Learning Through Experience

Segmentation’s Impact on Gaining Insights

Even though our room assignment, the Backyard, brought some constraints, the limitless consumer segments and product categories forced us to prioritize opportunities where these two intersected and presented opportunities to stimulate growth and profits. We considered many factors when selecting our target segment, including:

• potential growth and size
• spending power
• changing needs as it relates to the Backyard
• access to gaining a deeper understanding of this segment through research and methods

We ultimately selected the Young, Affluent Family, professional families with annual incomes greater than $125K and two children under the age of six. This selection guided future decisions and key-learnings.

This selection greatly influenced our choices for gaining insights due to their inherent life-style and time constraints. For example, we initially wanted to do in depth interviews with the entire family and have each parent construct a current and future vision-collage of the backyard. During scheduling we quickly realized that young families could not dedicate the amount of time our plans required. In response to this challenge, we provided participants our materials well in advance of interviews to allow them to complete many tasks and questions on their own schedule, such as when their children were asleep. We decided that journals from each parent, short-interviews and one current and future vision-collage of the backyard per family would provide much valuable information, while fitting into our participates tight schedules. During the interviews we were unable to get the collaborative insights of the parents together due to their need to each take turns managing the children. Researchers studying this demographic should consider the increased expense of paying the parents or doing focus groups where the parents get free childcare.

Ultimately it is important to not let demographics entirely dictate your segmentation. You risk not identifying rising social trends or even similarities between completely different demographic groups. For example, the Honda Element reaches both the male Gen-Yers and women Baby Boomers, to polarized demographics, due to the common denominator of both wanting to feel young while watching their pocket-books. We learned that by strictly using demographics you could identify a group with many sub-segments, making your ability to identify common un-met needs difficult through research insights.

Lateral Marketing

You do not have to reinvent the wheel to create an innovative product for consumers. This was particularly crucial for the Young, Affluent Family because though they are not afraid of technology, they have significant time constraints that limit their ability to learn challenging new products. If a product offering builds on or combines two existing products in the marketplace while adding value for these consumers, it is more likely to be adopted and therefore purchased. These differentiators must also be clearly communicated (and then delivered) for the very same reasons.

Taking these factors into consideration we chose to use Kotler’s lateral marketing techniques of substitution and combination when evaluating our research results. With our segment placing their children’s needs and enjoyment number one and our secondary research indicating that the greatest amount of discretionary income ($285K) would be spent on the children, not including education; we determined that the playscape provided the greatest opportunities for differentiation, profits and growth. Our research indicated that product safety, evolution with the children, aesthetics and service were the top opportunities for improvement. Finally we substituted:

• bright colors with less garish colors for accessories to blend better with the consumers’ homes,
• mesh to replace wood slats that exposed children to slipping, suffocation and falling hazards, and
• wider steps where narrow steps allowed for children to slip-through and fall.

And we combined:

• playscapes of different age-levels to meet the consumers’ evolutionary needs, and
• playscapes with web-cam technology to increase the security and parents’ safety response.
  

The Experience

After years of methodologies that allowed only one potential answer to be considered the correct one, discouraged creative thought and focused on only one environment, it was refreshing to attend a class where fundamentals were laid without these constraints. The project flowed logically, and helpfully, solidifying and expounding class lessons. The in-class work days were immensely helpful, particularly for a cross-functional class of advertising masters and MBA students. These sessions also allowed us to leverage each other’s experiences and get advice and insight from Professor Walls.

Our group was very diverse both from our personal and professional backgrounds. This created some interesting and creative discussions. I think our selected project segment may have been an indirect form of birth control for our group, as we learned the level of change children bring to one’s life. The insights often brought about many shocked faces and laughter; however, nothing was more fun than brainstorming product ideas. My team was very inventive . . . crazy, but inventive.

I personally appreciated the slides set aside for reflection. It was often working through this slide where I learned the greatest lessons and prepared for the next phase. It would be easy to forgo the concerns and lessons learned if not for this exercise.

Teen Power?

Teen Spending Power Declines

A recent report on teens discloses common misperceptions that influence teens’ attitudes toward money and financial matters such as, banking practices and spending power. Contrary to popular perception, the spending power of todays teen population is not increasing, but has actually declined 12% from 2003 to 2006. Though the current teen generation is large, the teen population is not expected to grow significantly in the next ten years because parents have chosen to have fewer children.

Despite the declining spending and population, their estimated spending power was $153 billion in 2006. Therefore teens still represent a vast marketing opportunity, but to successfully target teen consumers, manufacturers and marketers must be aware of demographic changes in the teen population. The proportion of Caucasian teens is diminishing while the number of Hispanic and Asian teens is rapidly growing. These demographic changes could have significant changes on the groups tastes, preferences and perceptions.

