Marketing Research, Hollywood & Broadway Style

How will audiences react to a new movie or Broadway show? Given the ever-increasing price tag of creating and presenting entertainment products, it's no wonder marketers are testing different ways of, well, testing before launch.

For example, producer Ken Davenport is testing his new Somewhere in Time musical by giving Portland, OR audience members hand-held meters to use in rating each element. The show, based on the well-known movie starring Christopher Reeve and Jane Seymour, received fairly positive critical reviews. Before spending another $9 million or so to bring it to Broadway, however, Davenport is asking dozens of audience members at each performance to rate songs and scenes on a three-part scale: “Love this part,” “Neutral about this part” and “Hate this part.” By looking at the ups and downs of audience reaction (see photo), Davenport can get an idea of what works and what doesn't.

Of course, Broadway producers typically gauge audience sentiment by watching and listening as the show goes on, noting when/where people laugh or seem bored. That's the time-honored tradition of out-of-town tryouts, when plays get tightened up and songs are added or cut according to audience reaction. Will hand-held meters help Somewhere in Time become a Broadway box-office smash? Only time will tell.

Hollywood studios have used sneak peek previews and audience reaction cards to test movies for years. These days, targeted market research is helping studios better understand the movie-going public's interests and preferences and fine-tune marketing for individual movies. Yet marketing research for movies has had a bumpy road, in part due to the difficulty of pinpointing what will attract audiences and still support the creative concept of each film.

One key element in marketing movies is the trailer--plastered all over social media, with the goal of going viral and generating sufficient buzz to boost ticket sales during the first weekend. "Trailer view searches are predictive," says Google's head of entertainment. According to Google's YouTube experience, "94% of variation in a film’s box office opening can be explained with trailer-related title search volume 4 weeks prior to release, coupled with seasonality and franchise status." In other words, studios use searches as metrics for anticipating and tracking movie marketing performance.

Staples Thinks Ahead to September--and Beyond

The first official day of summer was Friday, June 21st--the day school let out for the season in my home state.

Screen shot dated June 24, 2013

The very next day, local Staples stores began putting up back-to-school displays. If you visit Staples during July, you can get a jump on the new school season by stocking up on pens, markers, binders, paper, or--hopefully--a new tablet or laptop computer. Staples wants you to think of it first when you think of school supplies.

It's all part of the comprehensive marketing plan set out by Staples. The chain has been slimming down by shuttering low-performing units, chosen on a store-by-store basis. "If we feel like the store’s profitability is good enough and even with risk for the next few years, it’s fine. We renew on a very short-term basis and we’ve been successful in doing so," says the president of the US chain.

Also, Staples is testing multichannel options to accommodate customers' changing buying behavior. Its new omnichannel units are smaller than the typical Staples and feature in-store kiosks (like the unit above) that deliver an "endless aisles shopping experience," meaning every product is available online at the click of a mouse. In 2013, Staples will open 45 such stores, optimized for on-site, online, and mobile shopping. "It’s very clear to us that mobile is the future," observes the head of global e-commerce. In tandem with this multichannel approach, free overnight delivery helps Staples compete with its online rivals and makes shopping more convenient.

Now that Office Max and Office Depot plan to merge, Staples will face stronger competition on the retail level. At the same time, online goods and services are starting to eat into the company's product lines. To be where the social action is, Staples is active on Facebook (726,000 likes), Twitter (255,000 followers), YouTube, and LinkedIn. Of course it has its own iPhone and Android apps, as well.

Four KPIs for Costco

What are four key performance indicators for Costco, the $100 billion members-only retailer that charges $55/year for the privilege of shopping in its gigantic, no-frills warehouse stores? If I were in charge of marketing, these would be at the top of the KPI list:

1. Sales. The company closely tracks same-store sales and carefully analyzes fluctuations. It also looks at website results, which are decent (according to outside analysts) but don't begin to approach the kinds of figures achieved by web stars such as Amazon, for example. "We view Amazon as one of our primary competitors in almost every category. We all believe we are going to have to adapt in some form," observes Costco's head of membership, marketing, and services.

