All great efforts, but they confused an already-overloaded consumer, who wondered: what, exactly, did Timberland stand for?

To simplify the sustainability communications mix, Timberland applied six filters to its existing efforts:

Tangibility. Can the message be linked directly to the purchase decision?

Mainstream relevance. Can the selected areas be easily explained to the target consumer?

Product range applicability. Are the areas applicable across our range of products?

Measurability. Are the processes for measurement and data collection of our green efforts easy to explain?

Transparency. Can our communications efforts provide a fair picture of the green initiative?

Distinctness. Are the selected messages and efforts substantially different from each other?

Applying these filters across the range of their existing efforts, Timberland chose a few that fit well, leading to significant lifts in the effectiveness of green marketing initiatives.

MLC members, for more, see the full case, or check out our study on Scaling Green.

With these shifts in the landscape becoming more apparent every day, Deloitte Research has come out with a timely look at the ways – especially on the consumer end – it expects the retail industry to change by 2020. It’s a great piece of research – worth reading in full – and its conclusion is that in the new environment, retailers will have to prioritize four things above all others: aligning value with values, driving sustainable consumption, going everywhere your consumers go, and taking care of your people.

Let’s take them one by one:

Aligning value with values. It’s been clear for awhile that the utility-maximizing rational actor model of the consumer is faulty, in that consumers are willing to pay more for functionally-identical goods that align well with their values, like environmental responsibility or fair trade practices. But “values” are actually even more important than just that; MLC’s research into consumer loyalty demonstrates that, by far, the biggest driver of repeat purchases and brand advocacy is value alignment and “emotional differentiation”.

We’ve created some tools to measure your company’s efforts on this front; find our which loyalty metrics matter most, and check out our Loyalty Program Effectiveness Diagnostic and our Loyalty Program ROI Calculator.

Driving sustainable consumption. Along the same lines as value alignment, retailers and other consumer-focused organizations need to think seriously about how to reduce waste in their supply and value chains. A lot of this activity will rely on business partners in functions like procurement and logistics, but marketers can take a lead role in “greening” business activity.

Check out our work on Scaling Green to find out how companies like Phillips and Timberland have done it.

Going everywhere your consumers go. Be careful with this one. Deloitte’s white paper describes this key activity as following the consumer through the informational and purchase decision chains, ensuring a “positive experience” and, presumably, a brand imprint at every stage. But MLC’s most recent research into purchase decisions indicates that simplicity, not omnipresence, is what consumers crave from brands – and that brands who don’t comply risk losing consumers to “information spirals” and indecision.

Learn more about how too much information can lead to poor brand experiences.

Taking care of your people. The Deloitte piece makes the point that the most effective brand ambassadors for your company are your employees, and that care must be taken to ensure that employees are treated well, and that the messages they’re putting into their communities and families about your brand are consistent with the larger strategy.

Learn about the best ways to motivate hourly workers in a retail setting, and how to give employees the tools to comply with brand standards.

To me, what’s notable about Borders closing is that its another loss for the forces of “good” against the forces of “good enough”. Contrary to what a lot of people think, the essence of disruptive innovation isn’t necessarily whiz-bang technology. Rather, its about providing a product or service at a radically lower cost, without a serious – as defined by the preferences of the buying public – concomitant decline in quality. In practice, this means the creation of “good enough” products and experiences that provide a radically different value proposition to the consumer.

“Good enough” is one of the key insights Clayton Christensen uncovered in his seminal book, The Innovator’s Dilemma, and we’ve seen it play out across industries. Consider: the first automobiles were lovingly handcrafted machines made by craftsmen and artisans – works of art, really. But these cars were driven out of the market by a solution that was likely aesthetically and technically inferior, the Ford Model T, which was able to offer the automobile experience at a dramatically lower cost. The Model T wasn’t the best, but it was good enough, and as such was the first car to gain a foothold in the broader consumer market.

Let’s return to the example of bookstores. I think it’s clear to anyone who loves books that the experience of shopping in a bookstore is superior to the experience of shopping on Amazon. You can open the books, do the page 99 test, examine the covers, even read the first few chapters with a cup of coffee. You can talk to a human being that might recommend more books, or tell you what’s been popular in the neighborhood. Everything you buy, you can start reading immediately.  Entire days (I should know) can be spent at a brick-and-mortar bookstore.

Amazon, the principal “good enough” competitor to brick-and-mortar bookstores, isn’t capable of those things. Amazon Prime, a service which guarantees 2-day shipping on most of the company’s inventory, is close; Prime plus a great one-click mobile shopping experience comes even closer. Amazon’s recommendation engine is cool, but still not a great substitute for human recommendations. In short, the shopping experience is not as good as brick-and-mortar stores, but it’s good enough.

Where Amazon provides value, of course, is pricing. Their purchasing power enables serious discounts to the consumer, and their affiliate used book program offers outlandish discounts to those willing to accept used books (I regularly buy excellent-condition used books for pennies on the dollar). And despite my love of bookstores, I’m perfectly willing to trade down to good enough in exchange for more discretionary income.

