Wednesday, May 12, 2010

Will Facebook help you choose your groceries?

I've been preaching the Transparency Gospel for over three years - suggesting that as technology allows more people to find out how good a product really is (from objective experts or digitally aggregated peers) it will become more and more important to actually have great products.

The theory is a no-brainer in considered purchase categories. But even I wondered if this behavior would ever trickle-down to the grocery store shelf. Will people actually take the time to compare the ingredients or the carbon footprint* of two different brands of baked beans?

Apparently people will take the time and are interested in these rational issues when it comes to food purchases. As reported by Marketing Charts, Deloitte's new "2010 Consumer Food Safety Survey"spells it all out. As you might expect, most of the study relates to food safety but a few of the findings have broader marketing implications. First, people are going online to do their homework prior to shopping shopping for food items: Twenty three percent of consumers visited a food company's website to get product information while 23% of consumers made a food purchase as a result of something they read online.

More interesting was the impact of smartphone technology. As the chart below illustrates, 7% of people have used their phone in-store to learn about potential purchases (click chart to enlarge).

These data demonstrate people have an appetite for detailed and objective information regarding their food purchases. Technology is filling a need that apparently is not being met on the package.

Where is this going? According to comScore, approximately 17% of the U.S. (age 13+) had a smartphone in December of 2009. That means over 40% of those with the ability to use a smartphone while shopping for food did so. Multiple sources predict smartphone penetration to increase to 40 or 50% in the next 24 months. Assuming the rate of usage for food shopping stays flat, that would translate into 16-20% of food shoppers using their smartphones to learn about food products in the store. To be sure, we don't know frequency of use or the actual impact on what was purchased. Price comparisons and coupon hunting are a big part of this dynamic. But this behavior is more than incidental and it's bound to increase.

The quality of information available in-store will only get better. The folks at GoodGuide provide detailed information regarding the health, environmental, and social impacts of over 70,000 products in your home. Their clever iPhone app is no doubt driving some of the in-store usage unearthed by Deloitte. Walmart's sustainability index initiative will surely catalyze this transformation.

And yes, I imagine someone at Facebook has mocked-up a "Liked" product rating
index calibrated to the tastes and preferences of your very own social network. Your old high school girlfriend may finally add some value by helping you pick the right can of baked beans. Seriously, every aspect of a product - good and bad - will soon be transparent. How will marketers respond when their product is naked on the shelf?

In this environment, Job One for marketing will be to make the product and usage experience extraordinary.
Domino's recent moves to improve their product show that this strategy can drive significant increases in sales (see It worked! below).

Smart shopping at the shelf will also impact other elements of the marketing mix. Traditional product demonstration and affinity advertising strategies will likely have a hard time competing with hard data in the store. How many FSI drops or TV target rating points will it take to top the impact of significantly superior quality or sustainability score - not to mention a timely digital coupon? If trends continue it may well become less expensive to differentiate and gain market share by improving product quality or how that product is made, shipped or recycled. A bigger question is how many TV TRPs will it take to counter a negative product performance issue? It's going to get interesting. Fast.

* measured
prior to consumption

Wednesday, May 5, 2010

It worked!

Congratulations to the Domino's team for delivering a jaw-dropping 14.3% same store sales gain in Q1. Advertising Age today reported the big news.

Back in early January, I wrote about Domino's gutsy decision to reformulate the product in my post, Marketing with a capital "M." The Pizza turnaround worked. Make the product better and apparently more people will buy it.

Ad spending was up 9% for the period but that alone would not account for the increase (Papa John's sales were flat for the same period). Social media played a role here. When I wrote in January, 170,000 people had seen the four-and-a-half minute Domino's YouTube video. As of today, the number is up to 640,000. That kind of momentum can only be sustained with sincere consumer interest and active social sharing. Domino's made real news by being honest about their situation. This campaign was not spin and people responded.

This is a potent reminder that real marketing is more than ads and promotion. Product (and the product usage experience) comes first in a transparent, socially connected marketplace. Way to go Domino's!