Knowledgeistics

Archive for the ‘Fundamentals’ Category

We all know that social media are a great source of market insights. All you have to do is log on, see what people are saying about your brand or product, and act accordingly. When you pay close attention to your customer, you can’t fail. Right?

Wrong. SMMR is like any other research activity – it demands not just data-gathering, but the knowledge to interpret that data correctly. If you take the time to understand your brand, product, and target market well enough, SMMR will return great ROI. On the other hand, if you simply take online commentary at face value, you’re playing Marco Polo in an empty pool.

Take the example of the 2006 film Snakes on a Plane. Early teasers generated a great deal of buzz in social media, with commentators practically salivating over the expected camp extravaganza. The studio went so far as to re-shoot portions of the film to meet (some might say pander to) fan expectations. Despite the huge buzz and apparent addressing of needs uncovered through (crude) SMMR, the film grossed a disappointing $62MM.

Buzz aside, SoaP was probably never going to be a truly great film, in terms of acclaim or revenue. However, it is clear that the studio was badly misled by internet buzz. A better understanding of the dynamics of online conversations and their target market would have prevented this misapprehension.

In contrast, the site Think Geek takes a very sane and profitable approach to integrating online conversations into their product and marketing strategy. Although (or maybe because) Think Geek is a niche retailer, they have exhibited a much better understanding of their target market.

Each year, they feature April fool’s products which are meant only as satire of the merchandise they actually carry. However, sometimes these fictional products strike a chord with their customer base and spark a lot of conversation and outright demand. One year, the “Personal Soundtrack Shirt” created such an outcry and later saw production:

April Fool’s Joke Turned Real
Yep. This unusual shirt was originally a joke product for April Fool’s day. But after your overwhelming positive response and hundreds of e-mails screaming to “make the damn shirt already” we went ahead and made the damn shirt… please enjoy.

While this might seem like an obvious choice – ‘give the people what they want’, it required careful consideration on the part of TG. First, they had to find a way to produce the shirt in appropriate quantitites at a reasonable price. Just as importantly, they had to use knowledge of their customer base to determine what that price could be. They had to estimate propensity to buy, rather than simply exclaim about the desirability of the shirt. They had to whether there was genuine demand, or simply a vocal minority, as in the case of SoaP. TG considered all of these variables and introduced a successful product.

Moral of the story: If you can’t tell the difference between real demand from your target market and loud noises from an unruly mob of bloggers, step away from the keyboard, take a deep breath, and look a bit closer.

At the outset of this project, we want to lay out why social media market research (SMMR) is a valid area of interest. After all, there are thousands of emerging trends you could be spending your precious blog time understanding – what sets SMMR apart?

More importantly, especially if you are a consumer insights/market intelligence/marketing manager, why should you care about this project?

There are three central reasons.

1) The price of qualitative market research has become astronomical. Think about this one. You want to get four groups of 8-10 young men who are college graduates and own at least one video game console (or single moms, or women 50+ years, etc.) in a room together for 2 hours and ask them questions. Intuitively, how much do you think this should cost?

If the answer isn’t $15,000+, we’re on the same page. The costs of traditional focus group research (not to mention IDI’s or “ethnographies”) has become astronomical.

In the age of Facebook, Twitter, and iPhone apps, is paying a focus group call center really the best way to find participants?

2) Gathering a group of pre-selected individuals to whom you will ask a list of pre-selected questions is a fundamentally flawed research model. The central goal of qualitative research is to understand the real lives of your current or potential customers. This is harder in focus groups because you are controlling the conversation, not them. Inherently, active observation biases the results. This explains the extraordinary popularity of “ethnographic” market research, which few academic anthropologists would recognize.  However, we are now fortunate that, for many demographics, our customers are sharing their thoughts, reactions, and needs (for free!) in their native environments.  Key caveat: this is not to discredit the importance or usefulness of traditional research methods, but only to show that they certainly have no monopoly over methodological rigor.

3) SMMR makes it easy to expand your research universe without exploding research costs and timelines. For example, say Serta is undertaking a study on the mattress market.  However, they want to expand the focus to understand not only the existing market options but also what “rest” itself means to its potential customers.  With traditional research methodologies, the team would have to construct elaborate screeners focused on certain demographics, with every effort limited by the fact that they will need to pay $300-$400 for every contact point.  Were they to leverage SMMR, they could harvest from a much larger pool, and after a thorough analysis of the data, understand from the universe of options where further research is warranted and what the key demographics are.

Two lessons here: A) SMMR can shrink your research costs and timelines and produce more useful results; B) When you let the market lead (instead of your pre-determined demographic screens and focus group guides), you open a world of possibilities.

As we continue this project we will be testing these benefits, and hopefully adding others.