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Consumer Behavior

trust-is-important-in-purchasing-marijuana-pricing-research

As researchers, we are always interested in understanding consumer choices. We ask respondents to rate importance, rank priorities, and trade-off among complex configuration scenarios. We discuss and make our own trade-offs in terms of design simplicity, project cost and informational objectives. And sometimes we try new approaches.

Anyone who reads the news is aware that there is a whole new consumer product category on the horizon: marijuana is now legal for medical purposes in over 30 states and for recreational use in at least 9 of those states (as of this writing). In partnership with NJ Cannabis Media (www.njcannabismedia.com), we took the opportunity presented by this new consideration dynamic to test a new choice evaluation strategy.

Essentially, we were interested in understanding the roles of 4 factors in adult recreational-use marijuana purchase decisions. A constant sum exercise (allocation of 100 “importance points”) among self-reported current and potential users yielded the following priority distribution:

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Tagged in: Pricing Research
brandless how-to-measure-brand-equity-with-conjointI grew up in a family that always seemed to be on the hunt for a good sale. Whether it was clothing, electronics or home goods, we never passed up an opportunity to buy an item for MUCH less than it was two days ago. Now, don’t get the wrong impression, I’m not an extreme couponer by any means. Nor do I sit outside in the cold for hours waiting for the doors to open on Black Friday. But a good sale has my name written all over it—especially clothing. Food and beverages, however, were never really something that we compromised on in terms of price, especially since I grew up in a household that favored organics. We were 100% guilty of buying a product we knew of and trusted rather than a cheaper, lesser known, alternative. I never even thought to buy “Toasted Whole Grain Oats” on the bottom shelf when “Cheerios” was right at eye level and is from a brand I know and trust. And let’s be honest— “Cheerios” just has a better ring to it. 
 

Best Way to Measure Brand Value, Price and Size of a Product 

I always wondered how companies knew exactly what consumers wanted. It never occurred to me that there were survey techniques that could be used to identify needs as well as the best way to price, size and package a product. That is until I started at TRC. I just assumed that companies use the standard question and answer format in order to get the information they desire. Once I began working on surveys, I learned that some companies were already utilizing a conjoint analysis to better understand its consumers’ needs, interests and perceptions. By showing several variations of the same product and only changing minor features across each group (such as the size, cost, packaging and other attributes), these surveys seek to identify the characteristics most appealing to respondents. This, in turn provides companies with the data they can use to assess their brand equity, while also seeing what they can do to modify their product and/or packaging, ultimately to increase sales. But is this enough to retain loyal customers? 
 

What about Off-brand Products? 

It wasn’t until I graduated from college and started working full time that I learned there are stores essentially devoted to off-brand products and are actually thriving. Imagine a store filled not only with “Toasted Whole Grain Oats,” but an off-brand product for everything you use. Yeah, that’s Brandless.com and stores like Aldi. Since realizing that I can fundamentally get the same item for much less, these types of stores have easily become some of my favorite places to shop. They have very minimal, if any, advertising throughout the store, so there is really no pressure when it comes to buying anything. Brandless.com, is just as it sounds. It takes the brand name off of every single item and shows you exactly what you are paying for. And to make it even better, both of these stores have organic products for a fraction of the cost. But, are these types of stores currently being seen as a major threat to well-known companies?
 

Can Optimization Conjoint Research Be Further Optimized? 

Typically, when doing research, we tend to only include brand-name products and services; which makes sense seeing as those are the ones that are most popular and come to your mind first. However, now that there’s this new segment of stores totally devoted to off-brand products, it may be time to break the mold and include generic and “brandless” companies when conducting choice research to measure brand equity. When it comes down to it, it’s only a matter of time before products like “Toasted Whole Grain Oats” begin to take over. How prepared is your company?
 
Tagged in: Brand Equity Conjoint
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Callmebymyname market-research-conjointIt’s well known that humans respond to personalization. But, as consumers do we respond more when our name is used when we are being sold to, and if so, why? Specifically, are we more likely to react positively to marketing emails that include our name in it? It turns out that we do indeed, as revealed by an interesting new study to be published in the INFORMS journal Marketing Science (authored by Navdeep Sahni, Christian Wheeler (both from Stanford) and Pradeep Chintagunta (Univ of Chicago)).
 
The researchers were specifically interested in understanding whether including a consumer’s name in the subject line of an email had a positive effect – in terms of the number of emails opened as well as subsequent conversion into sales leads. They ran a classic A/B test where everything was controlled to be the same except the inclusion of the consumer’s name in the subject line. This one tweak was sufficient to increase the probability of opening the email by 20%, which then translated to a 31% increase in sales leads and a 17% reduction in those who wanted to unsubscribe
 
What is interesting here is the nature of the manipulated content. It is non-informative about the product and its benefits, yet still has a significant impact on the consumer’s behavior. This would seem to imply that the effect should be generalizable to other products and contexts as well. To test this they ran two more studies where the products differed as well as the relationship of the consumers to the particular companies. The results were consistent with the first study, establishing the generalizability of the results. “Aspects of the advertising message that are seemingly unrelated to the product can affect how consumers process the message, and significantly change outcomes,” said lead author Navdeep Sahni. 
 