2. Membership. Currently, Costco is just shy of 70 million members. The retailer tracks new members, renewal percentages, and defections to gauge loyalty and identify potential issues or opportunities. Membership is a vital metric because, as discussed in #4, it directly impacts profits, not to mention being a bellweather of consumer attitudes and behavior.

3. Product category results. Gasoline is a big draw: According to Costco's CFO, "thirty or so of those [shoppers] for every 100 that pump gas, go to shop." Groceries are another important category, which is why Costco watches online competitors that are trying new home-delivery offerings. The "treasure hunt" aspect of Costco sometimes defies categorization. Caskets in the same store as candy? Analyzing how one category affects another category can turn up valuable clues to customer behavior.

4. Profit margin. Membership fees account for 80% of its gross profit. In other words, when you pay your annual membership fee, it drops right to the bottom line--especially if you're a renewing customer who doesn't even need a new card. People (including me) become members because Costco's merchandise is value priced. The company rarely prices any of its 4,000 products at more than 15% above cost. And anybody who's ever shopped at Costco knows the retailer spends nothing on store ambiance, protecting that bottom line.

Who's Behind That Red Square Logo?

See that red logo patch on tennis super-star Novak Djokovic's shirt? That's not a Nike swoosh. And it's not an Adidas striped logo. No, it's the logo of a company that's clawing its way to higher visibility, one celeb endorsement at a time: Uniqlo, the Japan-based retailer of clothing that is in the middle of a multiyear marketing plan for international expansion.

Golfer Adam Scott, winner of the 2013 Masters, also wears Uniqlo's red patch, along with top athletes from Japan. These high-profile athletes make appearances on behalf of Uniqlo and lend cachet to the company's value-priced, chicly basic tops/bottoms and performance apparel.

A decade ago, Uniqlo's global expansion hit some bumps in the US and China, but today, the company has a fresh start in both markets. It is about to build its largest flagship store in Shanghai, part of the push to expand beyond 200 stores in China.

Uniqlo's long-term goal is to become the top retailer of casual clothing in the US, an audacious goal supported by the deep pockets of parent Fast Retailing. With a handful of suburban mall stores and a growing downtown presence, plus a US e-commerce site, the company is aiming to boost US sales dramatically during the next couple of years so it can achieve profitability in this market.

Watch for Uniqlo all over the world. It already has a joint venture to open in Bangladesh and a separate joint venture for Indonesia.

For more, follow Uniqlo's US marketing messages on Facebook (384,000 likes) and Twitter (20,000 followers).

McDonald's Latest Marketing Moves

McDonald's has been getting customers more involved in its marketing efforts and simultaneously making more info available via app, social media, and more. This makes good business sense in today's competitive marketplace--especially since McD's has been trying to boost sales at existing stores, which have been stagnant lately.

Here's a quick look at what's cooking around the world:

• McDonald's Australia released an app that shows customers, with a quick scan of a food container's QR code, where the beef or chicken is from--supply-chain transparency. It has also been posting YouTube videos of customers (selected from among its FB fans) reviewing specific menu items--kind of the vid equivalent of posting product ratings, if you will.
• McDonald's US has a new "After Midnight" menu in selected 24-hour stores, with both dinner and breakfast choices (see left). Still no breakfast available around the clock, but this does expand breakfast to the wee hours of the morning. The new Egg White Delight breakfast sandwich is getting a big ad push to demonstrate that McDonald's does offer healthy eating options.
• McDonald's UK is reassuring customers about the high quality of its 100% beef burgers, following a horsemeat scandal that did NOT involve McD's but raised questions in the minds of UK burger lovers. Follow-up research showed a high level of interest among customers in eating ethically-sourced foods, so McD's UK is now promoting its quality pork from Freedom Farm sources. In other words, there's more transparency about supply-chain sources.
• McDonald's China is trying to gain market share by introducing rice-based dishes it believes will appeal to local tastes. So far, however, reviews aren't very encouraging.
• One major McDonald's India franchise owner has already raised prices once in 2013 as new taxes and inflation increase costs, with a second increase possible soon. The company's "Pakka Indian" (absolutely Indian) burger, just introduced, is backed by a multimedia campaign including TV, radio, print, outdoor, and online ads.
• McDonald's Canada has addressed transparency by posting YouTube videos that answer customers' questions by taking viewers behind the scenes into kitchens and operations. "Canadians were talking about our brand perhaps not in a factual manner and we wanted to get into that [social] space and leverage the social environment with our facts and our story and change those perceptions that Canadians have about our brand," explains the senior national marketing manager. No wonder the company won Marketing magazine's Marketer of the Year 2012 award.