MLC members, wondering what to do to protect yourself from “good enough”? Check out our recent research on radical innovation; we explain a number of ways to orient your organization towards the creation of disruptive products and experiences.

“Doing a Domino’s” entered the vernacular following Domino’s self-critical 2010 campaign, which acknowledged that its pizza “taste[d] like cardboard” and promised to improve the taste.

Domino’s mea culpa coincided with a 14% revenue boost, a 10+ percentage point increase in taste perceptions, a 613% growth in Facebook fans, and a 83% share price increase.

Could admitting your failings do the same thing for you?  MLC’s 2011 research on purchase drivers suggests so.

Our survey of 7000+ consumers found that decision simplicity – i.e., ease of trusting, understanding, and weighing information – is the biggest driver of follow through on intended purchase, repurchase, and recommendation (bigger even than brand affinity and engagement).  Brands with more credible information have far ‘stickier’ consumers than others (i.e., less attrition).

A great way to boost consumer trust is to acknowledge your weaknesses; especially those that consumers are already fully aware of (dodging the topic is suspect).  This wins you the credibility needed to talk about your strengths.  Of course, highlighting your flaws is a pretty risky strategy though – and needs to be approached the right way.

Dennis Maloney, Domino’s Pizza’s VP Multimedia Marketing, gave a great talk at the ANA’s Digital and Social Conference about how Domino’s iconoclastic campaign came about.   Here are a few of my biggest takeaways:

Only focus on widely-acknowledged flaws that can be addressed. And only when your strengths are already well-known.

Domino’s Insights group discovered that consumers perceived Domino’s to be:

• Best at service/ fast delivery (versus its five main U.S. rivals), but
• Worst at taste

It wasn’t ranked middle on taste – it was bottom – and across the board (not just according to a few customer segments). Luckily, taste is something that can be easily changed.

Instead of creating more ads about Domino’s great service, which consumers already knew about, Domino’s took a counter-intuitive approach.  They led with the negative, but promised to right their wrongs. They showed that they’d listened, they admitted to being wrong, and they committed to investing in improvements.

Get consumers to confirm that you have changed. Once Domino’s had changed their recipe, it wasn’t enough for them to assert that their pizza was better.  “New and improved” has been an empty claim for decades. To be credible, Domino’s needed consumers do the talking for them.  First, they added unfiltered consumer tweets about the new recipe to their homepage.  Second, they promised not to doctor photos of the new pizzas – because they looked good enough naturally. Instead, they asked consumers to send in their own photos.

Demonstrate a continued commitment to listening and reacting to negative feedback. Once a brand positions itself as honest and transparent, consumers hold it to a higher standard.  As such, Domino’s had to acknowledge negative feedback received in the call for consumer tweets and photos following the change.  Instead of filling ads with all the flattering photos consumers had sent (see image left), they focused on one of the negative images a consumer had sent it (see image right).  Once again, they acknowledged a mistake (careless delivery) and committed to trying to do better.

Humanize your apology. Domino’s had its CEO to apologize and commit to making changes on TV commercials.  By personalizing the mistake, it seems more human, and consumers are more likely to be forgiving.

MLC members, to learn more about boosting trust in your messages, please attend our 2011 meeting series.

An effective CPG-retail partnership can help brands and stores in three big ways.  First, CPGs can benefit from a higher compliance rate of in-store promotions and shopper marketing.  Consumers are becoming more overloaded with a larger volume of product-oriented information, leading most to simply put off purchase decisions until they are in the store.  A point-of-purchase campaign can help sway these consumers toward your product and away from your competitors’, and a partnership can help ensure that the campaign is executed effectively.

Retail stores can also benefit from increased store affinity through a co-equity promotion.  With 56% of consumers more likely to try new stores than five years ago, stores are looking to differentiate themselves and create emotional connections with their core customers.  An effective partnership can help them reach these goals by offering marketing that is on-target with both the brand and the retail, allowing the brand’s and the retail’s affinity to increase.  This CPG can benefit by being able to reach a more targeted demographic by designing unique campaigns for each store’s core customers.

The last major benefit helps both the CPG and the retailer by launching an inventory forecasting and control partnership to share data.  By providing rich CPG data to help retail outlets better predict their inventory needs, the correct amounts of each product will be sent to each retail outlet – reducing waste while still ensuring the store has enough of the product.  This helps cut costs while also benefitting consumers, who will be less likely to find a given retail store sold out of their favorite product.

Unfortunately, though, there are two big challenges with CPG-retail partnerships.  First, the biggest big-box stores are gaining more market share – Wal-Mart alone accounts for 35% of some brands’ sales.  This increased size sometimes gives the retails almost complete control over pricing and in-store product placement, which limits opportunities for brand-led marketing campaigns.  The slashed prices retail giants offer are leading smaller mom-and-pop stores to also have to compete on price.  To do this, they are often focusing on pricing promotions, choosing lower prices over creative in-store displays or promotions.  Outside of big-box-store woes, though, there is another big challenge with in-store promotions – profitability.  Because many partnerships focus on lowering prices, profitability is often sacrificed for an increase in sales volume.

MLC members, for more on forging effective CPG-retail partnerships, stay tuned for coverage from our shopper marketing networking event next week.