There is then the question of why this occurs. While there are competing theories the best one (message elaboration) seems to be that once their attention is drawn using their name, consumers process the information more carefully. This, of course, has a potential downside in that if the message is not relevant to the consumer then the more careful processing could translate into fewer sales leads and more people unsubscribing.   
 
A rather clever 2x2 design was used to tease out this effect – the recipient’s name was included in the body of the email (or not) and a relevant piece of information in the form of a product discount was included in the email (or not). By including the name in the body of the email, the chances of the recipient processing the message increases. By including the discount the relevance of the message itself becomes higher (or not). So if the psychological mechanism at play is message elaboration, then the condition where attention is drawn and a relevant message is presented should provide the most leads – and that is precisely what they find.  
 
Additional (regression) analysis showed how the pieces fit together. Seeing the name increases the likelihood of the message being read and processed, and increases the chance of a positive outcome – if the message is compelling. By itself, the personalization still has an effect but not as much as it otherwise could with a relevant message.      
 
This research does not tell us what happens when more and more marketers start using email personalization. Will consumers get desensitized to the effect? What if the domain is sensitive? Would consumers get offended resulting in a backlash? The answers are not available in this research as the datasets examined here do not fall into these categories. 
 
But, for now, we can say that email marketers could benefit from including the recipient’s name, and can enhance the effect by having a relevant message in the body of the email.     
 
Tagged in: Consumer Behavior
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advanced-market-research-methods-and-candyAt TRC, the most popular spot in the office is our snack shelf. It features an array of sugary, salty and carb heavy treats. The contents vary and are determined by one person (Ruth, who stocks the shelf) with influence from the rest of us (based on past usage and suggestions). Sometimes the shelf has exactly what you’re looking for. Other times, not so much. But what if instead of relying on Ruth’s powers of deduction we were to use research to figure out the optimal shelf configuration?  We’re researchers, after all. 
 

Start out with Incentive Alignment 

We would start out by using our Idea Mill™ product to generate ideas on which snacks people want to have. It uses incentive alignment and gamification to bring out the most creative ideas and provide direction on the favorites. It is likely that this will create too long a list of ideas (the candy shelf is only so large) and while we can toss out ideas that are not feasible, we believe it is best not to toss out ideas just because you personally don’t like them (I’m looking at you Mr. Goodbar). Far better to get more consumer input…this time to narrow the list. 
 

Go beyound Simple Ratings, Employ a Choice Method

We could ask our folks to rate all the suggested snacks and then use that to figure out which ones should make the cut. Ratings might be good enough to eliminate some things (my guess is that despite what people claim, healthy snacks would bite the dust), but among popular snacks (like different types of pretzels) we are not likely to see clear differentiation.
 
A choice method like Max-Diff could help but if the list was long it would require a lot of work on the part of our employee respondents. A method like our proprietary Bracket™  would do the job in a faster and more engaging fashion while still finding clear winners and losers.  
 

Find a Combination of Flavors that Would Please the Most People 

Stocking the winners would therefore make the most sense…but would it please the most people?
Currently the shelf features five types of M&M’s (original, almond, caramel, dark and strawberry nut). If dark chocolate was the least preferred it might get cut. But what if those who like almond, caramel and strawberry nut also liked original, but those who like dark only liked it. For situations like this we can take the results of the Bracket™ (or Max-Diff) and use TURF  to find the combination that would please the most people.   
 

Find the Best Position on the Shelf with Discrete Choice Conjoint 

Of course, another factor is positioning. The shelf is only so large. M&M’s can be dispensed from any size canister (in fact Ruth has one that spins so that it can dispense three types) while Pretzels tend to come in large bins that take up a lot of room. In addition, not all of the snacks cost the same. In an effort to keep our expenses and waistline under control we follow a strict budget. Might I trade off having greater quantity of a lesser snack in exchange for an expensive favorite? 
 
For these kinds of questions a discrete choice conjoint is the answer. We can include a variety of candy types and constraints related to the room they take up as well as cost. Simulations can then optimize how to spend our candy budget.  
Despite our love of research and wide array of tools though, I think in this case they would be overkill (we have a very small population of around 40 employees). So I think we’ll stick with Ruth’s instincts. I never go wanting….
 
Tagged in: Conjoint
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Market-Research-Prioritization-email-violations

I work in a business that depends heavily on email. We use it to ask and answer questions, share work product, and engage our clients, vendors, co-workers and peers on a daily basis. When email goes down – and thankfully it doesn't happen that often – we feel anything from mildly annoyed to downright panic-stricken.

So business email is ubiquitous. But not everyone follows the same rules of engagement – which can make for some very frustrating exchanges.

We assembled a list of 21 "violations" we experienced (or committed) and set out to find out which ones are considered the most bothersome.

Research panelists who say they use email for business purposes were administered our Bracket™ prioritization exercise to determine which email scenario is the "most irritating".

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Tagged in: Consumer Behavior

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