Best Buy Reshapes Its Retail Look

Best Buy is changing its retail attitude yet again. Earlier this year it finally got out of the UK partnership with Carphone Warehouse, a venture that was supposed to bring American-style big box stores to British shoppers. Given the struggling economy and changing shopping behavior, that strategy is gone.

Recently, Best Buy's US stores have been carving out store-within-a-store sections devoted to specific brands like Samsung, Apple, and Microsoft (above). By adding depth to high-profile branded inventories and training salepeople on product specs and benefits, Best Buy aims to convince shoppers to buy in the store rather than going the showrooming route and defecting to online competitors. This also requires a sharp pencil for pricing--which appears to be hurting Best Buy's margins, for now.

Given its tech orientation, it's not surprising that Best Buy is social and mobile: It has 6.7 million Facebook likes, 365,000 Twitter followers (not including its dedicated customer support Twitter account), a Best Buy YouTube channel, and of course apps for mobile browsing and buying.

Can Best Buy parlay its multichannel presence and branded boutiques into higher sales and profits?

Melissa & Doug & Classic Toys

In a recent New York Times article about Melissa and Doug Bernstein, who founded the Melissa & Doug toy company, the family (including a 6-year-old daughter and a 9-year-old daughter) is playing with toys being considered as new products.

The younger girl says she likes a set of princess slippers--but the older sister doesn't. "You're not the target market" for the slippers, Melissa tells her daughter.

And she should know: for 25 years, Melissa and Doug have been producing and marketing hands-on toys that are fun, durable, and classic (meaning non-electronic). Once the firm identifies "classic play patterns," Melissa says it looks for products that will "make them more enticing in all kinds of ways."

The company is rarely featured in media profiles, but its quality products are popular in independent toy stores, specialty stores, and chain stores nationwide. Started in a garage, it now has an estimated $325 million in annual sales, gaining revenue momentum in recent years despite challenging economic conditions.

One reason is their emphasis on toys that are timeless, well-made, and interesting enough to engage kids in active, entertaining play. The founders test products on their own children and ask two dozen other families to test and report their reactions to new items. No, Melissa & Doug have no plans to license famous characters or brand franchises, or to go high-tech, although they regularly receive proposals for electronic alliances.

Although the company focuses on traditional toys, it is highly social: Check out its Facebook page (163,000 likes), Twitter account (nearly 25,000 followers), Pinterest pages (192,000 followers), and YouTube channel (156,000 views). It's also on LinkedIn, where it recruits for open positions.

Wheel of Retailing, 21st Century Style: Pushcarts and Trucks

http://www.emeraldinsight.com

The wheel of retailing theory suggests that retailers enter at the low-price, low-service point in competitive positioning, then trade-up over time to better merchandise and better service at higher prices. This leads to the vulnerable phase, where low-price newcomers start to chip away at the market share of now-established stores.

In the history of U.S. retailing, an early point of competitive entry was pushcarts and itinerant merchants who roamed city streets and country roads carrying their inventory with them, going to where customers lived and worked. After major retail chains became the dominant force in the industry, malls sometimes introduced pushcarts to give independent retailers and local craftspeople a chance to break into the market and reach customers at a reasonable cost. In turn, successful pushcart operators might open a store, trade-up, and so on.