On the retail front, much has been made of teens’ attraction to the youthful image projected by retailers like Abercrombie & Fitch where teens themselves have given high marks to this retailer as one “for someone my age.” Yet when it comes to actual shopping behavior, their money tends to go to more affordable stores like Old Navy and American Eagle Outfitters, and even Wal-Mart and Target.

Teens Still Impact Advertising

The Echo Boom generation, also known as Gen Y or Millennials, comprises the offspring of the Baby Boomers. This generation rivals their parents’ generation in size but differs greatly in buying habits and reactions to advertising. Echo Boomers have grown up bombarded with media and are more resistant to advertisers who try to attract them with image or celebrity appeal. Nearly half of Echo Boomers surveyed say that all advertisements seem the same, more than any other age group surveyed. Even worse for advertisers, this generation tends to show little brand loyalty. But this may change as Echo Boomers mature as consumers.

In 2005, Echo Boomers span the ages of 11 to 28 and so are just beginning to develop their own consumer preferences. Their tastes are more varied than previous generations, and they are more ethnically diverse. The majority of the generation is still at an age where they are likely to still receive parental financial support (roughly half live with their parents), which means they are able to spend what money they have on discretionary purchases.

By 2010, approximately 63 million Echo Boomers will have reached driving age and are expected to rival Baby Boomers in purchasing power. And though Echo Boomers do not earn as much as Gen Xers, there are 55% more of them. Both of these make them a top-priority for retailers. For example Toyota launched Scion, a new brand of automobile in 2003, with Echo Boomers specifically in mind. In 2004, Toyota spent $60 million to advertise its new brand, 20% of which went toward magazine ads. However, taking into account the fact that Echo Boomers are unlikely to read conventionally popular magazines, Scion places 75% of its magazine budget in obscure, youth-oriented lifestyle magazines, such as Modified, Scratch, or XLR8R, which helped it build street credibility as the “cool” car. As a result of its non-traditional ad campaign, almost 90% of Scion owners are completely new to Toyota.

Alleluah! Alleluah! Alleluah!

Until Wednesday I thought creativity or innovation was beyond my reach. But on Wednesday I realized that even creativity is often a combination of two existing ideas or a reflection on the past. If that was the case, I had been creative a million times over. Then I read the next piece; a creative idea or product must also be useful . . . . ok not so many creative ideas. Although the few creative ideas that have surfaced truly have come from reflection in the oddest of places; the shower, the massage room, the elliptical machine, etc. That is where I imagine that the people at 3M must come-up with their amazing products like Art Fry and Dr. Silver's Post-it notes or the most recent, Post-it flag highlighters.

Long before email (and blogs) Post-it notes revolutionized the way people communicate and even think about the processes in their life. So rarely does one see a non-technical innovation so radically change communication and processes. It is hard to imagine that Art Fry's revolutionary creation started in the 1970's in search for a bookmark for his choir hymnal that would neither fall out nor damage the hymnal (i.e. requirements).

It was because 3M employees and scientists are encouraged to step outside of their own departments and projects to learn what people in other areas of the company are doing and spend time working on independent projects (15% of the time) that Fry learned about 3M researcher Dr. Spencer Silver's "failed" (was not sticky enough) adhesive. However, this adhesive was strong enough to stick to surfaces, but left no residue after removal and could be repositioned without damage. Fry took some of Dr. Silver’s adhesive and applied it along the edge of a piece of paper creating his hymnal "bookmark".

Fry soon realized that his "bookmark" had other potential functions and used it to leave a note on an internal report. Fry then found himself inundated with requests from co-workers for more of that sticky notepaper. Despite the internal success of the now Pull and Peel Notes, Fry had difficulty selling his product to his superiors. Fry was forced to prove their worth through testing them among the office and keeping track of how many pads were requested and having the staff journal their thoughts about the product. They were almost addicting to the 3M staff. This "bookmark" actually created a new way to communicate and to organize.

Finally, 3M crafted the name Post-it note for Fry’s "bookmarks" and began production in the late 1970s for commercial use. In 1977, test-markets failed to show consumer interest. However in 1979, 3M implemented a massive consumer trial and education strategy, and the Post-it notes finally took off. Today, we see Post-it notes scattered across every surface in offices and homes throughout the world. From a choir hymnal "bookmark" to an office and home essential, the Post-it note has revolutionized the way we live.

Now Post-it notes have graduated too many other related products; one being the Post-it flags. Unlike the Post-it notes the latest innovation, Post-it flag highlighters, were not developed out of requirements but from the combination of two existing innovations, the Post-it flags and highlighter. However what is consistent with Post-it and what makes this creative is the fact that 3M considered how one uses these products and in what context. When pondering the usages and timing of each of these products (possibly in the shower), one would determine that they are often used simultaneously and that combining the products would reduce time and increase convenience. As Art Fry would say, "Alleluah!"