Now the retail world is seeing the wheel of retailing return to its roots yet again. Penguin Books has begun taking its inventory on the road in trucks (aka mobile stores or possibly pop-ups) and pushcarts.

Of course, this 21st century pushcart is supported by Twitter announcements of its location plus Facebook photos and comments. Penguin's web site has a map showing locations, as well. And Penguin's blog includes posts about the truck, which was inspired by the food truck craze sweeping the nation.

Actual sales may be less important than local publicity and brand reinforcement. I like this turn of the retailing wheel because it brings the industry back to one-to-one interaction.

Wanelo's Social Shopping Success

Wanelo--which stands for want, need, love--is a social shopping site targeting teens and 20-something consumers. Of the 8 million registered users, 90% are female--and more than half are under the age of 24.

The site's iPhone app has been downloaded 1.5 million times, indicating the extremely high level of interest from consumers in this highly mobile-savvy segment.

Of course Wanelo is highly social, with 161,000 FB likes and 15,000 Twitter followers, plus a small but fast-growing presence on Pinterest. The home page of its web site features "trending now" product photos reflecting what users are buying at the moment.

What sets Wanelo apart is that every link/photo takes you to a site where you can buy whatever is being discussed or pictured. Not a news item or a style blog, but a shopping site so users can click and buy. “Our core content is product,” according to founder Deena Varshavskaya. “Wanelo has a buy button on everything.”

This emphasis on commerce would be off-putting on most other social media sites. But with the revenue stream from commissions on purchases, Wanelo is profitable and doesn't need the clutter of ads that appear on most social sites. So the e-commerce angle is the whole point of sharing on Wanelo. Want, need, love something? Find it and buy it with minimal friction on Wanelo.

Happy Blogiversary #7

Seven years ago, my first-ever Marketing Handbook blog entry was about the ongoing rivalry of Boeing vs. Airbus.

Boeing was betting its future on smaller, lighter jets that could fly point-to-point, making direct flights more convenient and fuel efficient; Airbus was betting its future on jumbo jets that could carry more than 500 passengers at a time from hub to hub.

Fast-forward to 2013, and Boeing is working to keep its next-generation Dreamliners back in the air after battery fires grounded the 787s worldwide. Airbus, meanwhile, is attracting interest from Cathay Pacific and other carriers with its very large, fuel-sipping A350-1000 jets. And the rivalry continues!

Today's post is #789 in my long-running look at marketing trends, innovations, and challenges. Of all these posts, the five most popular are:

• Are Competitors Stakeholders?
• Are Competitors Actually Company Stakeholders?
• Nespresso, the Apple Store of Coffee Machine Boutiques
• Strategy or Execution? Both!
• Coca-Cola Goes Freestyle for the Touch-Screen Generation

Thanks for reading.

Marketing Highlights of the Previous Cicada Boom

Time has a two-page spread about this year's cicada appearance, including a brief look back at what happened in 1996, the last time the 17-year cicadas were above ground.

Following up, I want to present a few marketing highlights of the year 1996 with updates from the latest news.

• Yahoo! went public in 1996 . . . and just this year, before the cicadas emerged, Yahoo acquired Tumblr. 
• Amazon.com was first established as a corporation in 1996 . . . and today, the pioneering e-commerce company rings up $64 billion in annual sales.
• McDonald's opened the first branded restaurant inside an Olympic Village, in 1996 in Atlanta . . . and for 2013, the fast-food giant became the official NFL restaurant sponsor of the Pro Bowl.
• Pepsi, taking advantage of what was cutting-edge communications tech in 1996, launched a "Beeper Network" for Mountain Dew . . . and earlier this year, USA Today's Admeter said that Pepsi's "Coke Driver Busted" TV commercial from 1996 was one of the top three Super Bowl ads of all time.

What will the marketing headlines be in 2030, the next time this cicada brood emerges?